Procurement act change seeks status quo ante in variation order - 
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By Rudra Pangeni 
KATHMANDU, Oct 31: The authority of government secretaries to approve variation orders in construction contracts was ended by the Public Procurement Act 2007, but now a draft amendment seeks to restore the authority for up to 10 percent. A variation order is issued for payments for construction project work which could not be foreseen during the project design and cost-estimate stage. 

The draft amendment says that the provision for restoring the discretionary authority of the secretaries is meant to make variation orders more accountable. 

Following implementation of the procurement act in 2007, all variation orders above 15 percent of the total project were decided by the cabinet. However, high-level officials maintain that the variation orders became impractical for the cabinet ministers to handle and several such orders became subject to political pressure.

According to the act, project chiefs and departmental chiefs decide 5 and 10 percent of variation orders respectively. 

Secretary at the Ministry of Physical Infrastructure and Transport, Tulasi Sitaula, said that secretaries were stripped of their power variation orders purportedly to exercise greater control over such orders. But several projects have suffered delays because of the need for the decision to be taken by the cabinet. 

Former finance secretary Krishna Hari Baskota has welcomed the latest decision as it distributes authority from the cabinet to the line ministries and should result in faster and more practical decision-making. 

According to some engineers, however, secretaries who are not from an engineering background may take longer to take their decisions. 

But Secretary Situala said that a secretary is not alone in taking the decisions on such important financial issues. He also pointed out that non-technical secretaries are also given charge of ministries of a technical type. 

“There is a committee comprising officials from the Comptroller General’s Office as well as experts to help the secretaries decide on such issues,” added Sitaula. 

Variation orders are full of anomalies as the contract bidders try to bag projects by hook or by crook and through low bidding. But they are accused of later coming up with artificial needs for expanded work and such demands also get approved, a clear indication of rampant corruption, it is pointed out. 

“There are genuine cases to be made for variation orders, such as changing the alignment of a tunnel the need for which could not have been foreseen during the project design stage,” said Baskota. He also accepted that there are big anomalies in variation orders and suggested making the engineers who design the construction projects more responsible. 

During a discussion Thursday on the amendment draft prepared by the government, many lawmakers at the parliamentary Finance Committee demanded that unlimited authority should not be given to the bureaucrats over large projects. 

Construction contracts at hydropower projects, particularly projects developed by Nepal Electricity Authority, have become a haven of corruption and are riddled with controversy. 

The Finance Committee has itself found anomalies in variation order to the tune of Rs 1.09 billion at the Chameliya Hydropower project and the committee’s study file has been forwarded to the Commission for Investigation of Abuse of Authority (CIAA). There are similar anomalies alleged at the Upper Trishuli 3A, Kulekhani Hydropower III and other projects. 

Experienced engineers have suggested that the anomalies have become rife in hydropower projects due to the unlimited authority given to the executive bodies at government-run entities and companies, including NEA. 

The amendment draft makes no mention of placing a limit on such authority. “In principle, the cabinet should not be sitting on the procurement process but several procurements for the Pokhara Regional International Airport, the Upper Trishuli 3A upgrade project and many others were decided by the cabinet,” Baskota pointed out. - See more at: http://www.myrepublica.com/portal/index.php?action=news_details&news_id=85766#sthash.vh2F6sPK.dpuf

Finance Committee for fixed dates for budget process
	RUDRA PANGENI KATHMANDU, Oct 18 :The budget for the current fiscal year was approved only recently, some three months later than usual, as the opposition UCPN (Maoist) obstructed parliament for one-and-half months to press its political agenda.

 The record of over a decade shows similar obstructions by parties in the opposition in the presentation of the budget and its endorsement, regardless of the adverse effect this had on the country’s economic development. 



To address this chronic problem, the Finance Committee of Parliament has come up with the idea of bringing in a number of reforms, including instituting a fixed timetable for budget presentation and endorsement, and making these legally binding. 

Following a series of discussions with officials of the Ministry of Finance and the National Planning Commission, the parliamentary committee has decided to direct the government to fix the second week of May and the middle of June for tabling the budget along with its income and expenditure plan and for its endorsement, respectively. 

The committee has also directed the government to come up with bills or legal provisions incorporating fixed dates for budget presentation and endorsement by parliament. 
Likewise, in a bid to discourage public construction works that take place at the start of the monsoon in Ashadh, the committee also floated an idea of bringing the start of the fiscal year forward by a month to Ashadh 1 (mid-June). 

Joint-Secretary at the Ministry of Finance Baikuntha Aryal said they have long been demanding an early budget to provide ample time for necessary preparatory work. 
A significant portion of budget funds remains unspent while the bulk of the spending takes place in the dying days of the fiscal year, which coincide with the start of the monsoon rains. The result is substandard construction work. Data shows that 75 percent of the annual budget is spent in the final quarter. 

Likewise, the parliamentary committee has also asked the government to effect all transfers and deputations of civil servants during Ashadh so as to ensure the continuity of officials in the implementing agencies. 

Economist Bishwambher Pyakuryal welcomes the time-bound schedule but seeks proper implementation. Noting that a past finance minister had also endorsed the idea, he said it however remained limited to paper. “Parties should refrain from messing up economic issues with their so-called political consensus,” added Pyakuryal. 
The approach paper for the 13th periodic plan says that government spending on developmental works spurs overall economic growth if capital investment by government and the private sector is in the ratio of 35 and 65 percent respectively. 

Pyakuryal also suggested removing any legal and structural barriers to growth. 

Likewise, the parliamentary committee has suggested shortening discussions on the budget in parliament. Talking to Republica, Prakash Jwala, chairman of the committee, said they have sought time with Finance Minister Ram Sharan Mahat to hand over its directives. 

During discussions with lawmakers on the committee, Mahat had said that the fiscal year can be brought forward by a month to help avoid the rainy season. However, the four-month period for construction works from Falgun to Jestha (mid-February to mid-June) should not be split between separate fiscal years. About two-thirds of the government’s expenditure is on construction work and such work is implemented in those four months. 

The committee has also suggested strengthening the monitoring and evaluation of development projects as well as endorsing a reward and punishment system for the personnel of implementing agencies.