WORLD Nepal again raises threshold for foreign contractors in construction projects


Nepal again raises threshold for foreign contractors in construction projects


21:46, July 05, 2022

KATHMANDU, July 5 (Xinhua) -- The Nepali government has barred foreign contractors from participating in bids for the construction of works worth less than 5 billion Nepali rupees (39.48 million U.S. dollars).

File photo: CFP

By amending the public procurement regulation, the government has increased the threshold for foreign contractors from 3 billion rupees (23.69 million dollars) earlier. The amended regulation, aiming to promote the capacity of domestic construction companies, was published in Nepal Gazette on Monday.

It is the second hike by the Nepali government after the threshold was first raised in March from 1 billion rupees (7.89 million dollars).

"The objective of hiking the threshold is to help domestic contractors enhance their capacity," a senior official at the Public Procurement Monitoring Office told Xinhua. "It will also help save foreign currencies as the country is facing depleting foreign exchange reserves."

According to Nepal Rastra Bank, the central bank of the South Asian country, the gross forex reserves of Nepal decreased 21.1 percent to 9.28 billion dollars in mid-May 2022 from 11.75 billion dollars in mid-July 2021 due to surging imports.

However, stakeholders are concerned that growing entry barriers could limit competition, which in turn would increase the cost for the government.

Rabi Singh, president of the Federation of Contractors' Associations of Nepal, told Xinhua that the number of large contractors capable of handling construction works valued at around 5 billion rupees is limited in Nepal.

Under the procurement regulation, foreign construction companies can participate in works worth between 5 billion rupees and 10 billion rupees (78.96 million dollars) only through joint ventures with Nepali contractors.

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