In a bid to streamline the process, improve compliance, and tackle revenue leakage concerns, the Ministry of Finance (MoF), has recently issued a significant notification outlining the decentralized collection of rebates for cements and High-Density Polyethylene (HDPE) pipes procured for government construction works. Under the new procedures, the procuring agency is required to issue a letter to the depot manager for each consignment of cements and HDPE pipes to be lifted by the contractor. This letter must specify the price and quantity of the construction materials, and the contractor must submit copies of the corresponding invoices to the procuring agency.
However, the MoF has noted that some procurement officers and relevant officials are facing challenges in accurately determining the quantity of cements and HDPE pipes utilized in various construction projects, leading to difficulties in the compilation and collection of rebates from manufacturers. In light of these observations, the Ministry has urgently called on concerned project managers and engineers to ensure strict compliance with the aforementioned notification for the procurement of cements and HDPE pipes for government construction works, whether executed through contracts or departmentally.
This decentralization initiative is not entirely new, as it was initially introduced in December 2021. Its main objectives are to increase compliance rates among procuring agencies, address incomplete reporting issues, and prevent revenue leakage by collecting rebates at the source.
To facilitate the process, the MoF has prescribed specific procedures for rebate collection by spending agencies engaged in civil works involving cement consumption and water supply, irrigation, or plumbing works involving HDPE pipes. The bidding documents must clearly specify the use of designated cements (Penden Cement, Lhaki Cement, Dungsam Cement) and HDPE pipes (Druk Pipes, Rabten Pipes) to be lifted from the nearest sales depot.
For each consignment, the contractor is required to obtain a letter from the spending agency, specifying the price and quantity of cements and HDPE pipes to be lifted. This letter must be presented to the depot manager during the purchase, and the contractor must also submit invoice copies to the spending agency.
To streamline the process further, various administrative bodies involved in government construction works have been assigned specific reporting and rebate collection responsibilities. Gewog Administration and Dungkhag Administration awarding works are required to submit monthly reports detailing the purchases of cements and HDPE pipes, along with invoice numbers and dates, to the Dzongkhag Administration for compilation and collection of rebates offered by the manufacturers.
Similarly, regional offices, autonomous agencies, and ministries shall submit monthly reports on cements and HDPE pipes procured by contractors or their respective offices to their respective higher bodies for compilation and rebate collection.
The Ministries will compile the monthly consumption of cements and HDPE pipes by their offices and collect the applicable rebates from manufacturers. To oversee this process, the Head of Agencies shall appoint a focal officer, typically a Procurement Officer or a relevant officer in the absence of a dedicated procurement officer.
Rebate collection from manufacturers will occur on a quarterly basis, based on the consumption reports compiled by the respective agencies. The collected rebates will be deposited into the Government Revenue Account using the Revenue Administration Information Management System (RAMIS). Additionally, the Department of National Properties (DNP) will disseminate the executed rebate agreements with the manufacturers to all rebate collecting agencies to ensure compliance.
This decentralized rebate collection system is expected to enhance efficiency, ensure accurate reporting, and boost revenue collection for the government, ultimately contributing to better construction practices and infrastructure development nationwide.
Tshering Pelden from Thimphu
