Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The government has started terminating non-performing irrigation contracts that have remained stagnant for years without progress. The Babai Irrigation Project has initiated the process to cancel six contracts awarded to Aman Construction Company, Gulariya-5, nearly six years ago after the contractor failed to execute the agreed works.
The contracts, signed in the fiscal year 2077/78 BS, were intended for canal maintenance, command area protection, and building repairs under the project. However, among the six contracts, four recorded zero progress, while only one reached 30 percent and another 55 percent completion.
Energy, Water Resources, and Irrigation Minister Kulman Ghising has directed subordinate agencies to terminate such non-performing contracts and end the tendency of contractors leaving major national projects incomplete. His instruction follows repeated delays and negligence that have obstructed the government’s goal of enhancing agricultural productivity through improved irrigation systems.
Despite multiple public notices and reminders, the contractor failed to resume or complete the works within the contract period. The project office stated that no substantial effort was made by the company to fulfill the terms of the contract. Consequently, the project has issued a 15-day public notice, urging responsible representatives of the company to appear at the project office with valid justifications and evidence if there are genuine reasons to avoid termination.
The notice clearly mentions that if the documents and explanations submitted are not credible or satisfactory as per existing regulations, the project will proceed with legal actions as per the contract and the Public Procurement Act. This includes confiscating performance bonds and deposits, along with blacklisting the contractor from future government projects.
The Department of Irrigation has identified 25 projects under the national pride category — including the Bheri Babai Diversion and Sunkoshi Marin Multipurpose Projects — where contracts have become dysfunctional due to prolonged inaction or disputes. Among them, six contracts have now entered the formal termination phase.
The ministry has emphasized that such measures are crucial to restore accountability in Nepal’s infrastructure development sector, where delayed and abandoned contracts have long hindered progress in irrigation, hydropower, and transport development. Officials say strict enforcement and blacklisting of irresponsible contractors are necessary to protect public resources and ensure timely project completion — a persistent issue affecting Nepal’s irrigation development and agricultural growth.
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