KATHMANDU: The contract for constructing the Inaruwa–Kaptangunj road section under the Postal Highway in Sunsari has been terminated. The Project Office, Itahari, under the Postal Highway Directorate, decided on Tuesday to cancel the 22.66-kilometer road construction contract.
With this decision, the agreement with Gauri Parwati–Dev & Sair–Bhumi Joint Venture (JV), Biratnagar, has officially come to an end.
The JV had signed a contract worth Rs 527 million (including tax) on January 15, 2022. As per the agreement, the road was to be completed by mid-August 2024. However, the physical progress stands at only around 18 percent. Although the contract period had been extended until mid-July 2026, the contractor repeatedly failed to resume work, ignored reminders, and left the construction site idle, leading to contract termination.
Following the termination, the government will confiscate Rs 169.4 million submitted as performance guarantee, as well as Rs 23.1 million of mobilization advance. The advance will be recovered with ten percent interest. The contractor had bid almost 50 percent below the estimated cost.
Earlier in July, the Itahari Project Office had asked the JV for clarification within 15 days on why the contract should not be terminated. The explanation submitted was deemed unsatisfactory, prompting cancellation under provisions of the Public Procurement Act.
Authorities stated that the contractor neither completed the work within the stipulated timeframe nor presented a credible revised schedule or resource-mobilization plan. The firm also failed to show willingness to resume work, constituting a violation of procurement laws and the contract agreement. The office has recommended blacklisting the contractor, and the remaining work will be recovered as government dues.
The contractor has been instructed to appear within 15 days for measurement and financial settlement of completed and remaining work. If they fail to do so, the office will carry out the measurement independently.
Under the leadership of Urban Development Minister Kulman Ghising, the department has intensified action against underperforming contractors, terminating contracts that fail to make progress.
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