Govt preparing to monopolise construction industry, allege private contractors

File: The construction of a new Dharahara is underway in Kathmandu, on Tuesday, December 24, 2019.

On July 10, 2020, the government of Nepal, in a bid to carry out development work smoothly, established Nepal Purbhadhar Nirman Company Limited (NPNCL). This was the first time that such a company had been formed under government control when it came to the construction work.

The aim of the company, according to its officials, is to decrease the construction cost and complete projects that are in limbo. The company also aims to work on projects of national importance to ensure its timely completion.

A lot of people had hoped this was a good start as a lot of projects were waiting for completion. But now, nearly a year after its establishment, there is a concern amongst the private sector that the company is trying to monopolise the construction industry.

Special treatment, legally

This comes after the government’s plan to amend the Public Procurement Act, which will give the NPNCL contracts of projects without competition. The government claims that it wants to create such a law because as a new company, the NPNC will not be able to compete with the companies which are already in the market. The government says it wants to give emergency projects to the NPNC in order to complete them swiftly.

The 48th meeting of the National Problem Solution Committee under the National Planning Committee suggested that the act be amended to help the company get projects without competition. A task force led by joint-secretary of the Infrastructure Ministry and comprising officials from the Public Procurement Monitoring Office have been tasked to prepare a report to amend the act. The team has been given one month to give in written suggestions on how the act can be amended, inform sources close to the ministry.

The NPNCL’s CEO Devendra KC says that his team had requested the government to form a special law for the company as it could not compete with other companies.

“We want to work on projects that have been left by other contractors,” says KC. “All countries have laws that help companies which are under government control like ours. This will definitely help in the smooth implementation of infrastructure development projects.”

Private sector’s concerns

The private sector, however, is not impressed as many feel that the government is trying to create a monopoly by helping the NPNCL with a new law. They argue that the millions they have spent on machinery and equipment will go to waste if this happens.

A former president of the Federation of Contractors Association of Nepal says the government, which respects the free-market policy, will be contradicting itself if it amends the law to help the NPNCL. He says that it would have an adverse effect on the construction industry as a whole.

“If they want us to compete with a government company, we are ready to do so. But, things have to be fair,” he says on the condition of anonymity. “If we think it is unfair and that the government is playing favouritism, we will object to that.”

He says that it would be wrong if this was being done because of commission.

Other contractors say that it will be tough for a private company to compete with a government company as the government will definitely help its company to save it from a failure.

The NPNCL, however, states that it wants to ensure that there is a competitive market. Officals at the NPNC say the company will work on the study and planning of various projects along with management and construction of a few.

But, sources say that NPNCL is yet to purchase any equipment needed for construction. The company will only purchase equipment after the act is amended, say sources.

The NPNC officials say it will compete in the bidding of all projects including those related to urban development, buildings construction, runway projects, highways, ports, railways, pipelines etc. For many private companies, the NPNCL poses as a threat as it can bid for the projects open for the private, government and public sectors.

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Ghimire is a senior business journalist at Onlinekhabar.

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