KATHMANDU — The Government of Nepal has intensified its crackdown on long-delayed and inactive development contracts. In a decisive move, multiple ministries and subordinate agencies have begun terminating agreements with contractors who failed to complete projects within the stipulated time.
Irrigation and Energy Ministries Cancel Dozens of Idle Contracts
The Ministry of Irrigation recently annulled 12 construction contracts under the People’s Embankment Program Field Office No. 2 in Jaleshwar, Mahottari. These projects had remained idle for several years despite repeated requests from authorities.
According to the ministry, contractors ignored multiple public notices and failed to resume work. Similarly, the Babai Irrigation Project issued a public notice on October 16 to terminate six additional contracts, the Ministry of Energy stated.
The Ministries of Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, and Urban Development have jointly launched a campaign to curb the widespread tendency of taking contracts but abandoning projects midway. Minister Kulman Ghising has directed all subordinate agencies “not to hesitate in taking legal action against non-performing contractors.”
His secretariat confirmed that processes are underway to seize performance guarantees and terminate contracts in accordance with the Public Procurement Act. The respective offices have been instructed to evaluate the remaining works and submit assessment reports within 15 days.
Road Department Expands Termination Drive Across Divisions
The Department of Roads has initiated similar action against stalled projects. Division offices in Tumlingtar, Ilam, Hetauda, and Nepalgunj have issued public notices to terminate 40 contracts that have remained inactive for years.
Among these, Tumlingtar accounts for 17, Ilam 12, Hetauda 7, and Nepalgunj 4 contracts. Earlier, the department had already moved forward with the termination of 68 non-performing contracts nationwide.
Officials said these steps are part of a broader reform initiative to revive infrastructure projects that have been stagnant for years. After the cancellations, government agencies plan to initiate fresh bidding processes to complete the remaining works in a timely manner.
Construction Federation Raises Objection Over Government Move
Meanwhile, the Federation of Contractors’ Associations of Nepal (FCAN) has expressed dissatisfaction with the government’s approach. FCAN President Ravi Singh said that although the decision to terminate dormant contracts “sounds appealing in theory,” its long-term implications have not been properly considered.
Singh emphasized that the government should first identify the root causes of project delays. “Many contracts became inactive not only because of contractors but also due to administrative delays and policy instability,” he said, warning that indiscriminate cancellations could create new complications.
Officials, however, have defended the move, calling it an essential reform step to restore momentum in stalled development projects.
