Construction Work Halts Due to Soaring Material Prices, Federation Demands Government Action

Kathmandu. The Federation of Contractors' Associations of Nepal has demanded immediate government intervention to resolve the crisis, stating that construction work across the country is on the verge of halting due to excessive price hikes in construction materials. During a discussion with the Chairman of the Infrastructure Development Committee, Ashish Gajurel, federation officials drew attention to the complexities and practical problems within the Public Procurement Act.

In the discussion, the President of the Federation of Contractors' Associations of Nepal, Nicolas Pandey, stated that although Section 55 (1) of the Public Procurement Act clearly provides for adjustments in case of unexpected price increases, employees are reluctant to implement it. He said, 'The Public Procurement Monitoring Office (PPMO) document mentions that price adjustments should be given, but employees have put businesses in trouble by writing in the contract that it is 'not applicable' to old contracts. If employees cannot make decisions due to fear of the Commission for Investigation of Abuse of Authority or irregularities tomorrow, a concrete decision must come through the 'removal of obstacles' from the Council of Ministers.'

He also said, 'There is a compulsion to bring skilled workers from India and Bangladesh due to the lack of skilled workers in Nepal.' Shahi complained that materials like stone, gravel, and sand have to be bought expensively from the black market due to obstruction from local levels, which has unnaturally increased project costs.

The General Secretary of the Federation, Shivahari Ghimire, pointed out that the district rate determination process itself is flawed. He argued that the committee chaired by the CDO sets the rate at the end of Ashad, and that rate does not reflect the market price for the entire year. 'Although the rule states that the rate can be reviewed even in the middle if the price increases by more than 10 percent, no district has followed this,' Ghimire said. He emphasized the need to issue 'Directive 2' to solve the current crisis, similar to 'Directive 1' issued in 2035 BS.

The spokesperson of the Federation, Mangal Bahadur Shahi, argued that there is a shortage of skilled manpower and raw materials in the construction sector. 'Currently, more than 31,000 small contracts are at risk.'

He informed that 31,142 contracts were supposed to be completed by the end of Ashad. However, he stated that those contracts would be left incomplete due to the price increase.

'This problem has arisen due to the tendency of delaying contract calls. From now on, contracts should be issued by the month of Ashwin, and an automatic price system should be included in all contracts.'

Committee Ready to Solve Problems
After hearing the problems of the entrepreneurs, the Chairman of the Infrastructure Development Committee, Ashish Gajurel, said that the contraction of capital expenditure to 25-26 percent is a historically worrying situation. He acknowledged that the country's development is not possible without solving the problems of the construction sector. Chairman Gajurel said, 'Discussions will be held immediately with the ministry and concerned bodies regarding low bidding and price adjustments. The committee will coordinate and take necessary initiatives to address the legitimate demands raised by the entrepreneurs and untangle the legal knots.'

Furthermore, Chairman Gajurel stated that they are committed to resolving the obstacles seen in the construction business.

Chairman Gajurel clarified that it is his responsibility to solve the problems affecting development construction works due to the shortage and abnormal price increase of construction materials. 'We are aware of the problem, now it must be solved, and we will solve it,' he said, 'We are the ones who will solve it, not someone else.'

In this regard, Gajurel informed that a joint meeting of officials from the concerned ministry and construction entrepreneurs will be convened at the next committee meeting.

He stated that a detailed discussion on price increases and material shortages will be held at that meeting, and important decisions will be made for a way out.

In addition, he expressed his commitment to gradually improve laws and regulations as needed to systematize the construction sector. 'The main challenges now are the price increase and shortage of materials, and we are serious about this. We will continue to discuss other remaining issues,' Gajurel said.