Construction Entrepreneurs Federation Warns of Industry Collapse, Demands Government Action

Kathmandu. The Federation of Construction Entrepreneurs of Nepal has drawn the serious attention of the government and the Finance Committee of the House of Representatives, stating that the country's construction industry is on the verge of collapse. The Federation recently submitted a 13-point memorandum to the Chairman of the Finance Committee, urging immediate action to resolve the existing problems. 

According to the data presented by the Federation, construction entrepreneurs have incurred a loss of approximately 10 billion rupees in construction materials, especially diesel and bitumen, due to price increases in the international market.

The Federation claims that due to this abnormal situation created by the impact of the West Asian war on fuel price increases, it has become impossible to proceed with construction work. Although the Public Procurement Regulations stipulate that price increases of more than 10 percent should be adjusted, entrepreneurs are further burdened as this does not apply to small and short-term contracts.

The Federation has stated that the provision in the Public Procurement Act to award contracts to the lowest bidder (low bidding) has led to a decline in construction quality and many projects have become sick. The Federation has demanded that bids coming in at more than 15 percent discount be discouraged and the standard deviation method be adopted. 

Furthermore, it has been demanded to either provide a one-time extension for sick projects that have not been completed on time due to various reasons, or to terminate them based on convenience without confiscating the bank guarantee.

Objection has been raised against unnecessary harassment and detention of construction entrepreneurs by various state agencies. It is mentioned that this has spoiled the investment environment and made entrepreneurs fearful. 

Similarly, the Federation has complained about problems in purchasing insurance policies due to the monopoly of Himalayan Re-Insurance Company in re-insurance, and the premium being excessively high.

Other Main Demands:

Payment Problem: Demand for immediate release of long-pending payments and arrangement for monthly payments.

Site Clearance: Contracts should be awarded only after site clearance, tree cutting, electricity pole relocation, and environmental studies are completed.

Audit Discrepancy Resolution: Suggestion to resolve issues through a tripartite meeting and not to burden entrepreneurs with audit discrepancies arising from the weaknesses of public bodies.

Accountability: Stating that frequent transfers of project chiefs hinder work, they should be held responsible until the project is completed.

The Federation has warned that if the construction sector, which contributes about 13 percent to the country's Gross Domestic Product (GDP) and provides employment to more than 2 million people, falls into crisis, the entire economy will be at risk. 

The Federation has also emphasized the need for the mandatory participation of stakeholders in the 15th amendment of the Public Procurement Regulations.