Construction Federation Demands 'Construction Holiday' Amid Soaring Material Costs

Kathmandu. The Federation of Contractors' Associations of Nepal (FCAN) has urged the government to declare a 'Construction Holiday' until construction material prices stabilize. The federation stated that it is seriously concerned about the sharp increase in prices of fuel materials heavily used in the construction industry, such as diesel, petrol, and kerosene, citing conflicts in the Middle East and West Asia. The FCAN put forward this demand.

A statement issued today by FCAN General Secretary Roshan Dahal read, "The sharp increase in prices of fuel and other materials during the peak construction season will place a huge financial burden on construction entrepreneurs and is certain to add an economic burden to Nepal Government's public entities due to increased infrastructure costs. Therefore, we inform you that the federation will be compelled to suspend construction work on all projects for the time being until the prices stabilize."

The FCAN requested the government to declare a 'Construction Holiday' until prices stabilize, as material prices are increasing in the market while the price index issued by the central bank is not realistic.

The federation claims that besides the sharp increase in fuel prices, a few importers in Nepal exploited the recent elections to create an artificial shortage of bitumen used in road construction through 'carteling,' causing financial distress.

The federation believes that the possibility of further damage to roads prepared for asphalting is high due to the shortage of bitumen after road paving begins, and construction entrepreneurs are in double jeopardy as the price has increased by up to NPR 40 per liter compared to the price at the time of 'booking.'

The statement mentioned that the country's construction industry is further tormented because India recently stopped exporting bitumen. "Amidst the election atmosphere, a few industrialists have also increased prices for steel bars and cement, adding a significant financial burden not only to government infrastructure but also to private sector infrastructure," the statement read. "Currently, steel bars have increased in price from NPR 85 to NPR 100 per kg, and cement has increased by up to NPR 50 per bag. Since a few industrialists have also cut production through carteling along with price hikes, the construction industry, which is already under extreme stress due to reasons like payment delays, has become more problematic."

Through the statement, the FCAN demanded that the relevant bodies of the government arrange for price adjustments corresponding to the price increases in each project, in accordance with the Public Procurement Act and Regulations.