Contractors in Koshi Province Prepare for Legal Action Over Unpaid Infrastructure Projects

Biratnagar. Due to the negligence of infrastructure development offices under the Koshi Province government, contractors are preparing to move to court after failing to receive payments for dozens of completed projects.

In the fiscal year 2080/81, infrastructure development offices issued verbal orders to contractors to complete various projects that were not listed in the Red Book. The Ministry of Economic Affairs and Planning estimates that payments for such projects across Koshi Province total around 300 million rupees. However, the Ministry of Physical Infrastructure Development does not have exact figures as there was no requirement to track them. Contractors have been pressuring the government for payment for two years, claiming they have not been compensated for their work.

Chief Minister Hikmat Kumar Karki has shown interest in resolving this issue. However, the challenge remained in finding a budget for projects that were not originally allocated funds in the Red Book. The Chief Minister had repeatedly directed former Infrastructure Development Minister Bhupendra Rai and Minister of Economic Affairs and Planning Ram Bahadur Magar to find a solution. The process stalled after officials from both ministries stated there was no legal basis for such payments. Minister Rai had even suggested that making such payments could lead to an investigation by the Commission for the Investigation of Abuse of Authority (CIAA), stating that contractors could only be honored, not paid.

Following a cabinet reshuffle, the Chief Minister's office again pushed for payments. Although Minister Pradip Kumar Sunuwar, who initially led the Ministry of Physical Infrastructure Development, promised to seek legal advice, he has since backed down. 'I have said that this payment cannot be made now. I have told them to go to court,' said Sunuwar. The Chief Minister's office had previously prepared to form a committee to study the payments, but abandoned the plan after no staff agreed to serve on the committee and there was no legal justification for its formation.

Ramesh Adhikari, President of the Contractors' Association, Jhapa, expressed intense frustration with Chief Minister Hikmat Kumar Karki. Adhikari complained that he had hoped for a resolution since the Chief Minister is from his own district, but instead felt betrayed. 'We have been greatly betrayed, especially by the Chief Minister. We had high hopes that since he is from Jhapa, he would understand our problem and resolve it as in the past. But we never thought that we contractors would be in such a difficult position due to a Chief Minister from our own district,' he said. 'We contractors from Jhapa and Ilam relied on him. Even after visiting the Chief Minister's office repeatedly, we only received assurances. Now, telling us that the staff does not agree and that we should go to court is pure injustice and betrayal.'

He stated that the irresponsibility of the Chief Minister and departmental ministers has pushed small contractors to the brink of ruin. He accused Chief Minister Karki of playing a game to sink the contractors by promising to address the issue in the budget and then ultimately telling them to seek legal remedies.

According to President Adhikari, payments for 74 contractors in Jhapa and Ilam alone, amounting to approximately 180 to 190 million rupees, remain blocked. 'We have met the Chief Minister's office 20 times and the departmental minister 10 times,' said Adhikari. 'They do not say no, but they do not pay either. What are we small contractors supposed to do now?'

Officials have maintained that annual projects must be completed within the year they start, and payments cannot be made for work done in subsequent fiscal years. According to the Financial Procedures and Fiscal Accountability Regulations 2077, there is a provision to make payments one week before the end of the fiscal year. The administrative staff insists that payments for work from fiscal years 79/80 and 2080/81 cannot be made now.

Seeing no signs of payment from the government, the contractors have concluded that they must seek legal remedies. Adhikari said, 'We are having lawyers study the files and are preparing to go to court.' However, he noted technical problems in approaching the court. 'Many contractors have completed the work, but the relevant office has not prepared the bills and has not conducted measurements. There is a problem of how to go to court without documents,' he added.

According to Adhikari, although contractors have contract agreements, work orders, and BOQs, the payments are being politicized. He recalled that when a similar problem arose during the previous government, 320 million rupees were paid, but he accused the current government of merely stalling.

This issue has particularly affected small contractors operating projects worth 10 to 15 million rupees. 'Small contractors do not have much knowledge about future legal processes; they trusted the office and finished the work by Ashoj-Kartik,' said Adhikari. 'Now the government has betrayed them.'

Officials have maintained that annual projects must be completed within the year they start, and payments cannot be made for work done in subsequent fiscal years. According to the Financial Procedures and Fiscal Accountability Regulations 2077, there is a provision to make payments one week before the end of the fiscal year. The administrative staff insists that payments for work from fiscal years 79/80 and 2080/81 cannot be made now.

How many such projects are there?

The Infrastructure Development Office, Jhapa, alone has shown over 220 million rupees in outstanding payments. According to the office, there are 63 annual projects in Jhapa with an estimated cost of 143.9 million rupees, all of which remain incomplete. Similarly, there are 23 maintenance projects in Ilam and Jhapa with an estimated cost of 23 million rupees. There are 22 annual projects in Ilam alone with an estimated cost of 38.5 million rupees.

It is noted that there are 11 maintenance projects in Ilam requiring 11 million rupees, while 1.5 million rupees is owed for DPRs in Jhapa and 7.5 million rupees for DPRs in Ilam. In total, the Physical Infrastructure Development Office of Jhapa alone needs to pay 225.4 million rupees. It is reported that the total outstanding payment for such work across all infrastructure development offices in the province exceeds 300 million rupees.