Contractors seek price adjustment, deadline extension

By Rammani Dahal/Shashidhar Parajuli, Makwanpur/Biratnagar, Apr. 28: Construction entrepreneurs have demanded price adjustments in line with rising costs in ongoing projects.

The Federation of Contractors’ Association of Nepal, Bagmati Province, has called for immediate intervention, stating that the unexpected and steep rise in prices of construction materials, coupled with supply shortages, has pushed the industry to the brink of collapse.

At a press conference held in Hetauda on Sunday, the federation urged the government to provide immediate relief to contractors affected by escalating material costs and to prevent the construction sector from going bankrupt.

Bagmati Province President of the federation, Chhatra Bahadur Tamang, described the sharp and unpredictable increase in fuel prices as a “tsunami” hitting the infrastructure sector. 

He warned that shortages of construction materials have brought projects close to a standstill, making deadline extensions unavoidable.

He informed that the ongoing conflict in the Middle East has led to repeated and significant price hikes in fuel products such as diesel, petrol and kerosene, which are widely used in construction. 

In addition, key materials including bitumen, cement and steel rods have seen continuous and abnormal price hikes, alongside supply constraints, further paralysing the industry.

“The ‘tsunami’ in the physical infrastructure sector has already begun to have serious repercussions on the overall economy,” Tamang said. 

He added that despite repeated correspondence with the Government of Nepal and relevant authorities, no effective measures have yet been implemented.

He further criticised the government for providing only verbal assurances over the past two months without concrete action, stating that contractors, tens of thousands of workers, and related industries are now facing severe financial distress.

According to Tamang, contract price adjustments are currently based on the Nepal Rastra Bank’s price index. 

However, even as market prices of construction materials soar, the index reportedly shows a decline in their prices, complicating the sector’s difficulties.

He urged the government to immediately issue Directive-2 reflecting updated price adjustments for each project, and to ensure that all contracts are revised accordingly to provide relief and prevent further collapse of the industry.

Senior Vice-President Rajkumar Budhathoki said that continued surge in prices and shortages of fuel and construction materials during the peak construction season have imposed a heavy financial burden on contractors, raising serious concerns about the future of ongoing projects.

He added that due to the persistent rise in fuel prices and lack of materials, work on both national pride projects and other small and large-scale projects across the country has nearly come to a halt.

Given the current crisis, the federation stated that it is highly unlikely the projects will be completed within their stipulated deadlines. It has therefore urged the government and concerned stakeholders to extend project timelines, including provisions for bank guarantees, insurance and additional compensation.

Koshi contractors demand extension of deadlines

Meanwhile, construction entrepreneurs in Koshi Province have urged the government to extend deadlines for development projects following an abnormal rise in the prices of petroleum products and construction materials.

Citing inflation, contractors said it is no longer feasible to continue work at previously agreed rates, and have called not only for deadline extensions but also for price adjustments.

At a press conference held in Biratnagar on Sunday, the Federation of Contractors’ Associations of Nepal, Koshi Province, stated that completing projects within the stipulated timeframe has become impossible under current conditions. 

According to contractors, prices of fuel and construction materials have surged by up to 100 per cent, bringing both small and large-scale projects across the province to a halt.

Province President of the federation, Janasewak Bhandari, said rising fuel costs have triggered a serious crisis in the construction sector. 

“Fuel prices are increasing due to international market trends and ongoing conflicts. Under such circumstances, timely completion of projects is unlikely,” he said, adding that the government should extend the validity of all contracts, including bank guarantees and insurance periods.

Contractors have also demanded for immediate issuance of the “Price Adjustment Directive–2”. They complain that although market prices of materials have increased, the Nepal Rastra Bank’s index shows a decline, putting them at a disadvantage. 

The federation has accused the government of offering only verbal assurances over the past two months without taking concrete action.

General Secretary Ramesh Karki said that projects ranging from national pride initiatives to road blacktopping works have been halted due to shortage of fuel and bitumen. 

He cited the example of the Kakarbhitta–Sitapuri road section, where preparations had been completed to blacktop 22 kilometres of road, but work has not progressed due to lack of fuel and materials.

President of the Federation, Morang, Mahesh Mishra, said it is impossible to carry out work under existing contract agreements when diesel prices have risen from Rs. 133 to Rs. 204. 

Contractors warned that delays in extending deadlines and adjusting prices could push tens of thousands of workers and related industries dependent on the construction sector into crisis.