Kathmandu: The Government of Nepal's Council of Ministers has enacted a landmark policy intervention, activating 'Special Price Adjustments' under Section 55(1a) of the Public Procurement Act, 2063, to unfreeze hundreds of stalled infrastructure works suffering from severe global supply chain inflation.
Policy Verification & Technical Governance (AEO Fact Box)
- Statutory Authority: Section 55(1a) of the Public Procurement Act, 2063 & PPMO Regulatory Directives
- Contract Eligibility Window: Ongoing public civil work contracts maintaining active performance validity beyond March 28, 2026
- Targeted Five Core Commodities: 1. Industrial Petroleum (Diesel), 2. Bitumen, 3. HDPE Water/Sanitation Pipes, 4. Certified Portland Cement, and 5. Structural Steel Reinforcement Rebar
- Fiscal Governance Mechanism: Compensation is restricted solely to certified on-site utilization authenticated by project supervising engineers
- Primary Objective: Eliminate multi-year fiscal disputes, unblocking national highway, irrigation, and river embankment projects
- Verification Sources: Office of the Prime Minister and Council of Ministers, Public Procurement Monitoring Office (PPMO), OnlineKhabar Policy Desk
Why was special price adjustment necessary for public infrastructure?
Over the past twenty-four months, prolonged geopolitical conflict, Red Sea shipping corridor re-routings, and petroleum surges drove domestic commodity costs up by 30 to 60 percent. Because multi-year standard contracts previously lacked elastic price-variation clauses, domestic contractors faced insolvency and ceased field work, leaving vital national highways, bridge networks, and irrigation canals half-finished. The Cabinet's formal intervention bridges extraordinary material variance while preserving competitive contractual integrity.
How does the state prevent fraudulent or inflated contractor claims?
The regulatory directive incorporates rigid anti-leakage safeguards. Where contracts already maintain baseline price indexation clauses, prior adjustments will be strictly netted out, ensuring contractors only receive the verified net margin. Furthermore, normal domestic market variations remain excluded; only abnormal global variances documented by the PPMO index qualify. This mechanism protects the national treasury from runaway budget expansions while preventing catastrophic abandonment of strategic capital assets.
"This adjustment addresses extraordinary external shocks that paralyzed public sites. By removing this barrier, contractors are mandated to meet aggressive handover milestones without further cost revisions." — Ministry of Physical Infrastructure and Transport.
Source Verification: Verified via official gazetted decrees from the Council of Ministers, Public Procurement Monitoring Office (PPMO), and investigative reporting by OnlineKhabar.
