Construction companies that secure government projects through bidding
process will now see the first installment amount, which they receive
from the state, slashed to half, as the the Ministry of Physical
Planning and Works (MoPPW) clamps down on growing practice of misusing
funds for personal purpose.
The ministry introduced the measure after detecting multiple cases of misuse of financial resources by construction companies, especially in the roads sector.
According to Shyam Kharel, head of the Kathmandu Valley Road Improvement Project (KVRIP), contractors who win government projects through tender will get only 10 percent of the total cost of the project in first installment. Previously, government used to provide 20 percent of the total cost to companies just after they secured the project.
"We will distribute remaining amount only after the contractor shows satisfactory performance,” Kharel said. "This will help us expedite project implementation." Initially, this measure will apply for road projects in Kathmandu valley. KVRIP, which is handling 6 road projects within the valley, had consulted with the MoPPW before introducing the measure.
The ministry approved the KVRIP´s proposal. "Many of the construction companies misuse the money they get after winning tenders to buy land or invest in the real estate sector," Tulsi Prasad Sitaula, secretary of the ministry, said. "We believe that after taking this measure, there would be proper utilization of government resources in the particular project."
Secretary Sitaula said the measure was taken mainly for two reasons, one for proper utilization of budget and second for effective implementation. "We have come to know few contractors involved in misusing the money allocated by government for their personal purpose," he said. However, Sitaula declined to disclose the names of the contractors who were found misusing the resources.
According to the Public Procurement Act 2007, the government can allocate up to 20 percent of the total cost of the project to the winning party. "However, from now on we will allocate only 10 percent of total cost to establish the required logistics," Kharel said. The construction companies who win tenders will have to submit the work progress report and financial documents in order to get the further allocation of budget.
Importantly, according to Sitaula, this measure will also help increase capital expenditure. "Once we tighten budget allocation, construction companies have to work in a satisfactory pace since they get money only after accomplishing the certain target of work," he said.
KVRIP, which has the responsibility of implementing six projects including Dillibazar to Maharajgunj, Kalikasthan and Araniko Highway, is the first agency of government to take the measure. "This rule definitely helps us to reduce the rate of corruption and mismanagement of resources," Kharel claimed.
The ministry introduced the measure after detecting multiple cases of misuse of financial resources by construction companies, especially in the roads sector.
According to Shyam Kharel, head of the Kathmandu Valley Road Improvement Project (KVRIP), contractors who win government projects through tender will get only 10 percent of the total cost of the project in first installment. Previously, government used to provide 20 percent of the total cost to companies just after they secured the project.
"We will distribute remaining amount only after the contractor shows satisfactory performance,” Kharel said. "This will help us expedite project implementation." Initially, this measure will apply for road projects in Kathmandu valley. KVRIP, which is handling 6 road projects within the valley, had consulted with the MoPPW before introducing the measure.
The ministry approved the KVRIP´s proposal. "Many of the construction companies misuse the money they get after winning tenders to buy land or invest in the real estate sector," Tulsi Prasad Sitaula, secretary of the ministry, said. "We believe that after taking this measure, there would be proper utilization of government resources in the particular project."
Secretary Sitaula said the measure was taken mainly for two reasons, one for proper utilization of budget and second for effective implementation. "We have come to know few contractors involved in misusing the money allocated by government for their personal purpose," he said. However, Sitaula declined to disclose the names of the contractors who were found misusing the resources.
According to the Public Procurement Act 2007, the government can allocate up to 20 percent of the total cost of the project to the winning party. "However, from now on we will allocate only 10 percent of total cost to establish the required logistics," Kharel said. The construction companies who win tenders will have to submit the work progress report and financial documents in order to get the further allocation of budget.
Importantly, according to Sitaula, this measure will also help increase capital expenditure. "Once we tighten budget allocation, construction companies have to work in a satisfactory pace since they get money only after accomplishing the certain target of work," he said.
KVRIP, which has the responsibility of implementing six projects including Dillibazar to Maharajgunj, Kalikasthan and Araniko Highway, is the first agency of government to take the measure. "This rule definitely helps us to reduce the rate of corruption and mismanagement of resources," Kharel claimed.