Chinese Contractors Face Scrutiny Amidst Infrastructure Project Delays in Nepal

The Chinese company holds a project valued at NPR 2.25 trillion in Nepal’s infrastructure sector. Despite winning the contract by accepting a low price and leveraging public procurement, the company has struggled to complete the work as per the agreement. According to the agreement, they submitted a draft project paper valued at NPR 1 trillion 73 billion 48 crores.

There is evidence that the Chinese company is inflating the project’s cost after signing the contract, contravening the agreement’s stipulated period. The agreement specifies legal action against any company that contributes to a cost increase. Simultaneously, the government silently approved the budget, raising concerns about collusion between political leadership, employees, and the Chinese company.

Recent revelations about the planning by the Chinese contractor for the Narayangarh-Butwal Road highlight deficiencies. The contractor, China State Construction Engineering Corporation, has not executed the work properly.

A contract agreement was signed on February 7, 2019, to complete the road expansion work within 42 months, aiming for completion before August 7, 2022. However, only 12 percent of the work was done at that time. Despite imposed limits, progress in the road department has been slow, with only about 30 percent of the work completed to date.

The extreme laxity in the work on expanding this road is a matter of surprise for the Nepalese; the movement of foreign tourists to Lumbini via the road has been affected.

The government is left helpless after the Chinese contractor failed to complete the work, costing around Rs 17 billion. The government is repeatedly setting deadlines for carrying out the work as per the agreement brought by the construction company.

This is not just the contract awarded to China State Construction Engineering Corporation. They secured the contract for Siddhababa Surung Marg in March 2022 but have not started construction yet. The company that won the contract worth Rs 7 billion 34 crores could not start the construction due to delays in the design work.

This company has taken the contract for a package on the Kathmandu Terai Expressway (Fast Track). In 2022, they got the contract for the construction of a 3.355-kilometer tunnel from Chokredanda to Dhedre. According to this contract agreement worth Rs 21 billion 61 crores, the work will be completed in two and a half years; the Nepali Army is not happy.

A planned sum of 1 trillion 81 billion rupees is to be handed over to the Chinese contractor. Companies, including CAMC Engineering, Sino Hydro Corporation, Poly Chanda, China Overseas, and China State Construction Engineering, have taken significant contracts from Nepal.

All the contracts for the fast track are with Chinese companies. Package 2’s contract worth Rs 28 billion 53 crores has been awarded to Poly Chanda Engineering Company. In this package, two tunnels and bridges from Makwanpur to Dhedre, located 1.37 kilometers from Simpani to Chalisa Kholsi, and Ghattepakha to Bandrekholsi 1.4 kilometers, are under construction. The work is not being done as per the target.

Similarly, under the fourth package, the contract for the construction of an 8-kilometer road for 19 billion people should not be given to Poli Chanda.

The Army in Nijgarh Section invited a tender for the 3 package, Kumar Roshan Sichuwan got the contract for the construction of a 3-4 lane road and bridge. This is a contract worth around Rs 10 billion.

Under Package 5, an agreement of 11 months earlier has been signed with China CAMC Engineering Corporation to build about 7 kilometers of roads and bridges on 4 lanes. This contract will cost Rs 8 billion.

Same Laxity on Muglin Pokhara Road

There should be Chinese company to get the contract for the Muglin-Pokhara road extension. The work funded by the Asian Development Bank (ADB) under loan assistance and a 2-year contract for the construction of a 4-lane road is unsatisfactory.

For the eastern section, a contract agreement worth Rs 6 billion 21 crore 31 lakh 13 thousand was signed with China Communication Construction on January 30, 2021. According to the agreement, they should be able to work for one year.

This section of 41.45 kilometers will have to be constructed, including 3 big and 4 small bridges. With only 5 months left, only 36 percent of the work has been done.

Similarly, a contract agreement was signed with Anhui Kaiyuan Highway and Bridge Co Ltd on May 16, 2021, for the road extension from Jamune to Pokhara in the western section.

7 billion 40 crore 46 lakh people should be able to work for 10 months as per the agreement of this contract. However, work in this section is even slower than in the eastern section. The relevant departments, which have not completed more than 9 percent of the work, have not been able to muster up the courage to even go ahead with the process of breaking the contract.

Nagdhunga Muglin Road – Only 15 Percent Work

The contract for the Nagadhunga-Muglin road extension has been awarded in a 3-way package to expedite the work. The three-way package is available only to Chinese and Nepalese companies. The construction of this plan, which costs Rs 11.5 billion and received loan support from the World Bank, is sluggish. More than 15 percent progress has been made in one year.

The Nagadhunga-Naubise 12.26 Km stretch worth Rs 1 billion 31 crore 84 lakhs has been awarded to MS Jiangsu Sagun JV, and the Naubise-Malekhu 43.542 Kms stretch worth Rs 5 billion 33 crores has been awarded to Sharma Lama ZICG JV.

They completed the work in 3 years, but till now, there is no sign of it. Sharma ZICG JV has just started the work after getting the contract of Rs 4 billion 80 crores for the expansion of the Malekhu-Muglin section.

Laxity on Kamla Kanchanpur Road

A contract agreement was signed in 2077 for the work on the extension of Kanchanpur-Kamla Road under the East-West Highway to be completed by the 29 October 2020. However, during this period, only 27 percent physical progress has been made on the 86.82-kilometer road.

The Chinese company China Railway Engineering Group Corporation (CREGC), which won the contract for the upgradation of the 4-lane road worth Rs 15 billion 66 crores, has shown laxity in the work due to Covid-19. Whereas it has been 2 years since we started seeing the effects of Covid. ADB loan assistance or a contract for a period of 1 year is not the basis for completing the work of CREGC.

Sunakoshi Marine Diversion Multipurpose Project and Bheri Babai Project:

Mining work has been done by the Chinese company China Overseas for the Sunakoshi Marine Diversion Multipurpose Project and Bheri Babai Project. The company used the TBM machine to dig the well and finished it one year ahead of the planned target. The contract for Bheri Babai Surung Marg should be worth Rs. 10 billion.

Planning and Cost Details of Contract Agreements with Chinese Companies:

Project Planning Cost (Rs.)
Nagdhunga Muglin Road Extension 11 billion 44 crores
Narayangarh Butwal Road Extension 17 billion
Muglin Pokhara Road Extension 13 billion 61 crores
Kamala Kanchanpur Road Extension 15 billion 66 crores
Fast Track from Chokredanda
to Dhedresam Surung Marg 21 billion 61 crores
Fast Track Simpani Dekhi Chalice
Kholsi Samm Surung Marg 28 billion 53 crores
Fast Track Fourth Package 19 billion
Fast Track Fifth Package 8 billion
Fast Track Rajdamar (Nijgarh Section) 10 billion
Siddhababa Surung Marg 7 billion 34 crores
Sunakoshi Marine Diversion
Surung Marg 11 billion 29 crores
Bheri (Babai Surung Marg 10 billion
Total 1 trillion 73 billion 48 crores

The Sunakoshi Marine Project, which cost Rs. 11 billion 29 crores a year ago, has been awarded to China Overseas. Mining is being conducted using the TBM machine, and its progress is deemed satisfactory.

Similarly, China’s Sino Hydro Corporation is engaged in the Tanhu Hydroelectric Project with a capacity of 140 MW, involving tunnel mining and the construction of the powerhouse. Forty-five percent of the powerhouse construction work has been completed. The contract agreement with Sino Hydro was signed in 2017.

The completed construction planning indicates that Chinese companies have been actively involved. They undertook the runway maintenance work at Tribhuvan Airport, managed the Civil side of the 456 MW Upper Tamakoshi Hydroelectric Project, and participated in the construction of Gautam Buddha International Airport.

Following the award of the contract for the construction of the main road for the much-discussed Melamchi water scheme to an Italian company, the remaining work was undertaken by the Chinese company Sino Hydro.