Accelerating Procurement for Development

This article was originally published by Ayushma Shrestha in the Himalayan Times on December 08, 2019.

A general concern on economic growth of Nepal has wedged attention of many Nepalese. As per the experts, the Gross Domestic Product (GDP) is likely to grow by 7 percent, and will not meet the 8.5 percent set target of this fiscal year. The major reason behind this abate is the deceleration of post-earthquake construction works and delay in national pride projects.

The abysmal performance on such imperative developmental activities has not just hindered the annual economic growth of Nepal but also tapered the achievement of medium-term goal – to graduate from LDC category – and long-term goal – to become a medium income country by 2030 – of the nation. Simply put, amongst the rapidly developing economies of the world, the sluggish growth in national projects has made Nepal’s development a primitive one.

It is apparent that the growth of productive sectors in the economy can be realized only with the advancement of various infrastructural and construction-related projects. However, factors like delay in implementation, persistent deferrals, deadline extensions and other inconsistencies has stalled the completion of such projects and the benefits that could be derived.

It has been a long realization that Nepal needs appropriate policies and alternative working mechanism that could expedite these developmental projects. Consequently, with no further delay, the government should take significant actions that could bring substantial improvement in this sphere of the economy.

While at it, the government can start by setting its agenda to achieve actionable reforms that will bring efficiency and integrity in the public procurements conducted by Nepal. Inefficient public procurement has been rendered as the core reason behind recurrent hurdles in completion of development-oriented projects. The many problems persistent in the sector is mainly because of the ambiguity, and inconsistencies in legal provisions, which presents an unclear and complex picture to both government officials and bidding agencies, encouraging them to be more process-oriented than result-oriented.

With subsequent improvements in policies and regulations related to public procurement which will accelerate project implementation and stimulate private sector activities, the government can use it as a strategic tool to address the many economic and environmental challenges that exists in Nepal.

To start with, problems that result in project implementation delays which unnecessarily prolong the commencement of construction should be addressed.

Public Procurement Act (PPA), 2016 has provisioned a bidding time frame of up to 30 days for national level bidding and up to 45 days for international level bidding. This is an international practice for large-scale projects. The rationale behind the provision is to provide enough time to quality bidders for adequate preparation. However, for small projects, this clause only seems to lengthen the process. With the technological advancements like e-procurement that have taken place over the years, it is plausible to reduce the time frame to a week for domestic small-scale biddings and ten days for international biddings.

For large scale projects, public entities need to be pro-active themselves in terms of planning for procurement. In case of road construction projects, for example, the concerned authority needs to do its homework in terms of pre-assessment survey, initial environmental survey, design and drawing, site clearance, etc. such that the process is not delayed further.

Additionally, in order to increase procurement efficiency, capacitating local and state level government is equally important. With the onset of federalism, all tiers of government are responsible in carrying out their respective infrastructure projects and operation and maintenance activities. As the local and state government lack expertise in the sector, public procurement throughout Nepal is carried out by the federal law.

PPA, 2016 mentions that all public entities should follow the procedure of the act while conducting any public procurement. However, it fails to incorporate policies that would capacitate the local and state level government to do the same. One of the methods through which the desired result can be obtained is through clear categorization of projects to be procured by different level of government. For the same, segregating between small, medium and large-scale projects would be very beneficial. The act should then designate the jurisdiction of carrying out small-scale projects to local government, medium-scale projects to state government and large-scale projects to the federal government. This would help ease out the contentious procurement procedures and minimize the time required for starting a project.

Aforementioned are a few alternatives on how the government can address the delays in project implementation and enhance administrative efficiency for the same. However, the various problems in execution and completion of procurement in Nepal also needs to be addressed.