Audit uncovers major irregularities in EPS procurement for Korea-bound workers

KATHMANDU, MAY 22: Significant irregularities have been uncovered in the procurement process related to the Employment Permit System (EPS), which facilitates the placement of Nepali workers in South Korea. These issues include mismanagement in the purchase of uniforms and air tickets, resulting in excessive government spending.

According to a report by the Office of the Auditor General, the EPS Office under the Ministry of Labour, Employment and Social Security independently prepared cost estimates for workers’ uniforms, bypassing standard procedures. As a result, the government incurred an additional financial burden of Rs 3.61 million.

Rule 11(2) of the Public Procurement Regulations, 2007  requires that cost estimates for goods be based on actual costs incurred for similar items during the current fiscal year by the relevant public body. However, the EPS Korea Branch directly procured 614 jackets and caps for outgoing workers from a single supplier at Rs 1,615 per set, totalling Rs 992,000, without conducting a competitive bidding process.

In a separate transaction, 20,000 sets of uniforms were procured through a formal tender at Rs 1,796 per set, amounting to Rs 35.93 million, which was 0.31 percent lower than the cost estimate. However, this tender rate was Rs 180.80 higher per unit compared to the earlier direct purchase.

Despite this, the office prepared the cost estimate at Rs 1,802.35 per set, failing to base it on the earlier direct purchase rate. This led to an excess expenditure of Rs 3.61 million, as calculated by the Auditor General.

Further financial mismanagement was found in the procurement of air tickets for workers. The EPS Korea Branch renewed a contract with a private airline service provider without issuing a new tender, relying instead on outdated rates. This decision caused an additional financial burden of Rs 703.9 million. The Auditor General recommends that the responsible officials be held accountable, as their decision increased the cost per worker by Rs 64,849.

As per Section 23 of the Employment Permit System (Operation and Management) Guidelines, 2073, the EPS Korea Branch is required to follow existing laws and invite competitive bids when procuring air tickets for outbound workers. In accordance with this provision, the office had previously selected service providers through open bidding, setting ticket prices accordingly, with workers paying the service provider directly.

In 2023, the office signed a one-year agreement with a private company at Rs 119,840 per one-way ticket per worker. However, a ministerial decision later extended the contract until mid-February 2025.

This year, the office again signed a new agreement—this time through open bidding—with the same company, securing a reduced rate of Rs 54,991 per ticket. Nonetheless, the earlier decision to renew the contract without a tender led to an added burden of more than Rs 700 million.

The EPS Korea Branch was established under a bilateral agreement between Nepal and South Korea to facilitate and manage the orderly supply of Nepali workers to Korea, as outlined in the Employment Permit System (Operation and Management) Guidelines, 2073 B.S.