KATHMANDU — The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has stated that its serious attention has been drawn to the grave crisis unfolding in the construction sector.

Expressing solidarity with the demands of construction entrepreneurs, the Federation noted that the construction industry has reached the most difficult period in its history due to the unexpected and excessive price hikes in fuel and construction materials.

According to the FNCCI, the construction industry, which serves as a major backbone for stimulating the country’s economic activities, provides direct and indirect employment to more than 2 million people. Furthermore, this sector, which spends nearly 80 percent of the government’s capital budget, is reportedly on the verge of a complete standstill recently due to rising costs and disrupted supply chains.

The statement notes that the price of diesel, which was Rs 139 per liter before February 15, has now reached Rs 225. The price of bitumen has risen from Rs 75 per kilogram to Rs 155. The Federation stated that during this period, construction entrepreneurs have had to bear a loss of over Rs 10 billion.

The FNCCI pointed out that the construction industry is at risk of collapse due to the unnatural increase in the costs of construction materials, transportation, and labor, including diesel, kerosene, and bitumen. The statement also expressed grievance that although the Federation of Contractors’ Associations of Nepal (FCAN) has repeatedly requested the government to make provisions for price adjustments, the problem has not been resolved.

The FNCCI stated that while price adjustment mechanisms matching the inflation rate are being implemented even in neighboring India, the lack of such a provision in Nepal has heightened the risk of affecting construction projects across the country.

Recalling that Section 55 of the Public Procurement Act, 2007 contains a mandatory legal provision for adjusting prices in accordance with inflation, the Federation has demanded the government to immediately issue directives and implement price adjustments across all contracts.

The FNCCI has urged the government and relevant bodies to promptly arrange for price adjustments in order to keep the overall economy moving and to save the construction sector from collapsing.