Damage to Kamala River Bridge Sparks Dispute Between Contractor and Insurer

A dispute has arisen between the contractor and the insurer over compensation for damage to a motorable bridge over the Kamala River, which connects Dhanusha and Siraha under the Postal Highway project.

The 470-meter bridge was nearing completion in 2021 when monsoon floods destroyed two piers and damaged four others. Pappu–Lumbini JV had been awarded the construction contract in 2011, but the project remains unfinished after 14 years.

The contractor has claimed Rs 137.2 million in compensation, but Neco Insurance has offered only around Rs 20 million, leading to a legal dispute now pending before the Patan High Court after the Insurance Board failed to resolve the matter.

Insurer’s Position

Neco Insurance CEO Ashok Kumar Khadka said the policy was not renewed, making the second damage claim invalid. He explained that engineering insurance must be renewed upon expiry, and coverage applies only within the policy period. Neco Insurance had already approved over Rs 20 million for the first damage incident.

Contractor’s Position

Lumbini Builders’ Managing Director Bishnu Prasad Sharma, part of the JV, said an independent consultant assessed the damage and that Neco Insurance had initially agreed to pay Rs 103.4 million before backing out. He claimed the policy was renewed and argued that the bridge could be completed within a year if the claim was settled.

Sharma said his company has been continuing the work alone since Pappu Construction, founded by former lawmaker Hari Narayan Rauniyar, abandoned the project in 2018. He alleged that Pappu’s withdrawal left Lumbini Builders solely responsible for construction to avoid blacklisting.

The Department of Roads said the contractor has threatened to halt work until the insurance payment is made. Krishna Kumar Mahato, head of the Janakpur office of the Postal Highway Directorate, said they have urged the contractor to continue work while the claim process is underway.

Delays and Cost Escalation

The two-lane bridge contract, worth Rs 240 million, was originally set for completion within four years. The government has extended the deadline eight times to avoid cost escalation and additional procurement.

Flood damage in 2021 halted completion plans, with about 50 percent of the damaged structure repaired so far. The latest deadline was set for mid-July 2025, but the contractor has requested an extension till mid-July 2026.