Kathmandu. The Federation of Contractors’ Associations of Nepal (FCAN) has warned of halting construction projects across the country if the construction industry did not intervene immediately.
Organising a press conference on Tuesday, FNCCI said that the current economic situation, especially low capital expenditure, has caused serious impact on the infrastructure sector.
FNCCI claims that only 27 percent of the allocated capital budget has been spent so far in the current fiscal year 2082/83.
According to the federation, the war in the Middle East has led to a huge increase in the price of diesel, kerosene, and other fuels, which has directly affected the construction sector.
The price of diesel has increased from Rs 139 per liter before the war to Rs 225 now, while the price of bitumen has more than doubled.
Most of the projects have been affected due to the price hike and shortage of construction materials including cement, sticks. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has complained that the price adjustment system has not been effective and the Nepal Rastra Bank’s index has not incorporated the real market price.
According to the FNCCI, most of the small and big projects, including the projects of national pride, have almost come to a standstill. In such a situation, the contractors have demanded the government to extend the deadline of all projects including bank guarantee, insurance and compensation.
The FNCCI has concluded that the ordinance to amend the Public Procurement Act-2063 brought by the government is only partially industry-friendly. Although the problems of low bidding have been addressed to some extent, price adjustment, payment and other structural problems still remain.
According to the federation, the arrest of private sector entrepreneurs including contractors has spoiled the investment climate. It warned that this situation could affect jobs, supply chains and the banking system.
The federation has clearly stated that if a concrete decision is not taken on price adjustment within a week, the construction work across the country will automatically stop. At the same time, the government will be responsible for all the consequences arising out of it.
The federation has also warned that it will soon announce protest programmes if their demands are not addressed.
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