Repeated Delays Lead Government to Terminate Mid-Hill Highway Contract in Panchthar

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Repeated Delays Lead Government to Terminate Mid-Hill Highway Contract in Panchthar

Repeated Delays Lead Government to Terminate Mid-Hill Highway Contract in Panchthar

Ecosphere News Service 2026-07-02 08:45:42

Phidim, July 2 - The Government of Nepal has terminated the construction contract for a key section of the Pushpalal (Mid-Hill) Highway in Panchthar after the contractor repeatedly failed to complete the work despite multiple deadline extensions. The decision follows years of stalled construction that has caused significant hardship for local communities.
According to the Mid-Hill Highway Project Office, the contract for upgrading the 16-kilometre to 33-kilometre stretch of the Chiwabhanjyang–Ganesh Chowk road (Package 2) was officially cancelled after the contractor failed to meet contractual obligations under Nepal's Public Procurement Act and Regulations. Authorities stated that repeated warnings and extensions did not result in satisfactory progress.
The road section had been assigned to Santoshi Shivashakti JV, which began construction but left several portions incomplete. Excavated road sections, unfinished drainage systems, and partially completed gravelling works have left the route in poor condition. During the monsoon, the road becomes muddy and difficult to navigate, while dust poses problems during the dry season, affecting daily travel and transportation.
Residents of Yangwarak Rural Municipality have welcomed the government's decision, describing it as a long-awaited step toward addressing years of delays. Local representatives said the project, originally targeted for completion during the 2017/18 fiscal year (2074/75 B.S.), remained unfinished even after several extensions, resulting in lost economic opportunities and increased transportation difficulties.
Local leaders noted that completing the road is essential for improving connectivity in northern Panchthar, enhancing market access for agricultural products, supporting tourism, and ensuring easier access to healthcare and education. Poor road conditions have also increased vehicle maintenance costs and made emergency transportation more challenging.
The project office has indicated that the remaining construction work will now proceed through a new procurement process. Local stakeholders have urged the government to carefully evaluate the technical capacity, financial strength, and past performance of prospective contractors to prevent similar delays in the future.
The contract termination comes amid broader government efforts to take stronger action against underperforming contractors involved in national infrastructure projects, particularly on the Mid-Hill Highway, where delays have affected multiple sections in recent years.
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