MoF faces backlash as contractors allege non-fulfillment of August agreement, leaving dues unsettled

KATHMANDU: Contractors in Nepal are currently facing a daunting challenge in securing payments from the government for projects they have successfully completed. The Ministry of Finance (MoF) has added to their predicament by refusing cash transfers as a method of payment.

The outstanding dues, amounting to a substantial Rs 40 billion, have become a point of contention, with contractors pointing fingers at the government’s failure to implement a nine-point agreement inked back in August.

Roshan Dahal, serving as the general secretary of the Federation of Contractors’ Associations of Nepal, raised concerns about the non-receipt of payments for projects completed during the last fiscal year.

He highlighted the compounding issues arising from the increased costs of construction materials and fuel, particularly in the aftermath of the Russia-Ukraine conflict. To exacerbate matters, Dahal underscored the government’s failure to fulfill its committed price adjustments, leaving contractors in a precarious financial position.

In response to the contractors’ plea for financial assistance, the MoF communicated its inability to provide an additional amount, citing mounting pressure on the state treasury amid sluggish revenue collection.

The apex financial institution of the government expressed constraints in exceeding the allocated budget, emphasizing the need to adhere strictly to the budgetary framework.

Simultaneously, the government finds itself in the throes of a financial crisis, struggling to meet its daily financial obligations due to surging government expenses and a sluggish pace of revenue collection.

According to the records maintained by the Financial Comptroller General Office, the government, as of the latest report on Friday, has only managed to collect 22.88 percent (Rs 325.54 billion) of its annual revenue target, set at Rs 1.422 trillion for the current fiscal year. Meanwhile, total expenditures have reached 24.68 percent (Rs 432.27 billion) of the allocated budget, which stands at Rs 1.751 trillion.

Dahal, in an effort to safeguard the interests of contractors, called upon the government to provide assurances against legal repercussions, refrain from seizing bank guarantees for delayed payments, and address concerns related to the soaring premiums of insurance policies.

Failing prompt action, he issued a stern warning that the contractor community might resort to nationwide protests to draw attention to their grievances, highlighting the urgency for the government to institute measures to rectify the situation and establish a more conducive environment for collaboration between contractors and governmental bodies.