Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The government has initiated the process to terminate the contract agreement with Patel–Raman JV, Janakpur-9, Dhanusha, for the construction of key civil and hydromechanical components of the Sunkoshi–Marin Diversion Multipurpose Project, a national pride infrastructure aimed at ensuring year-round irrigation in Madhesh and generating 31 MW hydropower.
The project office on Tuesday issued a public notice asking the contractor to clarify why the contract should not be canceled, citing severe delays, failure to mobilize resources, and a near-stagnant level of physical progress.
Despite 61% of the contract period already elapsed, the overall physical progress stands at only around 10%, with the contractor showing no significant efforts to improve the pace even after multiple official reminders, the project said.
Under the contract cancellation procedure, the project has also begun steps to seize bank guarantees, including Rs 2.40 billion in performance guarantees and Rs 1.20 billion advanced payment guarantees — totaling Rs 3.60 billion.
Energy, Water Resources and Irrigation Minister Kul Man Ghising had held a high-level meeting on Ashoj 7 with ministry secretaries, the Department of Irrigation Director General, project leadership, consultants, and the contractor after observing “unnatural delays” on-site. While the 13.3 km tunnel has already been completed using Tunnel Boring Machine (TBM) and breakthrough achieved on 26 Baisakh 2081, the dam, powerhouse, gates, and intake structures remain largely unbuilt, leaving the project stalled.
The contract with Patel–Raman JV was valued at Rs 14.08 billion (including tax). The company had quoted about 32% below the estimated cost at the time of bidding. Work began in Magh 2079, with the completion deadline set for Asar 2084. However, only Rs 2.14 billion (around 15%) has been paid so far, aligning with the meager physical progress.
The Sunkoshi–Marin Diversion Project, costing Rs 49.42 billion overall, aims to divert Sunkoshi River water through the completed tunnel to Marin River, enabling irrigation across 1,22,000 hectares of fertile land in Dhanusha, Mahottari, Sarlahi, Rautahat, and Bara, including the currently irrigated 45,600 hectares under Bagmati Irrigation Scheme.
Beyond irrigation, the project plans 31 MW hydroelectric generation, supporting energy security, rural livelihoods, agricultural productivity, food security, and economic growth in Nepal’s Madhesh region. The project has been categorized as a transformational national pride project with implications for regional balance, sustainable agriculture development, and improving farmers’ income levels.
However, with progress stalled and contractor performance in question, the government is now preparing to bring alternative measures, including re-tendering or package restructuring, to prevent further delays in one of Nepal’s most critical irrigation and hydropower infrastructure projects.
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