Contractors ask for relief as prices skyrocketed

by index360

LAHORE: Constructors Association of Pakistan (CAP) has urged the government to provide relief from the impact of unbearable increase in the prices of construction material registered during the last one and half year due to which constructors are unable to meet their already signed agreements in public sector besides boycotting participation in any new tenders for the last two months.

Prices of steel, cement, bricks and other construction material has registered an average increase of 75% in the prices during the last one and half year while escalation in the public sector project either does not exist or ensure only a 10-15% upward revision thus constructors have to bear the additional expense of 60% at their own, said CAP Chairman Engr. Kamal Nasir Khan while talking to a select group of journalists on Wednesday.

Escalation in the prices of construction material impact both the developers and contractors of government projects but developers can add the increased prices to their end cost for private buying but contractors in the public sector have to follow the agreed prices. ” Escalation is not given in the provincial contractors at all due to which industry is fast heading towards complete destruction”, he said.

He added that around 80% of the constructors in public sector development projects are small, constructors are unable to continue the work or participate in new bidding but if immediate relief is not given work on gong-on projects worth trillions of rupees would also soon come to a halt, said CAP Chairman.

He said steel prices have reached to Rs195,000 tons from 104,000 per tons in March 2020, cement prices touched Rs730 per bag from Rs480 per bag, Bitumen from Rs64,700 per tons to Rs130,600 per tons, Aluminum doors/windows from Rs475 per square feet to Rs825 per square feet and other materials have also increased with the same ratio.

“80% of the small contractors do not even have working capital and they complete projects through payments made by the government”, Khan said. Big constructors do have the capacity to complete the projects even in loss by borrowing from the banks or selling their assets to save their reputation but small contractors involved in construction of streets, small roads and etc do not have that capacity, he added.

Khan said that they were running from the pillar to post for the last one and half years to have upward revision in the prices in correspondence with the existing rate of construction material.

He claimed that a onetime escalation was given to the constructors in year 2004 by the then Musharraf regime vide SRO# 26/(183)Plan Cord-II/PC/2004 and earlier in year 1974.

He said that planning commissioner, finance ministry and Pakistan Engineering Council (PEC) representative should sit together to carve out some formula for one time escalation payment to constructors besides revising the existing escalation formula to reflect present market dynamics where already escalation is provided.

CAP Chairman claimed that stoppage of ongoing construction projects and boycott of new tender would cause a direct impact of Rs100-120 billion to the government while industries allied with construction would also face a slowdown causing further dent on the national exchequer.

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