November 28: The arrears of the Department of Roads, which mobilizes a large budget for infrastructure projects, is 20.89 percent of its total budget. In the current Fiscal Year (FY 2078/79), the total amount received by the Road Department is Rs 133 billion.
According to the annual report of the department for the last fiscal year, the arrears of the department was Rs 27.79 billion. The arrears was Rs 37.48 billion in the previous fiscal year. Such undeclared expense which was earlier settled and dropped to Rs 23.18 billion has increased again. However, the department has had such arrears since FY 2059/60. The department, which has been managing projects of national priority including national highways and tunnels, is yet to be clear the arrears.
Arjun Jung Thapa, director general of the department, claims that the increase in arrears was not due to any foul play but due to procedural hurdles.
He said, “The arrears are not due to wrong intentions in spending, but due to some procedural ups and downs. We demand the budget in the beginning of the fiscal year, but the budget is received only around mid-July. However, the construction entrepreneurs need to be paid within 28 days of request which is seen as arrears from the point of view of the auditor general.” He claimed that 99 percent of the department's irregularities are due to such reasons.
He said if they do not pay the construction entrepreneurs within 28 days, then the department needs to pay the interest.
Similarly, arrears is seen in the case of providing compensation for land acquisition as well as capital gains tax. The department’s spending seems to be irregular because of the need to manage budget from other headings to address these problems.
The arrear is also seen in the contract of design and build method. Stating that the Kothiya Bridge and Dhobikhola Bridge of Karnali built in the same model still have arrears, he said that the rules of Auditor General and the method of audit are impractical.
Infrastructure expert Surya Raj Acharya says that the arrears are clearly a sign of irregularity. However, he said that the arrears should not be viewed negatively as the development budget is very large and different conditions and technical problems are bound be created while working.
“Another indication is that there will be natural problems in the development work but the economic laws and regulations that address them are conservative,” he said, adding that the arrears in development and other bodies would have a negative impact on financial administration and project management.
He also stressed on the need to clarify the financial acts to address the uncertainty in infrastructure projects.
Shiva Nepal, spokesperson of the department, said that the arrears are created as the related laws, bidding process, interpretation of financial act, standards of international contract management are treated differently in our country.
He says that among the various methods of contract, there is a big difference due to the design and build model. “The Office of Auditor General has said that the contract amount of this model cannot be increased,” said Nepal, adding, “The department cannot comply with the demand of the Auditor General as it is an international practice and the arrears remains unchanged.”
However, he admitted that the volume of undocumented payment was huge due to the negligence and weakness of some project heads and officials. He shared that such amount is more than 20 percent of the total budget.