Supreme Court Decision Paves Way for Forfeiture of Rs 3.6 Billion Bank Guarantees from Sunkoshi Marin Diversion Project Contractor

Kathmandu. The path has been cleared to confiscate the NPR 3.6 billion in bank guarantees, comprising the performance bond guarantee and advance payment guarantee, from Patel—Raman JV, the contractor for the national pride Sunkoshi Marin Diversion Multipurpose Project in Janakpur-9, Dhanusha.

The joint bench of Justices Hari Prasad Fuyal and Nityananda Pandey on Monday allowed the confiscation after the Supreme Court did not continue the interim order it had previously issued. The project office had issued a 15-day notice on Kartik 25 last year, deciding to terminate the contract with Patel—Raman JV for the civil structures including the dam (headworks) and powerhouse, and the supply and installation of hydromechanical equipment including gates.

Simultaneously, along with the contract termination process, the project has initiated the process to confiscate the NPR 3.6 billion bank guarantee, which includes NPR 2.4 billion held as a performance bond guarantee and NPR 1.2 billion as an advance payment guarantee by Patel—Raman JV.

Against this, Patel—Raman JV filed a writ petition at the Supreme Court on Mangsir 9, naming the then Minister of Energy, Water Resources and Irrigation Kulman Ghising, the Ministry, the Department of Irrigation, the Project, and the consultant as respondents. On Mangsir 10, the bench of Supreme Court Justice Tek Prasad Dhungana issued an interim order not to implement the decision to terminate the contract and confiscate the bank guarantees. The bench also issued a show-cause order and summoned both parties for a hearing on the interim order.

The government had also filed a petition (vacate) at the Supreme Court seeking the cancellation of the interim order. Advocate Umesh Rupakheti, arguing on behalf of the project, stated that following Monday's order, the path has been cleared to proceed with government decisions, including the contract termination, forfeiture of the advance payment guarantee, and forfeiture of the performance bond guarantee. He noted that a major step taken to end the anarchy in the construction industry during the then Energy Minister's short tenure has succeeded.

The contract was terminated because, despite approximately 61 percent of the contract period being over, the physical progress was extremely low at about 11 percent, no urgency was shown to increase progress, and no attention was paid to improving the work as per the contract provisions even after issuing notices for improvement.

The project is stalled as the tunnel construction is complete, but structures like the dam and powerhouse could not be built. The contract agreement with Patel—Raman JV was for NPR 14.088 billion (including tax) for the project construction. Patel—Raman JV had quoted a price approximately 32 percent lower than the estimated cost. The construction company started work from Magh 2079. The agreement stipulated that construction must be completed by Asar 2084. However, the physical progress to date is only about 11 percent. An amount of NPR 2.14 billion (about 15 percent) had been paid.

The project's 13.3 km tunnel was excavated using a Tunnel Boring Machine. The tunnel was breached on Baisakh 26, 2081. The water from the Sunkoshi River, located on the border of Sindhuli and Ramechhap, will be diverted by constructing a dam and channeled through the tunnel to the Marin River, supplying water to the Bagmati Irrigation Project. Currently, the goal is to provide year-round irrigation facilities to a total of 122,000 hectares of land in Dhanusha, Mahottari, Sarlahi, Rautahat, and Bara districts, including the 45,600 hectares currently irrigated.

Hydropower generation of 31 MW will be produced by transferring Sunkoshi water to the Marin River. Since providing year-round irrigation facilities in the five fertile districts of Madhesh Province will significantly improve agricultural productivity and farmers' livelihoods, and by producing hydropower, it will contribute to the economy of the entire country and also contribute to provincial balance, the Sunkoshi Marin project has been implemented as a national pride and transformative project. The estimated cost of the project is NPR 49.42 billion.