Projects worth Rs 10 b in limbo as contractors hijack parties

November 15, 2017 06:52 AM Rudra Pangeni


Across the country, construction of roads and bridges worth Rs 10 billion remains in limbo. But the contractors who won bidding for the infrastructure projects have been fielded by major political parties to contest elections on the platform to 'build the country.'

 

KATHMANDU, Nov 15: Among thousands of candidates vying for public offices in the upcoming elections are dozens of contractors who have won bids to build roads, bridges and other infrastructure projects. Major political parties have fielded them as both first-past-the-post (FPTP) and proportional representation (PR) candidates.  "Most contractors have been fielded as candidates, not for their contribution to the political party they now represent, but because they can finance their campaigns," said an official at the Federation of Contractors' Association, Nepal (FCAN). Around 35 contractors are in the fray, according to FCAN.

Nepali Congress has fielded the largest number of contractors for the FTPT voting including Dil Man Pakhrin (Dhading-2), Mohan Acharya (Rasuwa), Tirtha Lama (Kavre-1), Purna Bahadur Tamang (aka Kancha Ram) from Ramechhap-2, Indra Bahadur Baniya (Makwanpur-2 B), Raju Thapa (Syangja-1), Hari Prasad Mahato (Sarlahi-3), Ganesh Lama (Kavre-1 B), Chhatra Bahadur Bamjan (Sindhuli-2) and Tek Bahadur Gurung (Manang). 
 

Joint venture of Sharma and Company Pvt Ltd and Kanchha Ram Construction Pvt Ltd (owned by Purna Bahadur Tamang) had won the contract to develop the Tinkune-Maitighar road section in Kathmandu. The contractor hasn't received the final payment because it violated the contract by building substandard infrastructure. After the contractor remained idle for months, the Department of Road (DoR) issued notice three times in Gorkhapatra, warning that it would cancel the contract. Another project entrusted to Tamang's company -- Duhabi-Biratnagar road section expansion -- has hit a dead end. Yet another of his construction project worth Rs 54.7 million in Palpa district hasn't been able to move forward in the last four years. 

Contractors Jip Chhiring Lama (owner of Lama Construction) and Bahadur Singh Lama (of Himdung and Thokar Pvt Ltd) have also been fielded by Nepal Congress as parliamentary candidates under the PR system. Both have poor record of project implementation. Lama Construction has abandoned six projects including in Biring, Sunkoshi in Khairenighat, and Madi Khola in Libang Ghartigaun. Similarly, several construction projects by Himdung and Thokar Pvt Ltd worth Rs 69 million in Basantpur and Myanglung of Tehrathum district are lying idle. Another project bagged by the company-- construction of Buddhist Circuit in Lumbini-has faced delays due to slow progress and may yet miss another extended deadline in July 2018. Seven years ago, the company won a contract to construct health post buildings in Morahang and Poklawang of Tehrathum, but has left the works halfway. 

Take the case of Kathmandu's Kamalpokhari-Ratopul road expansion project. Ganesh Lama, a candidate fielded by Nepali Congress for the provincial assembly from Kavrepalanchowk district, delayed the project for several years before completing it. In August, the Department of Urban Development and Building Construction had to give a six-month extension to the construction of Goganpani health post in Dailekh district after Lama's Siruwa Construction in partnership with Majdur Company failed to complete the work worth Rs 23.2 million on time. 

Bikram Pande, the promoter of Kalika Construction Pvt Ltd, is contesting for parliament from Chitwan's constituency 3 on Rastriya Prajantra Party ticket. Work on a bridge over Dudhkoshi River in Jayaramghat, a joint venture project with Hulas, remains incomplete even after nine years. 

According to the Department of Roads, until February, the company had completed only 52 percent of the work worth Rs 119.5 million. Among its unfinished work is a Rs 117.9 million Sunsari-Morang bridge project, a joint venture with Oasis, whose work began nine years ago. 

A bridge along the Sagarmatha Highway over Sapsukhola River connecting Rajapani with Batase of Khotang district remains in limbo three years after Dev Sayar and Kanchharam JV won a bid to construct the Rs 60 million project. The contractor has already missed a two-year deadline. Despite being fined on several occasions for the delay, the company hasn't made any headway.

Other contractors who have jumped in the electoral fray include Ganesh Bahadur Khadka, an independent rebelling against a Nepali Congress candidate in Dailekh district, Janardan Dhakal, who has been fielded by the UML as parliamentary candidate from Rasuwa, and Chandra Lama, a provincial assembly candidate from Kavre-1 B. Similarly, Khadka Bahadur Khatri, a candidate for provincial assembly in Surkhet-1 B, is also known as a contractor. Likewise, Devendra Bahadur Shahi, is a parliamentary candidate from Jumla district. 

A contractor who sits on contracts 

Hari Narayan Rauniyar, managing director of Pappu Construction, quit Nepali Congress in April and joined the Federal Socialist Forum Nepal, which has fielded him as an FPTP candidate for parliament from Parsa district. Though he claims that he has won a contract of bridges totaling five kilometers, half of his projects have been found to be 'sick.'  Half-a-dozen infrastructure projects worth Rs 800 million overseen by Pappu Construction have been abandoned halfway. "He is number one among contractors who sit on projects and give trouble to government officials by using political connections," said an official at DoR. 

 

Eight years ago, Dayananda Jha, the head of Hetauda Division Road Office, took action against Pappu Construction. The company was found to have submitted fake documents to land contracts. This prompted authorities to blacklist it. But Jha had to pay a heavy price for his action. Rauniyar lodged a complaint at the Commission for Investigation of Abuse of Authority (CIAA), the anti-graft body. At the time, UML leader Madhav Kumar Nepal was prime minister while Bijay Kumar Gachchhadar was minister for physical planning. Gachchhadar refrained from defending Jha. As a result and under pressure from Pappu Construction, Jha was transferred to DoR. 

Since then, according to an engineer at DoR, no engineer dares to blacklist a contractor that violates the contract. "If they have to blacklist a contractor, they will choose the weakest one. The head of the office will drag his/her feet or will ask for transfer to another office," the engineer said. Another senior engineer, who spoke on condition of anonymity, said, "Project managers wish Pappu Construction to not have won the contract at all.

Even if it wins a contract, they wish it to withdraw from the project. That's because they are fearful of awarding the contract and facing the consequences," he said. 
The DoR doesn't have detailed figures on contractors and bridges that are under construction across the country. But according to one of its estimates, until mid-September, 1200 bridges (ranging from 20 meters to 800 meters long) were under construction. 

Rauniyar, the managing director of Pappu Construction, told Republica that his son now oversees his construction business. "If projects are not completed on time, it's not our fault. It's caused by delay in land acquisition, poor design and lack of sufficient budget to carry out construction," he said. 

When asked about allegations against him-that he discouraged officials who took action against him for the delays and his use of political connection to avoid punishment-he said, "Both allegations are baseless. It's 200 percent wrong." 

 Helpless officials, contractors backed by political parties

Three years ago, Thodung, Lohani, Singh and Brothers JV won a contract to expand a 16 kilometer Birtamod-Bhadrapur road section in Jhapa district. The Asian Development Bank (ADB) had funded the project. But even after 18 months, less than 10 percent of work had been completed. When officials began the process to sever the contractors from the contract, they faced political interference. 

The government led by Prime Minister Sushil Koirala obstructed the process because the contractor, who implemented the project, among the JV, Hari Bansa Pandey belonged to Nepali Congress. A delegation of ADB from its headquarters in Manila went on a 'field visit'. But they found neither any machines nor equipment in the project site. It failed to deliver the work and in April last year, the contract was finally terminated. 

The contractor knocked the doors of Appellate Court of Patan, seeking an appointment of an intermediary. In mid-September, the court ruled in favor of DoR. This is a textbook example how contractors use their political clout for protection. 

Normally, a blacklist period for contractors lasts from one to three years, but Public Procurement Monitoring Office (PPMO) doesn't want to antagonize them. So, it limits the moratorium to a minimum ie one year. Dinkar Sharma, a former director general of DoR, said, "Banning them for a year is like giving them a breather because all it means is that they are only prevented for bidding for infrastructure projects."

Before the current Procurement Act came into force in 2007, concerned minister approved all the contracts. 

The intention of the Procurement Act was to free the bidding and subsequent process from political interference and to streamline it. The idea was officials who approve the design and cost estimate should also make the final call on the winning bidders. The law was stipulated in order to delink awarding of contracts from political interest. But it didn't have the desired effect. Tulasi Sitaula, a former secretary at the Ministry of Physical Planning, said, "After the law was passed in 2007, decision to award contract wasn't made at political level, but its consequence was that contractors themselves became politicians."

As a result, a nexus between politicians and contractors was established. Surya Nath Upadhyaya, a former chief commissioner of the CIAA, said, "Political party leaders break big infrastructure contracts into smaller ones and award it to their cadres. Then, the cadres contest polls as party candidates."

The bridge over Kamala River in Sindhuli is abandoned by the contractor Pappu Construction for the last five years. Managing Director of the company Hari Narayan Rauniyar is contesting election for the federal parliament from Parsa-3 from Federal Socialist Forum. Photo Anil Bhandari, Sindhuli / Republica. 

10 billion rupees wasted 

While political parties have fielded dozens of contractors as their candidates in the polls, infrastructure projects worth more than 10 billion rupees have been deemed 'sick'. 
But despite delays which extended several years, officials at DoR could neither sever the contracts nor blacklist the poor-performing companies. Even if an official tries to implicate the guilty party, he or she faces immense political pressure. "The bosses are miserable," Dinkar Sharma, a former DG of DoR, said, "By preventing them from exercising their authority, the political class has pushed back the pace of development."

On February 1, 2017, at a meeting of parliament's Development Committee, a group of lawmakers boiled over with anger, which they directed at officials of DoR. They accused the officials of allowing offending contractors to avoid punishment. After strong criticism from lawmakers, Min Bahadur Shrestha, the vice chairman of National Planning Commission, told the meeting, "We couldn't take action against them because we were under pressure from politicians and lawmakers." 

After the meeting, DoR submitted a report including a long list of 'sick' projects to the parliamentary Development Committee. According to the report, big contractors including Pappu, Sailung Construction, Swachchhanda Nirman Sewa each has yet to finish projects worth one billion rupees despite reportedly working on them for years. 
Despite the fact that the committee was well aware of the problem, it never ran any discussion on the report. Nor did it make the report public. 

Ganesh Pahadi, a UML lawmaker from Sindhuli district and a member of Development Committee, complained at a meeting about the delays in building a 400-metre bridge over Kamal River, which was awarded to Pappu Construction. "It's been five years since the contract and the work has yet to begin," he had told at the time. 

In all fairness, the DoR has severed contracts and blacklisted poor performing contractors, but only those contractors who lack political patronage have been subjected to the rule of law. According to PPMO's website, in the last five years, a total of 101 contractors have been blacklisted. But only nine A-listed contractors face the ban. 

The politico-contractor nexus

Contractors can easily become politicians because they have greater sources of wealth that allow them to climb up the political ladder. There's a growing nexus between lawmakers and contractors. A research into the background of lawmakers reveals that most of them were either contractors themselves or backed by contractors. A former government secretary, who spoke on condition of anonymity, said, "In the beginning, people who spent their lives fighting for democracy entered politics. Then came university students who later joined politics. After the changes of 2006, contractors have been attracted to political parties."

Sitaula, the former secretary, said, "Contractors cultivate relations with party leaders. The easiest route to political party is by becoming its supporter. If you tell that you support certain party, civil servants and others turn a blind eye." According to him, politicians want a pliant or weak engineer as the head of division offices in their constituencies. "In Nepal, there's a deep-rooted feeling that you need political protection in order to do business such as construction. That's wrong," said Upahdyaya, a former chief commissioner of CIAA. 

Twenty-two contractors had won parliamentary seats in the last constituent assembly. With the increase in the number of people's representatives in provincial assemblies and federal parliament, the number of contractors vying for public offices is likely to rise. More than 200 contractors have won various positions including a mayor in the last local election, according to Ram Sharan Deuja, general secretary of FCAN. 

"Politics is supposed to be a selfless service to the country. It should be conducted with minimum support from state. But if candidates win elections by mobilizing money power, then it will not only lead to political corruption but also help deepen policy corruption," said Neil Kantha Uprety, a former chief election commissioner. 

Yubaraj Gyawali, a veteran politician and a UML leader, recently told an interviewer of the BBC Nepali Service that he didn't contest elections because he couldn't raise funds required for his campaign. "If you don't have enough money for your campaign, you are discouraged from contesting in elections. This is a very serious issue," he said.

"Candidates tend to spend millions of rupees in their campaign. I can't do that."
Uprety echoed his sentiment. "This is no longer a democracy. This is Money-cracy, this is Gangster-cracy," he said. "This will drive our country toward a dangerous direction."

(This report was produced with support from the Center for Investigative Journalism, Nepal)




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