ADB to extend Melamchi project completion deadline if need be

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 May 2, 2019

The Asian Development Bank (ADB), a Manila-based multilateral lender, has said it would extend the deadline for completion of the Melamchi Water Supply Project if necessary.

The statement from one of the key financiers of the project comes at a time when works at the site of the much-awaited drinking water project for Kathmandu Valley have come to a halt after its contractor abandoned the project.

This is the second time a key contractor hired to build the $355.4-million project had abandoned it.

“It is unfortunate that the project has faced one delay after another.

And we cannot totally blame the government for what happened this time. But I think this (the project facing problems from contractors) will soon be a thing of the past as Nepal now has a stable government, which can attract a better contractor,” Hun Kim, director general of ADB’s South Asia Department, told journalists attending ADB’s 52nd Annual Meeting in Fiji.

The project, which will deliver 170 million litres of water per day to houses located inside Ring Road of Kathmandu Valley, where water is in short supply, started in 2000. At that time, the project completion deadline was set for September 30, 2006. But the project could not be completed on time due to various problems.

The last time the project had faced a severe problem was in 2012 when the Chinese contractor abandoned it. But by July 2013 this problem had been resolved, as the government hired an Italian company called Cooperativa Muratori & Cementisti (CMC) di Ravenna to complete the remaining work. However, new problems cropped up following CMC’s departure from the project in December. The Italian company had left the project after facing severe financial problems in the home country, which pushed it to the verge of bankruptcy.

“Almost 95 per cent of the project work has been completed. The ADB will finish the remaining work as well,” said Kim, adding, “We will extend the project deadline if necessary.”

The ADB has currently set June end as the loan closing deadline for the project. The government has to extend this deadline if it wants to continue receiving funds from the ADB to complete the remaining work. The government needs around Rs 2.5 billion to complete the remaining work, according to project officials.

But to extend the loan closing deadline, the government has to submit a clear plan on how it intends to complete the remaining work to the ADB. The plan should also include a new timeline on project completion as well, as currently the government has not set project completion deadline.

Earlier, Water Supply Minister Bina Magar had expressed interest to reengage the Italian contractor, CMC, to complete the remaining work stating ‘the project would be further delayed if the government restarts the procurement process to hire new contractors’.

But the ADB had rejected the plan stating there is no guarantee that the financially troubled company can complete the remaining work.

It has instead recommended that a ‘political decision be made to use existing vendors and suppliers to complete the project’. These vendors and suppliers, as per project officials, can complete most of the work, except head works.

 

Source: The Himalayan Times