Nepal cancels 22 stalled irrigation contracts worth Rs 14.23 billion

KATHMANDU: The Government of Nepal has terminated 22 long-stalled irrigation contracts that had remained inactive for years despite formal agreements, cancelling projects with a combined contract value of Rs 14.23 billion, according to officials at the Department of Water Resources and Irrigation.

The cancelled contracts include six projects under the Babai Irrigation Project, 15 contracts managed by the Irrigation and Water Resources Management Project Office in Janakpurdham, Dhanusha, and one contract linked to the nationally significant Sunkoshi–Marin Diversion Multipurpose Project.

Officials said the move targets contractors who secured public contracts but failed to execute works, leaving critical irrigation infrastructure incomplete and public funds tied up without delivery.

Ministerial Directive Triggered Action

The termination process followed a directive from Energy, Water Resources and Irrigation Minister Kulman Ghising, who instructed subordinate agencies to end the long-standing practice of allowing non-performing contractors to hold on to stalled projects indefinitely.

After the directive, project offices initiated legal and administrative procedures to formally revoke contracts that had remained problematic for years, officials said.

Extent of Problematic Contracts

The Department of Water Resources and Irrigation currently oversees 215 active contracts, of which 33 were officially classified as problematic due to prolonged delays, lack of progress, or contractual violations.

“So far, 22 problematic contracts have been terminated,” said Director General Mitra Baral, adding that further action on the remaining stalled projects is under review based on contractual compliance and progress assessments.

Project-Wise Contract Termination Details

Among the cancelled agreements:

Babai Irrigation Project contracts worth Rs 17.6 million were terminated under the Bheri–Babai framework.

Contracts worth Rs 131.7 million under the Janakpurdham project office were revoked due to prolonged non-performance.

The largest termination involved the Sunkoshi–Marin Diversion Multipurpose Project, one of Nepal’s national pride projects.

Major National Pride Project Hit

The Sunkoshi–Marin project contract was awarded to Patel–Raman JV of Janakpurdham-9, Dhanusha, covering construction of the dam (headworks), power house and civil structures, along with the supply and installation of hydromechanical equipment such as gates.

The total contract value for the Sunkoshi–Marin works stood at Rs 14.08 billion, including taxes. Officials said the agreement was cancelled after repeated failures to meet contractual milestones.

Policy Signal to Contractors

The large-scale termination of stalled irrigation contracts signals a tougher enforcement stance by the government amid mounting pressure to accelerate infrastructure delivery, improve irrigation coverage, and ensure accountability in public procurement.

The irrigation sector is considered critical for agricultural productivity, food security, and rural income growth, with repeated delays in flagship projects drawing criticism over governance and project management failures.