Kathmandu. The Federation of Contractors’ Association of Nepal (FCAN) has said that the contractors have reached a difficult juncture in the history of the construction industry.

At a press conference organized here today, the Federation said that most of the projects in the country have almost come to a halt due to the state’s weak capital expenditure, high price hike of construction materials and the policy level confusion.

According to the federation, around 32,000 contractors including seven provinces, 77 district associations and other members are currently under severe economic pressure. According to the FNCCI, only 27 per cent of the allocated capital budget has been spent so far in the current fiscal year, which has directly affected the infrastructure development.

FNCCI President Nicholas Pandey said that the price of petroleum including diesel and kerosene, and construction materials like bitumen, cement and rods has increased due to the ongoing war in the Middle East.

On February 15, the price of diesel was Rs 139 per liter and the price of diesel has increased to Rs 225 per kg and the price of bitumen has increased from Rs 75 to Rs 155 per kg. He said that due to this, the construction cost has increased drastically and the businessmen are forced to face a ‘force majure’ situation. However, the association has complained that the government has not taken effective decision for price adjustment.

According to the Federation, most of the national pride projects have come to a halt due to price hike and lack of materials. They have demanded the government to extend deadline of all projects with bank guarantee, insurance and compensation as there was little possibility of completing the project on the stipulated time.

Meanwhile, the ordinance related to the amendment of Public Procurement Act-2063 BS has not fully addressed the main problems like ‘low bidding’, according to the federation. The federation has concluded that there is lack of clarity on price adjustment, provisions related to consumer committee and monthly payment.

According to the Federation, the private sector is terrified of the crackdown on contractors and other entrepreneurs. It warned that this would have a negative impact on investment, employment and supply chains. Stating that the Central Investigation Bureau’s investigation into the electronic purchase system was found to be legal, the FNCCI said it was unfortunate to be arrested again in connection with the same issue.

According to the federation, in the current situation, the entrepreneurs are facing double whammy of ‘loss while working, fine for not working’. If a policy decision on price adjustment is not taken within a week, the construction work will be stopped automatically and protest programmes will be announced.