Road Department and Ministry Face Scrutiny for Negligence and Financial Irregularities

Kathmandu. The 63rd annual report of the Auditor General has revealed extreme negligence, financial indiscipline, and managerial weaknesses in projects under the Department of Roads and the Ministry of Physical Infrastructure and Transport.

Despite the department spending billions of rupees in budget, the report indicates that nearly 45 percent of the contracts are in a sick and problematic state.

According to the report, out of 2,106 ongoing contracts under the Department of Roads, 1,161 construction agreements, including 17 from foreign sources, appear to be regular. Similarly, 188 construction agreements appear problematic, 153 appear sick, and 14 appear to be sick but nearing resolution. Additionally, 9 from foreign sources appear sick, and 581 construction agreements are annual or completed but pending finalization.

Excluding the regular ones, 945 (44.87 percent) procurement agreements appear problematic or sick.

Among these, 188 contracts are in the problematic category, amounting to 14 billion 678.8 million rupees. The study report regarding these contracts has provided strategic suggestions such as monitoring based on action plans, promptly finalizing contracts up to 20 million rupees in cases of over 400 percent extension, and effectively collecting and presenting evidence for contracts in mediation and court processes, but these have not been implemented. The Auditor General has also suggested finalizing and settling contracts based on the actual situation.

Years of Delay in Design Approval, Projects Affected

The department has awarded contracts using the design and build method, but delays have occurred in projects due to the late approval of designs. The design for the construction of the Network Arch Bridge at Tinkune on the Kathmandu Ring Road has not been approved even as 92 percent of the time has elapsed.

Similarly, it has been found that it took 2 years for the designs of the Suryavinayak-Dhulikhel road and Pushpal Lokmarga bridges to be approved, which has increased both construction costs and time.

The Auditor General has pointed out that such delays increase project costs, lead to the misuse of advance payments, and affect construction work, therefore designs must be approved on time as per the contract terms. Furthermore, responsible officials for the delays must be held accountable.

Excessive Payments, Misuse of State Treasury

The Auditor General's report shows misuse of the state treasury under various headings. It mentions arbitrary price adjustments. Fifteen offices made excess payments of 214.465 million rupees while calculating price adjustments without deducting advance payments in 23 contracts. Similarly, 447.163 million rupees were paid as price adjustments in violation of rules for design and build contracts.

Likewise, in the Butwal-Gorusinghe road project, an additional expenditure of 3.866 million rupees was incurred by setting the pile concrete quantity 383 cubic meters more than the standard and entering into a contract. According to the rules, payments should only be made based on the actual measurement of the borehole, without including quantities above the cut-off level. Furthermore, the cost was increased by 118.1 million rupees by using M25 grade instead of M20 for footpath construction, so payments should be made only based on the actual work when implementing the contract, and additional expenditure should be controlled.

Additional expenditure of crores of rupees has been incurred by the state by not using premix carpet as per the standard. The Madan Bhandari Yojana Office, Bridge Sector Surkhet, and Road Division Office Nepalgunj have entered into contracts and made payments for premix carpeting with a thickness greater than the approved specification for road and bridge blacktopping. In two contracts being constructed using the design and build method under the Madan Bhandari Yojana Office, Surkhet, a contract was made for 1,026 cubic meters of premix carpeting work for the carriageway and apron road blacktopping of the bridge. The additional expenditure incurred due to the contract including an item with a thickness greater than specified is 24.116 million rupees for 620 cubic meters of excess quantity.

Contracts are being awarded without finalizing land acquisition and tree cutting, in violation of public procurement regulations. Tree cutting permission was obtained only 2 years and 9 months after the contract was awarded in the Road Division Kanchanpur. On the other hand, 45 percent (8.96 billion rupees) of the year's procurement contracts were made only in June (fourth quarter), raising questions about quality.

In four contracts being constructed using the design and build method under the Bridge Sector Surkhet, a contract was made for 1,820 running meters of premix carpeting work with a thickness of 50 mm for the carriageway and apron road blacktopping, and 881 cubic meters of work. Due to the design with a thickness greater than specified, an additional expenditure of 9.201 million rupees is expected for 528 cubic meters of excess quantity.

Similarly, the Road Division Office, Nepalgunj, has incurred additional expenditure of 15.848 million rupees by paying for 1,276 cubic meters of excess work this year for three contracts under the Constituency Strategic Road Program, as the cost estimate was prepared for premix carpeting with a thickness of 0.04 meters.

The Auditor General has suggested that the use of premix carpet with a thickness greater than specified in the standard specification should be technically substantiated, and contracts should be made based on approved norms for cost estimation.

Similarly, it was found that the performance guarantee of 54.1 million rupees was not forfeited in 17 terminated projects, and the cost of the remaining work, 2.08 billion rupees, was not recovered.

Contracts are being awarded without finalizing land acquisition and tree cutting, in violation of public procurement regulations. Tree cutting permission was obtained only 2 years and 9 months after the contract was awarded in the Road Division Kanchanpur. On the other hand, 45 percent (8.96 billion rupees) of the year's procurement contracts were made only in June (fourth quarter), raising questions about quality.

Misuse of Contingency and Consulting Services

88 offices under the Department of Roads spent 1.4867 billion rupees from the contingency fund this year. This amount was found to be spent in violation of rules on wages, fuel, travel allowance, and office supplies. The report has raised serious questions about the expenditure of crores of rupees by appointing separate consultants for supervision that should be done by government bodies.

In violation of the agreement with the Nepal Electricity Authority, road projects have made unnecessary payments of crores of rupees in the name of shifting poles and purchasing new poles. Similarly, the report also points out weaknesses in making payments to construction entrepreneurs who have not insured and not claiming compensation.

The Auditor General has directed the immediate finalization of problematic contracts, recovery of excess payments of billions made in violation of rules, and accountability of employees and consultants. Strict suggestions have been given to end the practice of awarding contracts without proper project preparation and finishing the budget only in June.