KATHMANDU: It has been found that the Melamchi Drinking Water Project sold pipes worth Rs 8 million that were intended for pipeline extension in the Kapan area of Kathmandu. According to the Commission for the Investigation of Abuse of Authority (CIAA), employees of the Store Section under the Melamchi Project Implementation Directorate (PID) were found to have sold the pipes.

The CIAA raided the PID’s office in Anamnagar on October 14 and confiscated documents from the Store Section. CIAA Spokesperson Rajendra Kumar Paudel states that the preliminary investigation shows pipes worth Rs 8 million were sold by the Store Section employees. “The preliminary investigation indicates the pipes were sold directly from the store section; a detailed investigation has been initiated,” he added.

Employees who previously worked in the store section are now under CIAA investigation. The CIAA stated that the individuals’ identities cannot be disclosed as the investigation is ongoing.

The CIAA team raided the office after a complaint was filed about pipes being sold from the Store Section. Laxmi Prasad Upadhyay, Director of the Melamchi PID, confirms that the CIAA took away documents after a complaint was lodged regarding the embezzlement of pipes from the Directorate’s store. He says, “The CIAA is working on this, so we don’t have any further information.”

According to the CIAA, the project has pipe storage facilities in five locations in the Kathmandu Valley: Gairighat, Sundarighat, Aarubari, Attarkhel, and Mahankal.

Of these, the pipes were found to have been sold from the Sundarighat (Kirtipur) area store. Upadhyay states that pipes for pipeline expansion and those remaining after expansion are stored. If needed, the surplus pipes are utilized by the Kathmandu Upatyaka Khanepani Limited (KUKL). The remaining pipes are also used for replacement during leakages.

The pipes sold from the store would have been enough to extend the pipeline by two kilometers. “There is a complaint that the pipes were sold to another contractor working on water supply, and an investigation is ongoing to determine who is involved in this case,” says a CIAA official.

CIAA office

According to the official, the complaint alleges that the pipes were sold from the store in March 2024. “Since there might be collusion between the Store Section employees and the contracting company, an investigation has been initiated on both sides,” the official further added.

He adds that the sold pipes appear to have reached the Kapan area, where the Melamchi pipeline expansion is currently underway. The pipeline extension work in the Kapan area is being carried out by Shailung Construction Pvt. Ltd. This company belongs to Sharada Prasad Adhikari, the controversial contractor and landlord of Pushpa Kamal Dahal, Chairman of the CPN (Maoist Centre) and former Prime Minister.

While the Melamchi Project’s pipe-laying work is complete in all other areas of Kathmandu, it remains unfinished in the Kapan area. Shailung had been awarded the contract for both pipeline installation and the construction of the overhead tank in the Kapan area.

Melamchi water began flowing into Kathmandu in 2021. The reason why Kapan residents have been unable to use Melamchi water for nearly five years is due to Dahal’s landlord, Adhikari. Nabaraj Bhattarai, Ward Chairman of Budhanilkantha Municipality-10, says, “The pipeline extension has not been completed anywhere in Ward no. 10, 11, or 12; materials are brought and then abandoned. We followed up many times, but after nothing worked against Adhikari, we gave up mentioning it.” According to him, Adhikari has been working slowly since he was awarded the contract.

Adhikari’s Shailung Construction received the Melamchi pipeline contract in 2019, when Dahal’s daughter-in-law, Bina Magar, was the Minister of Water Supply. Shailung Construction has gained notoriety as a company that fails to complete construction work on time and leaves projects incomplete. The contract was awarded to this troubled company when Dahal was a powerful chairman of the unified NCP (formed after the merger of CPN-UML and Maoist Centre) and his daughter-in-law, Magar, was the minister. When then-Home Minister Ram Bahadur Thapa publicly named construction companies known for ‘misconduct,’ Adhikari’s Shailung was on the list.

When Shailung won the Melamchi contract, it had formed a joint venture with CIPEL Company. The contract agreement between Shailung and the Melamchi PID was for Rs 1.41 billion to complete the work in 30 months. The pipeline in Budhanilkantha Municipality passes through Lasuntar, Kapantar, Shrapachok, Faika, Gaurishankar, Bhrikuti Chok, Kumarsthan, Dhobikhola Corridor, Ramhari Chok, and Fulbari, ending at Aarubari. The construction of the overhead tank in Aarubari is also unfinished.

Pipes being laid in the Sundarijal-Chabahil section of Kathmandu Upatyaka Khanepani Limited

According to the PID, the pipeline from Sundarijal to Panipokhari in Kathmandu is 83 kilometers long. From there, the pipeline covers an additional 1.80 kilometers both inside and outside the Ring Road. The government’s budget for pipeline extension is Rs 50 billion, of which Rs 31 billion has already been spent.

Apart from Adhikari’s Shailung Construction, seven other construction companies were awarded pipeline contracts that remain incomplete. These companies are Sharma-Raman, Teams-Kumar-CAB-Cap Construction, Huasui-Kankai, Tundi Construction, GIETC-Sharma-Raman, and VINCI-WMI-Kalika. “These seven companies have almost completed their work; Shailung is the one with no progress,” says Upadhyay. A total of 18 construction companies were involved in the Melamchi pipeline expansion.

A lump sum of Rs 140 million fine on Sharada Prasad

Only 51% of the pipeline extension work in the Kapan area is complete. While Melamchi water has reached all areas inside the Ring Road, the pipe-laying work remains unfinished in the Kapan area.

After Adhikari’s construction company failed to complete the pipeline work within the initial 30 months, the PID extended the contract period twice. When the work remained incomplete even after the extensions, the office imposed a penalty of Rs 140 million and is compelling the company to continue the work. PID Director Upadhyay says, “We have been making them work under penalty since 2024, and the pace has increased slightly now.”

According to the Public Procurement Act, 2007, and the Regulation, 2008, a company that fails to complete a contracted job on time can be compelled to work by imposing a penalty. Ram Bandhu Subedi, spokesperson for the Public Procurement Monitoring Office, says, “The concerned office decides on the extension of the contract based on the progress of the work; extensions are not allowed if no work is being done.”

If the work is not completed even during the extended period, a penalty is imposed. If the work is still not completed after the penalty is imposed, the process of contract cancellation is initiated. Upadhyay says, “The rule allows for a maximum penalty of up to 10% of the contract amount. If progress is still not visible even after imposing the penalty, the contract agreement is canceled.”

Subedi explains that upon contract cancellation, there is a provision to recover the entire contract amount and confiscate the bank guarantee.

The Public Procurement Act does not specify the maximum period for which work can be compelled under penalty. “We are urging the construction company to speed up the work; we have called them repeatedly to pressure them to finish,” says Upadhyay. “We will make the progress report public in the month of December and will take the next step based on that progress report.”

According to Ward Chairman Nabaraj Bhattarai of Budhanilkantha Municipality-10, earlier, the contractor Adhikari had stated in a discussion that he would complete the work before Dashain. “We asked for a work schedule because we didn’t trust him. He will not complete the pipeline work even in the next five years. We are shocked why the Project Implementation Directorate is not canceling the contract,” he further added.