Three Demands, One Budget: A Rural Municipality Chooses
Sunkhani Rural Municipality has NPR 45 million of capital budget for the next fiscal year and three competing demands. The largest is blacktopping 6 km of road to the district headquarters at NPR 30 million; last monsoon that road was impassable for 40 days and traders estimate NPR 12 million of produce spoiled. The second is repairing the Ward 4 basic school science block and rebuilding two toilets used by 480 students, 130 of whom walk more than an hour each way, at NPR 8 million. The third is a piped drinking-water scheme for 220 households in Wards 2 and 3, who now draw from an open spring shared with livestock, at NPR 22 million. The municipality must reserve 10 per cent of its capital budget for maintenance, cannot borrow without federal approval, and has already committed NPR 4 million of this year's allocation. The road contractors' association is pressing the ward chair, while 300 parents have signed a memorandum for the school.
1. Recommend which proposal or proposals the municipality should fund in full this year. Set out the criteria you weighed and defend your priority order.
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Step 1 - screen for legal duty first. Basic education is a constitutional guarantee (Article 31) and drinking water is a basic service the local level must deliver under the Local Government Operation Act 2074. A road is an economic facility, not an enforceable right, so it ranks last on obligation even though its money value looks largest.
Step 2 - compare cost against beneficiaries and harm avoided. The school costs NPR 8 million for 480 students and removes a sanitation failure; the water scheme costs NPR 22 million for 220 households (about NPR 100,000 per household) but removes a real health risk; the road costs NPR 30 million and mainly protects traders' margins.
Step 3 - test the cash constraint. Free balance is roughly 45 - 4.5 (reserve) - 4 (committed) = NPR 36.5 million. School plus water equals NPR 30 million and both finish. The road alone consumes NPR 30 million and leaves two unmet duties.
Recommendation: fund school and water this year; place the road in next year's plan with a provincial or federal conditional grant. A 40-day washout justifies planning, not an unfunded commitment.
2. The ward chair proposes starting both the road and the water scheme by spending the 10 per cent maintenance reserve, promising to repay it next year. Assess this proposal.
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What the reserve is for. The maintenance reserve exists so that existing roads, buildings and water systems do not decay into replacement-level costs. Spending it on new construction converts a repair budget into a capital budget, which is exactly the swap the rule prevents.
Consequence in numbers. The reserve is NPR 4.5 million. Water alone needs NPR 22 million, so the reserve does not make the water scheme viable; it only creates a partial, half-built scheme. A half-built pipeline delivers no water and blocks the site for the following year.
Cash-flow risk. Repaying the reserve next year means next year's maintenance backlog is deferred, and deferred maintenance compounds: a culvert repaired this year costs a fraction of the road rebuilt after two monsoons.
Accountability risk. Diverting a ring-fenced reserve without assembly approval is an audit objection and exposes the chair personally. The correct route is a public hearing, a written decision of the assembly, and a sequenced plan - not a promise to repay.
3. The contractors' association offers to begin road work immediately, before a contract is signed, to save the monsoon window. How should the ward respond, and why?
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Refuse, and record the refusal. Work begun before a contract is signed creates an unfunded liability and bypasses competitive bidding under the Public Procurement Act. If the association later claims payment, the municipality has no legal basis to pay and the dispute lands on the ward chair.
The saving is illusory. Starting early may save one season, but an unsigned contract carries no performance guarantee, no defect liability period and no quality specification, so a failed surface after one monsoon cannot be enforced. The expected repair cost is likely larger than the season saved.
A lawful alternative. The ward can still use the window: publish the tender now, use the users' committee route where the rules permit it for small works, and begin with survey, drainage and bioengineering on the worst section. This keeps the schedule without breaking procurement rules.
Transparency step. Announce the decision at the ward assembly and disclose the procurement plan under the right to information, so the association's offer and the ward's refusal are both on record.