In a rare case of early completion in Nepal’s public infrastructure projects, the 28-kilometre Nepalgunj–Gulariya section of the Postal Highway was finished 11 months ahead of schedule. Despite this achievement, Sharma & Company—the contractor for the project—is still awaiting payment of Rs 750 million.
According to the contract, the road was to be completed by Falgun 2082 (February/March 2026), but Sharma & Company finished the work by Chaitra 2081 (March/April 2025). Typically, contractors completing work ahead of time receive government recognition. However, Ramesh Sharma, chairman of Sharma & Company, said his firm is being penalised rather than rewarded. “Instead of being honoured, we are being punished,” Sharma told New Business Age. “We’re still waiting for Rs 750 million.”
Sharma said the original contract duration was three years. The project includes a four-lane road through market areas and two lanes elsewhere. While the Nepalgunj-based project office could not release the funds, Sharma said even the Ministry of Physical Infrastructure and Transport has not provided the promised amount.
“I was about to stop work in February,” Sharma said, “but we continued based on assurances that payment would be made by mid-April. However, the payment has still not been released. We’ve already submitted all the bills. It’s been a distressing experience. Timely payment would have made the process much smoother.”
Sharma & Company is not alone in facing delays in government payments. The Nepalgunj project office cited a budget shortfall as the primary reason for the delays. Officials said the budget allocation for the current Fiscal Year (FY 2024/25) was insufficient even to cover liabilities from the previous year.
“The entire Rs 780 million budget allocated this year was exhausted in clearing last year’s liabilities,” said Lila Bahadur Bhandari, head of the Nepalgunj project office under the Postal Highway Directorate. “Even the additional Rs 520 million allocated in December/January could not cover last year’s remaining liabilities of Rs 1.29 billion.”
As of the mid-January, Sharma & Company had only received Rs 170 million in payments for the current fiscal year. “We still owe them Rs 750 million,” Bhandari confirmed. “We have sent letters—including eight formal requests—with verified bills to the Directorate, Department of Roads, and the Ministry of Physical Infrastructure and Transport, urging them to release funds. We hope the upcoming budget announcement will help address the shortage.”
Bhandari said the office is unable to make payments without receiving funds from the concerned authorities. “Construction firms are now beginning to demand interest on delayed payments,” he added. “The contract with Sharma & Company allows for 7% interest on delayed payments. The interest claim has already reached Rs 50 million, but we haven’t been able to pay even that.”
As of Tuesday, the project office has verified bills worth Rs 1.05 billion, a large portion of which is owed to Sharma & Company. “We have less than Rs 10,000 in our account, while our dues stand at Rs 1.05 billion,” Bhandari said.
The total contract value for the 28-kilometre road, including VAT, is Rs 3.2 billion. The Nepalgunj office oversees the Dang, Banke, and Bardiya sections of the Postal Highway. Sharma & Company’s project falls in Banke and Bardiya.
In addition, Rs 180 million remains unpaid for bridge construction over the Rapti River, and Rs 200 million is pending for six bridges under construction in Dang. Altogether, the government owes eight contractors working under this project office Rs 1.05 billion.
The Postal Highway Project began in Fiscal Year 2009/10. Its initial estimated cost was Rs 47.65 billion. After revisions, the total projected cost has risen to Rs 101.63 billion. By the end of Fiscal Year 2023/24, the project had spent Rs 64.87 billion, achieving 66.91% physical progress. The revised deadline for project completion is now set for Fiscal Year 2026/27.
