Prime Minister Balen Shah's secretariat took Director General of the Department of Water Resources and Irrigation Dinesh Rajouria and Sunkoshi-Marin Diversion Multipurpose Project Director Krishna Prasad Rijal under “control” and had the tender process for the project's headworks and powerhouse construction canceled.
Two days after police brought the two officials from outside the Kathmandu Valley and handed them over to the Prime Minister’s Office, a notice announcing the cancellation of the tender was published in Gorkhapatra on Saturday.
The technical evaluation of bids for the project had been completed, and the financial proposals were scheduled to be opened on Monday, with the contract to be awarded thereafter.
The irrigation department had decided to move the tender process forward with the consent of departmental minister Biraj Bhakta Shrestha.
A highly placed source told Setopati that the Prime Minister’s Office had asked Minister Shrestha a few days earlier to stop the tender. Shrestha consulted party President Rabi Lamichhane about the concerns raised by PM Shah’s team.
According to a source close to Shrestha, Lamichhane advised the minister to proceed with the tender, arguing that stopping a process that was about to be completed without any reason would send the wrong message.
The source said that the Prime Minister’s Office had not provided the minister with any clear or legitimate reason for stopping the tender.
Shrestha therefore gave the irrigation department the green light to proceed.
However, while Shrestha was abroad in Thailand on official business, the Prime Minister’s Office intervened by deploying police to summon departmental officials to Singha Durbar and have them cancel the tender.
This is not the first time the prime minister has intervened in the work of a department under a minister by bypassing the minister concerned. The Prime Minister’s Office had also intervened in the Department of Passports, pressuring it to terminate an existing passport-printing contract.
Foreign Minister Shishir Khanal was bypassed on that occasion as well.
After learning of the move, however, Khanal insisted that the contract would not be terminated and that the process of printing passports under the new system would not be halted. Even after that, the Prime Minister’s Office continued efforts to terminate the contract for a long time but failed.
This time, similar interference has occurred at the irrigation department.
Six companies had submitted bids for the Sunkoshi-Marin Diversion Multipurpose Project contract. During the technical evaluation, the irrigation department qualified three Chinese companies: M/S China International Water & Electric Corporation, M/S ANENG-RCC (Rasuwa Construction Company) Joint Venture, and Sinohydro Corporation Limited.
The other three companies were eliminated from the competition.
One company was due to be selected from among the three qualified bidders on Monday. The tender was canceled after PM Shah’s advisory team intervened just as the financial proposals were about to be opened.
The prime minister’s secretariat has so far not clarified why the tender had to be canceled.
Experts told Setopati that the cancellation was rushed and relied on an inappropriate provision of the law.
A notice published in Gorkhapatra on Saturday, in the name of the project director, stated that the tender had been canceled under Section 3(2) of the Public Procurement Act. Experts say it was a violation of the Act for the project itself to invoke this provision to cancel the tender.
Former urban development secretary Maniram Gelal, who has extensive experience in public procurement, said that Section 3 was not intended to allow an office to cancel its own tender by invoking that provision.
Only the regulatory body responsible for determining whether a tender process complied with the law can review the process and make a decision under this provision. In other words, if someone alleges that a tender was manipulated or awarded contrary to the law, the Public Procurement Review Committee is responsible for examining the complaint and deciding the matter under the relevant provision.
“If someone files a complaint alleging that the tender process violated the law, the intention of this provision is that the Public Procurement Review Committee or a court examines the case and cancels the process if it finds that procurement procedures were indeed violated,” Gelal told Setopati. “The project chief or office conducting the tender process cannot cancel the tender under this provision. If the project chief discovers an error in the procurement procedure and needs to cancel it on that basis, the relevant provision for that is Section 26.”
Section 26 of the Public Procurement Act specifies five circumstances in which a tender process may be canceled.
First, if none of the bids is responsive.
Second, if an agreement cannot be reached with the bidder.
Third, if a bidder’s quoted price exceeds the estimated cost.
Fourth, if the requested construction work, goods, consulting services, or other services are no longer needed.
Advocate Semanta Dahal also said that Section 3 defines the scope and coverage of the Act but does not grant the authority to cancel a tender.
According to Dahal, the notice canceling the Sunkoshi-Marin tender does not appear consistent with the structure of the law or the provisions of the relevant sections. It appears to have been issued under coercion.
“The notice issued by the irrigation department, a public entity, regarding the cancellation of the bidding and procurement proceedings for the Sunkoshi-Marin Diversion Project does not appear consistent with the structure and provisions of the Public Procurement Act, 2006,” he said. “Section 3 is not a provision that grants substantive authority to cancel procurement proceedings. The authority and grounds for canceling procurement proceedings are provided only under Section 26 of the Act.”
He also said that the law clearly requires a procuring entity to specify the facts and legal grounds for its decision when canceling any procurement process.
“The law also provides for departmental action against the officials or procurement officers concerned if procurement proceedings are canceled outside objective grounds and prescribed procedures, in bad faith, or through an abuse of authority,” he said.
Setopati asked Ashok Raj Gautam, information officer for the Sunkoshi-Marin Diversion Project, which procedure had not been completed and whether the legal provision used to cancel the tender was appropriate.
He said that he had not yet seen the decision and would be able to provide information only after the office reopened on Monday.
Project chief Rijal declined to speak to the media, sending a response that he would not speak to the press at the moment. He did not wish to discuss the matter over the phone.
A member of Energy Minister Shrestha’s secretariat expressed anger, saying that the Prime Minister’s Office had taken advantage of the minister’s absence abroad to pressure the department and project chief into canceling the tender.
The member said that officials in the ministry and department, including technical staff, had discussed and consulted on the tender before moving forward, and that they did not know why or on what grounds it had been canceled at the last minute.
The project had invited bids in June to construct a dam, a powerhouse capable of generating 31 megawatts of electricity, and other infrastructure. The project aims to provide irrigation to approximately 122,000 hectares of land in the Tarai districts of Bara, Rautahat, Sarlahi, Mahottari, and Dhanusha.
According to a project source, some companies that failed the technical evaluation were dissatisfied and wrote to the project demanding explanations.
A representative of one company eliminated from the tender process acknowledged in a conversation with Setopati that the company had complained to Infrastructure Development Minister Sunil Lamsal.
However, the proper channel for anyone dissatisfied with a tender process is the Public Procurement Review Committee. This quasi-judicial body hears such complaints and makes decisions. If a party is dissatisfied with its decision, it can approach the courts.
No one has filed a complaint with the committee regarding this tender so far.
The prime minister’s team did not follow the procedures established by law and the state. Various government agencies award dozens of contracts every year. It is not the Prime Minister’s Office’s responsibility to determine whether every one of those contracts is proper. Even if it wanted to do so, it would not be feasible, because the relevant departments and offices have people with expertise in the particular fields and projects involved.
That is why the law assigns responsibility for awarding contracts to the relevant departments. For example, the Department of Passports awards passport-printing contracts, the Department of Roads awards road construction contracts, and the irrigation department or its subordinate offices award irrigation contracts.
This arrangement exists because the people who understand the work are in the relevant departments. Those departments are also responsible for implementing the work, whether it involves passports, roads, or irrigation dams. The law holds them accountable if something goes wrong in the procurement process.
If a department or the relevant office awards a contract with a wrong intent, commits serious procedural errors, or engages in corruption, competing companies that participated in the tender can file complaints with the Public Procurement Review Committee.
If they remain dissatisfied with the outcome, they can approach the Commission for the Investigation of Abuse of Authority (CIAA) or the courts.
This system establishes a division of responsibilities and a balance of power among state institutions. In this case, the Prime Minister’s Office appears not to have understood or respected that division and balance.
The prime minister appears not to have trusted his own ministers or the departments operating under their ministries.
The prime minister and his team appear to have acted with the mindset that they know everything, that only they are right, and that everyone else is corrupt. The same mindset appears to have driven the Prime Minister’s Office in both the passport controversy and the current case.
Construction of the project began four years ago. At that time, an Indian joint venture comprising Patel Construction and Raman Construction won the contract.
The Patel-Raman JV was awarded the contract in January 2023 to construct a dam on the Sunkoshi River, a powerhouse, and other infrastructure. The company secured the contract for Rs 14.07 billion and was required to complete the work within four and a half years.
Under the agreement, the work was supposed to be completed by August 2027. However, after 60 percent of the contract period had elapsed, physical progress on the project stood at only 10 percent.
During the tenure of Kulman Ghising, who served as irrigation minister in the government formed after the Gen Z protests a year ago, the contract with the company was terminated.
Citing the lack of expected progress, the project decided on around November 11, 2025, to terminate the contract and confiscate the performance guarantee.
A source close to Ghising said that after the termination process began, Raman Construction’s Raman Mahato and others pressured then-energy minister Kulman Ghising by invoking the name of Balen Shah, who was then mayor of Kathmandu Metropolitan City.
An official who worked in Ghising’s secretariat said that Lamsal had visited Ghising to lobby against moving forward with the contract termination.
“At that time, the owners of Raman Construction came to pressure us not to cancel the contract, invoking Balen Shah’s name,” the source said. “They were not the only ones. Sunil Lamsal, who is now the infrastructure minister, also came and asked us not to cancel the contract.”
The latest intervention by the Prime Minister’s Office has raised suspicions about whether the cancellation is a continuation of the longstanding interest shown by PM Shah and Minister Lamsal in the matter.
Infrastructure Minister Lamsal says the cancellation was in the state’s interest
A source at the Energy Ministry said that Infrastructure Development Minister Sunil Lamsal had also taken an interest in the tender process. According to the source, he had visited the Energy Ministry some time earlier to discuss the matter.
Setopati spoke to Minister Lamsal about the issue.
There are reports that you were also interested in the cancellation of the Sunkoshi-Marin Multipurpose Project tender. What is your position on this?
The problems we had observed in public procurement were that the market had become completely distorted because of low bidding – the practice of awarding contracts to whoever promises to complete the work at the lowest price.
We made extensive amendments to the procurement law to address these problems in the market.
The amendments were made around July 12-13. We introduced two procurement systems in the law: the average bidding method and the rated criteria method.
Under the average bidding method, the amounts proposed by all bidders are averaged, and the contract is awarded to the bidder whose offer is closest to that average.
Under the rated criteria method, points are awarded based on bidders’ experience and success in completing similar projects, their technical capacity, including personnel and equipment, and their financial evaluation scores. The contract goes to the company that receives the highest overall score after all these factors are assessed.
The regulations stipulated that projects costing less than Rs 1.5 billion would use average bidding, while more complex projects costing above that threshold would use rated bidding.
These regulations came into effect in August. After they were introduced, the Public Procurement Office under the Prime Minister’s Office issued a circular directing that all tenders proceed under the new regulations.
However, the tender process for the Sunkoshi-Marin Multipurpose Project had already begun around July, before the regulations were introduced.
Ten days ago, a complaint was filed with the Prime Minister’s Office alleging that this tender did not comply with the new rules. The prime minister’s team then told Minister Biraj Bhakta Shrestha to cancel the process.
Do you think Minister Shrestha did not cancel the tender process despite being advised by the prime minister’s team?
Biraj dai does not technically understand this law. Employees, however, took the position that they had followed the law and that this should be sufficient.
It is also difficult for them if a tender process is stopped halfway through. There must be very strong grounds and clearly stated reasons for canceling it. They may have feared that the CIAA or the courts could later find them responsible or question their intentions if they cancel the tender.
So I do not blame the employees either. I think they persuaded Biraj dai not to cancel the tender by pointing to the risks of action by the CIAA and the courts.
But we, as policymakers, must consider which policy would serve the state’s interests best. As I said, proceeding under the new regulations would benefit the state. The employees understand this too.
Those opening the tender know that the state would incur a loss of Rs 2-3 billion under this process. However, they fear action by the CIAA and argue that, even though the tender began before the regulations were introduced, it is legally valid because it followed the Act.
The complication has arisen because the tender process began in the gap between the enactment of the Act and the introduction of the regulations.
If there was a complication, they could have explained it to the departmental minister and the officials. Why did the Prime Minister’s Office have to use the police to summon officials and make them cancel the tender while the departmental minister was away?
This happened before Biraj dai left the country. The officials had gone on a routine site visit. Later, when the Prime Minister’s Office called them repeatedly and could not reach them, it simply informed the chief district officer so that they could be brought to Kathmandu.
The media have presented a somewhat different interpretation that could create confusion. Please understand this in a very simple manner. The employees are not at fault either, and they should not be portrayed as criminals.
A year ago, when the government was preparing to terminate the contract for the same construction work at the Sunkoshi-Marin Multipurpose Project because the work had not been completed, you reportedly met the minister at the time and asked him not to terminate it. Is that true?
We are not concerned with what the previous government did. The earlier contract was probably terminated because the contractor had failed to perform.
I did not visit Kulman sir to ask him not to terminate the contract. At that time, the contractor did contact me and ask me to request that the contract not be terminated. I merely facilitated a meeting with Kulman sir.
We have never supported protecting contractors who fail to do their work.
