KATHMANDU: The Nepal Army (NA) has pressed the Kathmandu-Terai Fast Track Project ahead by ignoring parliament’s Public Accounts Committee (PAC)’s directive to cancel the ongoing procurement process, which has been shrouded in irregularities.

PAC concluded that there have been irregularities in the procurement process of the Kathmandu-Terai Fast Track Project, being constructed by the Nepal Army, and thus directed the Ministry of Defense to cancel the ongoing procurement process and move ahead with the new procurement process.

However, after realizing that the decision was not implemented even within three weeks, PAC has sent a seven-day ultimatum to the Ministry of Defense to furnish details of the progress made so far.

In a letter sent to the Ministry of Defense on April 22, Dr. Roj Nath Pandey, the secretary of the PAC, has demanded a progress report on the implementation of the decision taken by the committee on April 1.

“Since we have not received any information about the implementation of the decision taken by the PAC on April 1, we urge the authority concerned to provide the details within 7 seven days and assist in the work of the committee as per the instructions,” Pandey wrote on behalf of PAC.

However, the Ministry of Defense has yet to reply to the PAC.

“We received the PAC directive and have started the process of collecting details,” Krishna Prasad Gyawali, the spokesperson at the Ministry of Defense, told Khabarhub, adding, “We have already written to Nepal Army (NA) seeking its opinion on the allegations.”

The source expressed optimism that the issue will be settled soon.

Interestingly, the NA has neither suspended nor canceled the procurement process despite PAC’s directive.

Three weeks have passed after the PAC wrote a letter to NA directing it to cancel the pre-qualification selection; however, the NA is pushing ahead with the project’s works.

NA has mysteriously moved the procurement process related to the Chinese company ahead making a mockery of the prevalent laws and glorious history of the army itself.

NA Spokesperson Brigadier General Santosh Ballav Poudel said that the NA did not receive any instruction from the Ministry of Defense to stop the process.

“The PAC gave instructions to the government and not to the NA. The instructions should come to us through the Ministry of Defense,” spokesperson Poudel said. “We have not received any directions from the Ministry, hence, we are moving forward according to the project schedule.”

What is in PAC decisions?

The PAC directed the Ministry of Defense to cancel the procurement process on April 1, stating that the procurement process of the Kathmandu-Terai/Madhesh Expressway initiated by the NA. The project’s cost is more than Rs 20 billion and goes against the Public Procurement Act.

The PAC made a two-point decision and directed the government to implement it.

“The Public Procurement Monitoring Office, as per Clause 65(1) of the Public Procurement Act, 2007, should issue guidelines, procedures and technical guidelines for procurement procedures and a sample of pre-qualification documents should be prepared as per clause (c) of the same section,” the PAC decision read, “In case no guidelines or procedures or guidelines have been prepared so far, at least three firms or companies should compete in the bidding and bidding stage.”

Citing the same provision, PAC decided to instruct the Public Procurement Monitoring Office to prepare and make appropriate guidelines, working procedures, or criteria related to pre-qualification, bidding, or call for proposals available for the public.

Similarly, the second decision of PAC instructed the government to annul the pre-qualification procurement procedure, hailing it did not meet the legal provisions stated in the Public Procurement Act, 2007, and Public Procurement Regulations, 2007.

“Out of two packages relating to the EPC of tunnel and bridge, contract and prequalification of the Kathmandu-Terai Fast Track, as the procedures adopted for the second package do not ensure competitiveness, transparency and frugality, which are regarded mandatory as per the Public Procurement Act, 2007, and Public Procurement Regulations, 2007, and as the bidding seems restricting the competitiveness,” the second decision read.

“The Government of Nepal is instructed to cancel the procurement process of KTFT / ICB / PQ/tunnel / 2076-077-2 package for pre-qualification and initiate the new procurement procedure.”

Thus, the PAC has made a two-point decision to stop the procurement process and has given instructions in the name of the government for the enforcement of its decision; however, neither the procurement process nor the ongoing activities have been halted to date.

The NA is still working according to the project’s ‘old’ schedule.

What did the PAC find objectionable?

The NA had invited bids from international companies for the pre-qualification selection on March 13, 2020. The NA Secretariat assigned to look after the Fast Track project had completed the pre-qualification selection on September 30, 2020.

However, the PAC has ruled that the selection process is flawed.

The flaws in the procurement process include:

– Although many companies had taken part in the pre-qualification stage, the ‘short-listing’ process failed to select enough companies to ensure competitiveness. Hence, the bidding is against the spirit of the prevalent Public Procurement Act and Regulations;

– The company that was regarded qualified in package one, appears disqualified in package two;

– The companies qualified in packages one and two seemed to be working in collusion;

– Instead of re-tendering or re-inviting for the prequalification so as to ensure transparency in the bidding process as per the letter and spirit of the Public Procurement Act, and Regulations, the tendering was carried out contrary to the prevalent laws and has caused huge loss of money to the nation;

– It has been found that reputed international companies have been deprived of participating in the contract process, pointing to the minor errors in documents;

– The China State Construction Company Limited, which was selected on pre-qualification, has not made even 10 percent progress in the Butwal-Narayangadh four-lane road construction project in the past two years. Yet, it has been selected. The selection seems baseless and haphazard;

– It is found that China State Construction Company Limited, which was selected in the pre-qualification process on April 5, 2018, was not selected in Package 2; however, the Poly Changda Company of Poly group, which was selected in the pre-qualification process on April 5, 2018, was selected for the second time;

– Rather than selecting construction companies enlisted among the largest engineering companies in US independent evaluator’s The Engineering News Record, the NA picked companies that do not reach anywhere near such fame;

– It is noticed that the management committee of Kathmandu-Terai Madhes Expressway suggested selecting 8 companies for the first package and 6 companies for the second package; however, only two companies have been selected;

– In the same package, two companies were selected in the first package and of them, Poly Chhangda Company was selected in the second package; China State, which was selected in the first package, was not selected in the second package.

– Remarkably, NA had selected only one company without taking the prior-consent from the Public Procurement Monitoring Office, which is regarded mandatory by the existing laws;

-Under the second package, the NA had selected only Poly Chhangda Engineering Corporation of China for pre-qualification for the construction of two tunnels and bridges from Simpani to Chalise Kholsi (1.37 km) and Ghattepakha to Bandarekholsi (1.4 km) in Makwanpur. The PAC is of the view that such a selection process discourages competition;

Mohammad Ishtiaq Rai, a PAC member, thinks that there is a big conspiracy and manipulation in the procurement process for the construction of the fast track project undertaken by the army.

“Nepal Army had selected two construction companies for the construction of two parts of the project in the first package, but it chose only one company in the second,” Rai said, adding, ” The army did not allow the best companies in the world. Thus, the deliberate choice of listing only one or two companies makes it clear that there is financial manipulation.”

PAC member Rai regards the disregard towards the provision of seeking prior consent from the Public Procurement Monitoring Office as a deliberate act to continue ongoing irregularities.

“Before the pre-qualification is made public or called for in the procurement process of large and complex nature, the Public Procurement Unit has to get prior consent by letter from the Public Procurement Monitoring Office but the NA has not done so. This is wrong.” he told Khabarhub, adding, “It is wrong for the army to be involved in the contract and make itself a party in the violation of the rules.”

PAC Chairman Bharat Kumar Shah said the contract put forward by NA has many flaws.

“Although Rule 35(2) of the Public Procurement Rules 2008 regards it essential to select many companies to ensure economic competition, NA has selected only one company which is wrong,” he said, adding, “Even the provision of consulting Public Procurement Monitoring Office has also been disregarded.”

Interestingly, NA’s intention seems foul in the fast track project from the initial phase itself.

The military had launched an opaque process amidst the lockdown and political liquidity in the country. According to a military source, the letter of intent was signed within two hours of the selection of the consultant. The source claimed that only two of the five companies were called to the NA headquarters.

Thus, the army has prolonged the multi-billion dollar project in an opaque manner and the budget has also skyrocketed. Even though the construction work is going on at a snail’s pace, the NA has been lobbying to make a case by taking various teams from journalists to lawmakers to the site for coverage to make an impact.

According to experts, the process of awarding contracts worth billions of rupees to a Chinese company that is not on a renowned list hints at the NA’s high level’s interest in it.

Most probably, this has compelled junior officers to remain silent about the fast-track-related scam.

Despite the ‘initiations’ for investigation, no action has been taken against the defaulters.

NA has mysteriously moved the procurement process related to the Chinese company ahead making a mockery of the prevalent laws and glorious history of the army itself.

The controversy over the construction of the expressway, and the NA’s involvement in the scam has discredited the glory, transparency and loyalty NA stands for.

Also Read:

Fast Track: PAC smells rat while awarding contract to Chinese company

Kathmandu-Terai Fast Track: PAC directs govt. to cancel second package contract

Tender called for construction of tunnels, bridges in Kathmandu-Terai Fast Track