Parliamentary Committee Discusses Construction Sector Crisis, Government Pledges Action
Kathmandu. The country's infrastructure construction sector is currently going through a serious crisis. At a time when this sector is on the verge of collapse due to excessive price hikes in construction materials, administrative hurdles, and policy ambiguity from the state, the government has pledged to take concrete steps to resolve the problems.
A discussion held on Friday at the Infrastructure Development Committee of the Federal Parliament between government representatives, lawmakers, and construction entrepreneurs paved the way for a proposal to the Council of Ministers, accepting price adjustment as the main key to ending the deadlock in the construction sector.
- Crisis in the Construction Sector
Nicholas Pandey, Chairman of the Federation of Nepal Construction Entrepreneurs, stated that the country's construction sector is in a serious crisis due to the unexpected price increase in construction materials. In the meeting of the Infrastructure Development Committee, he warned that the construction sector would completely collapse if prices were not adjusted in time.
Chairman Pandey mentioned that the price of construction materials, including petroleum products, has increased unexpectedly due to the war in West Asia and global inflation. Recalling the clear legal provision in Section 55 of the Public Procurement Act, 2063, he stated that prices would be adjusted if construction materials fluctuate by more than 10 percent.
Chairman Pandey stated that construction works are on the verge of halting because this mandatory provision has not been implemented yet. Informing that the construction sector contributes about 13 percent to Nepal's Gross Domestic Product (GDP), he mentioned that the crisis in this sector would have a serious impact on the entire economy. According to him, about 60 percent of the development budget flows into the market through the construction sector.
Pandey said, 'The construction sector provides direct and indirect employment to about 20 lakh laborers. If this sector stops, the livelihood of millions of laborers will be affected.'
He also presented the fact that the construction sector is like a large startup and has created self-employment for more than 32,000 Nepali citizens. He pointed out that due to the slowdown in construction work, cement and steel industries are currently operating at only 20 to 25 percent of their capacity, and the banking sector is seeing an increase in 'bad loans' as construction entrepreneurs are unable to pay installments and interest on loans taken from banks.
Many projects are becoming 'sick' due to the lack of price adjustment and proper provision for contract extension. Pandey said that although many contracts are expiring by the end of Ashad, it is not possible to proceed with the work without price adjustment.
- Lawmakers Question Entrepreneurs' Image and Work Style
Lawmakers present at the meeting expressed sympathy for the entrepreneurs' problems and made strong comments about their work style and their image in society. Lawmaker Rajendra Kumar Rai urged construction entrepreneurs to improve their social image.
Rai commented that most entrepreneurs stop working citing the rise in oil prices and keep repeating the same excuse. He emphasized the need to correct the generally poor image of construction entrepreneurs and speed up work.
Similarly, lawmaker Manju Bhusal suggested that construction entrepreneurs should end the tendency to make excuses. She stated that projects that need to be completed by the end of Ashad pose a big challenge. She said, 'There are more than 1 lakh 31 thousand projects whose deadline expires in Ashad, this is a big challenge.'
Bhusal argued that since the minister has already pledged to work, entrepreneurs should now focus on work without making excuses. She mentioned that development works can only be completed on time if entrepreneurs fulfill their duties and the government also becomes responsible.
Lawmaker Bodh Narayan Shrestha warned construction entrepreneurs to stop irregularities and 'under-the-table transactions' (bribery) in the construction sector. He urged entrepreneurs to come with clear data and action plans.
'Can you stop under-the-table transactions? If anyone has stopped work by demanding money, tell us, we will speak in parliament,' Shrestha said.
He suggested construction entrepreneurs adopt technologies for building sustainable roads using local stones and soil instead of imported materials. Citing the example of the Rasuwa customs building not being built for 7 years, he said that the state should not pay extra amounts to slow-moving entrepreneurs in the name of price hikes and that projects should be properly monitored.
- Projects Stalled Due to Lack of Cooperation from Staff
Similarly, lawmaker Bharat Kumar Swar said that construction entrepreneurs are suffering due to government employees and local problems. He argued that it is not fair to blame only the entrepreneurs.
Swar gave the example of Achham, where entrepreneurs had to abandon their work due to the oppression and lack of cooperation from employees. He said, 'In Achham, due to the lack of cooperation from employees, a businessman fled, leaving behind crores worth of vehicles and equipment.'
Swar also mentioned that construction is obstructed due to land disputes and compensation issues. He stated that if the government makes timely payments and employees do not harass entrepreneurs unnecessarily, then the work can be completed on time.
Lawmaker Dr. Mo. Firdous Alam discussed the administrative hassles faced by construction entrepreneurs. He said that construction entrepreneurs are compelled to leave their work and run to government offices and ministries, and that only those who are clever get their work done in the ministry, while others face a dead end. He demanded an immediate end to the discriminatory practice of making payments and advancing files only on the basis of access and acquaintance.
Lawmaker Ramakant Prasad Chaurasiya strongly objected to the fact that the final settlement of bridges, even after completion and use by vehicles, has not been done for years. He informed that the final settlement of contracts for bridges like Dudhaura, Simra, Chitpi, and Banjariya in his constituency has not been done even 8-10 years after their construction. He argued that construction entrepreneurs should not be put in hardship by withholding payments for completed projects.
Lawmaker Jayapati Rokaya expressed concern that the problems that have persisted in the construction sector for years have not yet been resolved. He said that the weaknesses seen in the past are still the same today and that work cannot be done in the old way anymore.
Lawmaker Gopal Sharma expressed anger that the public is losing their lives prematurely due to the poor quality of road construction. He mentioned the lack of honesty in construction work and urged entrepreneurs to be transparent.
Lawmaker Sunil KC opined that construction entrepreneurs are suffering due to the excessive price hike in construction materials and that the state should be entrepreneur-friendly. Lawmaker Rajunath Pandey said that 'hotel settings' and the culture of giving gifts in the construction sector are affecting good governance. He strongly criticized the tendency to win contracts by bidding 30 to 40 percent low and then compromising on work quality.
Lawmaker Pradip Bisht said that policy clarity and reforms in the employee administration are necessary for the country's development. He commented that the current construction-related laws in Nepal are old and irrelevant, and pointed out that the practice of changing project chiefs up to 15 times in a 20-year period is causing delays in work.
Lawmaker Rajkishor Mahato Koiri said that the public is suffering due to low bidding and incomplete projects in the construction sector. He mentioned that 18 people have died due to technical errors in a bridge in Dhanusha and that both the state and the construction parties should be accountable for such serious issues.
- Government's Commitment to Price Adjustment
Gopal Sigdel, Secretary at the Ministry of Physical Infrastructure and Transport, said that the government is making special efforts to resolve the problem of unexpected price hikes in the construction sector. Responding to questions raised by lawmakers in the meeting of the Infrastructure Development Committee under the House of Representatives, he informed that a proposal is being prepared to be presented to the Council of Ministers to address the price increase of construction materials.
Secretary Sigdel mentioned that the construction sector has been severely affected by the recent sharp increase in the prices of diesel and bitumen. He stated that although the price of bitumen has more than doubled, the Nepal Rastra Bank's wholesale price index has not been able to reflect it properly.
'The weight of bitumen in the central bank's calculation is less than 1 percent, so even if the price doubles in the market, its real reflection is not seen in the index,' said Secretary Sigdel. 'This has put entrepreneurs in trouble, and the ministry is coordinating with the Ministry of Finance and the Ministry of Law to address this.'
Secretary Sigdel admitted that the practice of freezing price increases when extending contract periods has created difficulties in construction work. He said that discussions are underway to remove these practical complexities and implement price adjustment even for contracts of less than one year, even though the law does not allow freezing.
Similarly, clarifying the payment problems of construction entrepreneurs, Secretary Sigdel claimed that work will not stop due to lack of budget. He said, 'Since I took charge of the Ministry of Physical Infrastructure, I have reallocated more than 10 billion rupees, and a total of about 13 billion rupees so far. We are conscious of not letting there be a lack of budget where work is ongoing.'
Responding to the questions raised by lawmakers about the quality of the Mugling-Pokhara road, Secretary Sigdel said that the project is being closely monitored. 'Work must be done with the specified quality and within the time limit. If there is any mistake, we will get it corrected and bring those who commit wrongdoing to justice,' he said.
Minister of Physical Infrastructure and Transport, Sunil Lamsal, said that the government is ready to solve the problems in the construction sector. He urged entrepreneurs not to delay construction work and not to compromise on quality.
Minister Lamsal stated that the government is aware of the country's economic situation and the impact of price hikes, and is serious about the problems of entrepreneurs. He pledged to resolve the issues of price adjustment and contract extension, even by amending the law for some projects. He urged entrepreneurs to work with confidence, but warned that the state would be ruthless towards negligent entrepreneurs.
Minister of Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, said that the delay in development and construction projects increases costs and raises questions about the relevance of investment. He mentioned that projects are becoming more expensive due to the inability to complete work on time, which affects the country's economy.
He emphasized the need to create an investment-friendly environment by looking at international practices, as the private sector is finding it expensive due to delays in hydropower investment.
Minister Shrestha acknowledged that it is difficult to work due to the existing Public Procurement Act and procedural complexities, and said that practical amendments to the law are necessary.
- Committee Directs to Solve Entrepreneurs' Problems Immediately
The Infrastructure Development Committee has directed the government to immediately identify and resolve the problems seen in the country's public infrastructure projects. Ashish Gajurel, Chairman of the Committee, said that the committee is serious about resolving the obstacles in the construction sector.
The committee has identified the increase in the price of fuel and bitumen due to the West Asian war as the main problem. Concluding that many construction entrepreneurs are unable to proceed with work due to the price hike, which is affecting the economy, the committee directed the government to find an immediate solution.
The committee has asked the government to present a bill in the parliament in the current session to remove the complexities in the current Public Procurement Act and amend the law. Chairman Gajurel said that work should not be stopped under any pretext of price adjustment or other reasons in the future, and the committee will facilitate the necessary measures to solve the problems.
The report prepared by the subcommittee led by Shriram Neupane on the status and problems of national pride projects was also presented at the meeting. The committee expressed concern about the quality and timeline of these projects and urged the creation of an environment where work would not be stopped for any reason.
This specific news has been automatically translated by AI. As a result, there may be some inaccuracies or language errors.
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