Construction Federation Warns of Nationwide Project Stoppage Due to Price Hikes and Material Shortages

Kathmandu. The Federation of Contractors' Associations of Nepal (FCAN) has stated that it is no longer possible to continue development and construction work across the country due to unexpected price hikes and a shortage of construction materials. 

FCAN President Nicholas Pandey stated that continuing work in the current situation is not just 'difficult but almost impossible.' According to President Pandey, petroleum products (bitumen, kerosene, and diesel) account for 40 percent of the 'weightage' in road construction projects. However, with the price of diesel reaching 202 rupees per liter and its limited availability in the market, construction work is on the verge of coming to a complete halt. He noted that, on one hand, it is becoming difficult to obtain fuel and other construction materials.

Pandey mentioned that the standards set for extracting riverbed materials (stones, gravel, sand) are extremely complex, making it difficult to source these materials. According to him, local governments and Chief District Officers often label crushers as illegal just as the peak construction season begins. He argued that practical standards should be established to allow for sufficient extraction of materials needed for development without causing minimal environmental damage. He asserted that the state should not obstruct this, as these materials are used for national pride projects like roads and bridges, not for individual private homes.

President Pandey said, 'First of all, there has been an unexpected price hike. Petroleum products account for up to 40 percent of the weightage in road construction. Bitumen, kerosene, and diesel make up 40 percent. Today, the price of diesel is 202 rupees per liter, and it is not easily available. As a result, it is not just difficult to work, it is almost impossible.'

President Pandey stated that in the context of rising prices in the international market due to the war in the Middle East, the Federation's leadership is lobbying to resolve the problems faced by its members. According to Pandey, the Federation has advised contractors who are unable to work under current conditions to halt operations, and the Federation will take initiatives to extend their project deadlines.

Furthermore, Pandey mentioned that the Federation has begun lobbying for 'appropriate price adjustment' for contractors currently working on projects. According to him, the existing price adjustment index cannot cope with the current inflation. Efforts are underway to lobby for a fair adjustment. 

Pandey informed that the Minister of Physical Infrastructure and Urban Development has committed to providing appropriate price adjustments, adding that they are optimistic about reaching a concrete solution within this week.