Himal Press 
KATHMANDU: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed solidarity with the demands of the Federation of Contractors’ Associations of Nepal (FCAN), saying the construction industry is facing one of the gravest crises in its history due to steep rises in fuel and construction material prices.
In a statement issued on Thursday, the FNCCI said the construction sector, regarded as the backbone of infrastructure development and a key driver of economic activity, has come under severe pressure from unexpected and excessive increases in the prices of fuel and construction materials.
The FNCCI said it stood in full solidarity with the extreme economic and mental pressure being faced by construction entrepreneurs.
According to the federation, the construction industry directly and indirectly provides employment to more than two million people and accounts for nearly 80% of the government’s capital expenditure. However, it said the sector has been severely affected by rising fuel and material costs, disrupting supply chains, stalling projects and negatively impacting the broader economy.
“Diesel prices have risen from Rs 139 per liter before the Middle East conflict to Rs 225 per litre at present, while bitumen prices have jumped from Rs 75 per kg to Rs 155 per kg. Construction entrepreneurs have already incurred losses exceeding Rs 10 billion during this period,” the FNCCI said. “Although contractors have repeatedly urged the government to introduce price adjustment mechanisms for all types of contracts in view of the abnormal rise in the prices of diesel, kerosene, bitumen, transportation and labour costs, they said the issue has not been resolved.”
Stating that neighbouring India has been making price adjustments in line with increases in fuel and construction material costs, FNCCI said Nepali contractors have been denied similar relief. It warned that such a situation could halt construction works across the country.
FNCCI has urged the government to immediately issue guidelines or circulars to ensure price adjustments in line with rising costs in all projects and contract periods.
Citing Section 55 of the Public Procurement Act, 2007, the FNCCI said there is a mandatory legal provision requiring price adjustment in accordance with inflation and cost escalation, and that the provision of price adjustment should not be frozen for contracts of any duration.
The FNCCI called on the government and concerned agencies to immediately implement price adjustment measures to protect the construction industry from collapse.
