Contractor demands Nu 330 million for contract termination

Construction: The opposition party said that the government had been penny wise and pound foolish, in deciding to terminate the Dagapela-Dalbari highway construction contracts.

The government offered compensations to the two contractors whose contracts it terminated in December 2014 months after works had started.

Tundi, a construction company from Nepal, which was awarded the package B worth Nu 415.88 million accepted the government’s compensation of Nu 35 million.

A joint venture between Gaseb Construction Company and an Indian construction company, SPML, was offered Nu 40 million, but they asked for Nu 330 million and took the works and human settlement ministry to court.

At present the case is being decided by an arbitration committee as required by the contract agreement.

The Supreme Court upheld the decision of the Thimphu dzongkhag court ordering the government to pay Gaseb-SPML Nu 150 million by July 10 while waiting for the arbitration committee decision.

The works and human settlement ministry has not yet paid the Nu 150 million, the proprietor of Gaseb Construction Company said.

South Thimphu MP, Yeshey Zimba and former works and human settlement minister, said that the main reason for the anti-corruption commission recommendation was that the government had not made any attempt to gain better value for money, by a more thorough evaluation, given that the bid submitted by the lowest bidder was Nu 21 million lower.

He said: “While cancelling the contract the government conveniently forgot about the inevitable cost escalation and benefits forgone by the people.”

In order to save Nu 21 million, the government stands to lose a minimum of Nu 125 million. Compensation of Nu 75 million was offered to the two contractors and a possible cost escalation of about Nu 50 million.

“In all likelihood the cost increase of Nu 50 million could be much higher resulting in very poor value for money and defeating the very purpose of re-tendering,” MP Yeshey Zimba said.

He said Dagana had been recognised as one of the most underdeveloped dzongkhags with high incidence of poverty, mainly due to connectivity problems.

The government has therefore accorded high priority to construction and improvement of motor roads during the 10th Plan.

The most important road project was the Dagapela – Dalbari, Lhamoizingkha national secondary highway approved by the former government.

The government of the Netherlands made an exception to approve a grant for the project given good relations between the countries.

It provided Euro 21.34 million to sponsor half the construction of the 80.58km highway.

The project was divided into three packages and tendered out internationally and awarded in September 2014.

Department of Roads (DoR) officials said by the time the Cabinet took the decision, construction work had begun and the progress was ‘ahead of schedule’.

Tundi Construction private company from Nepal had reached 5km of the 20km package B worth Nu 378M (million) between Odalthang and Gesarling.

The joint venture company SPML had already finished a 9km rough widening of the existing 21.22km.  It was awarded a 31.58km long section C worth more than Nu 358M of the road, including the 21.22km existing road from Dagapela to Geserling.

DoR officials said that the cutting was incomplete compared with the road design, thus, making assessments for compensation difficult.  Two groups of engineers assessed the construction progress.

Ms Rinson –Jaiprakash Associates, one of the bidders, complained to ACC that it was the lowest bidder at Nu 336.6 million and that the award of package C to Gaseb-SPML was unfair.

Following an investigation and having found no evidence of corruption involved, the ACC recommended the government to re-evaluate the tender or revoke the contract and re-tender in the interest of better value for money.

“The government for reasons unknown cancelled the contract package B and C with no regard to the inevitable delay in the works and subsequent cost escalation which would have serious repercussion on value for money,” MP Yeshey Zimba said.

The third package was not cancelled and work is in progress.

The opposition party said that the government had repeatedly made it clear that the reason for the cancellation of the contract was the order issued by the ACC, which cast doubts on prevalence of corruptive practices in the award of the contract.

“The reputation and image of the officials of the ministry and the contractors have unfortunately been tarnished,” MP Yeshey Zimba said.

Meanwhile, the roads department will open tenders for the package B contract on July 27. Interested bidders of this package made a site visit on July 19.

Tshering Palden

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