Can the Commission That Construction Entrepreneurs Must ‘Be Persuaded’ To Pay Be Stopped?

Former Secretary Kishor Thapa has described the directive given by Physical Infrastructure, Transport, and Urban Development Minister Sunil Lamsal to construction entrepreneurs not to pay additional fees to employees as courageous. Minister Lamsal made this request during a meeting with a delegation from the Nepal Construction Entrepreneurs Federation on March 29, according to the federation’s outgoing president, Ravi Singh. “(The minister) asked that no member of any construction company engage in improper transactions and that they support me,” Singh said, “We immediately convened a federation meeting and informed construction entrepreneurs across the country.”

Former Secretary Thapa mentioned that he could not recall any previous instance where a minister had issued such a directive, including to secretaries and director generals. “To my knowledge, no minister had dared to do so until now,” he said, “because ministers typically had deep collusion with construction entrepreneurs and middlemen.” The federation has also made public a letter informing all entrepreneurs about the minister’s directive, which states that from now on, construction entrepreneurs should not give additional fees to government officials at any level related to ongoing projects, and if any government official demands such fees, they are to report it directly to the minister.

A construction entrepreneur who stated that they would now refuse to pay these commissions revealed the reality of previous practices. They explained that earlier commissions that needed to be paid, which were as high as 10-15 percent, have currently dropped to 5-6 percent. Providing details on when the commission typically starts and its rates, he said, “Upon signing the contract after winning the bid, a payment of 0.5 to 2.5 percent is expected,” he added, “Then, with each running bill, commissions up to 4-5 percent are paid until the contract is completed. Previously, this money reached the minister, but now it won’t.”

Former Secretary of the Urban Development Ministry, Kishor Thapa, acknowledged this observation but noted that entrenched practices like this are not easily eradicated. According to him, with no departmental minister involved, such practices are beginning to decline. For that reason, he views Minister Lamsal’s directive as a positive first step, though not sufficient. He further explained that along with ministers, political parties have also used both employees and entrepreneurs as channels to collect money.