After the government amended the Public Procurement Rules, the deadlines of the contractual projects worth Rs 400 billion will be extended. The government has approved the 13th amendment to the Public Procurement Rules, 2080, and has legally opened the way to extend the deadline for projects that contractors have not completed on time.

The Public Procurement Rules (13th Amendment), 2080 were published by the government in the Gazette on Monday. The government reportedly amended the regulations under pressure from construction entrepreneurs.

Ravi Singh, president of the Federation of Contractors' Associations of Nepal (FCAN), said that the amendment to the regulations will extend the period of the projects worth Rs 400 billion. “By amending the regulations, the deadlines of about 2,000 projects will be extended,” said Singh, “But extending the deadlines alone will not solve the problem.” He said that the payment of the unpaid projects to the contractors should be made.

In response to the significant weakness in capital expenditure, the government has amended the Public Procurement Rules to bolster it. As the current fiscal year 2023/24 approaches its eight month mark, capital expenditure amounts only 24.44 percent. For the current fiscal year, about Rs 302 billion has been allocated, but only Rs 73.83 billion has been spent till March 4, falling short of the target.

As the under-construction projects are not completed on time and the capital expenditure is weak, the amendment to the Public Procurement Rules will make it easier to extend the project further. Although it is beneficial to the construction professionals, the development of the country will be affected if the projects are not completed on time.

By amending the regulations, projects that have not been completed will get more time according to the time requested. The authority to extend the time has been given to the head of the office of the relevant project, but there is a provision that the construction professionals must submit the reasons for not being able to complete the work within the specified time.

The confirmation is required regarding which tasks align with the work schedule submitted by the builder, the reasons for any deviations, the estimated time required to complete the tasks, and the proposed revised work schedule with a commitment not to submit additional financial claims due to the deadline extensions.

If the builder submits an application within 30 days of the notice’s publication, the bid approval authority may extend the deadline by determining the actual additional period required to complete the work while ensuring that the maintenance of the performance bond, insurance and delivery bond periods. It has been stipulated that the decision to extend the deadline must be reached within 30 days of receiving the application, and departmental action will be taken against the employees who fail to extend the deadline of the project according to the revised regulations.

The deadline will be extended only for projects facing specific challenges such as design changes in the purchase agreement, insufficient budget, non-availability of construction site, lack of payment on time, lack of construction materials, or natural disasters at the construction sites.

An arrangement has been made such that the deadline will be extended upon submission of the revised schedule and a commitment to refrain from making any financial claims in the event of an extension. This will be depending upon disclosing the reasons and duration of the project work as outlined in the schedule submitted by the builder, supplier or consultant.

The regulation now provides a legal way for extending the deadlines for projects that face delays in completion. Contractors working on infrastructure projects including roads, irrigation, buildings, urban development, and electricity have benefited from these amendments.

While some projects legitimately require extensions due to special problems, negligent contractors can also take advantage of this law. Some plans have been stalled due to the contractors not completing work within the stipulated time.

Despite the government claiming to have taken actions against such contractors, the cost of projects has increased by billions of rupees due to the delay in the completion of projects. Although the amendment to the regulation was made with good intentions, it also benefits the construction entrepreneurs who didn’t carry out work within the stipulated time.

For the past four to five years, the government has been extending the deadlines of projects by amending the laws related to public procurement under various pretexts.

Prior to this, the government had also amended the Public Procurement Regulations on July 4, 2022, allowing for the extension of pending contracts by one year. Then on July 6, the government published a notice in the Nepal Gazette extending the deadlines for projects that were about to expire. The Public Procurement Regulations were amended by a meeting of the Council of Ministers on Monday, benefiting the contractors who have not completed their work within the stipulated time.