Govt owes Rs 70 billion to construction entrepreneurs

KATHMANDU, June 4: The construction entrepreneurs have warned that if the government does not decide to extend the deadline of all the projects before June 18, 2023, they will halt all the projects. The Federation of Contractors’ Association of Nepal (FCAN) held a press conference on Sunday warning of bringing the construction works to a standstill if their demand is not addressed.

"If there is no decision to extend the deadline for all the projects within the given date we will be forced to stop all the projects and hand over all their licenses to the state," said Rabi Singh, president of the federation.

The government’s budget announcement for the upcoming fiscal year states that the government will release the budget for construction projects only after completing all the necessary procedures, the project managers will be held responsible and accountable, and the records of construction entrepreneurs will be updated through the Public Procurement and Monitoring Office. 

However, FCAN has expressed serious concern that this budget has not addressed the most necessary and important demand of the Federation to extend the deadline until the end of June 2024 as promised by the government. It also does not mention about making the remaining payments on time and addressing the current exorbitant price hike.

"It is unfortunate that the budget does not address the main demands of the federation, such as extending the deadline of all projects until the end of June 2024, canceling the milestone system, and adjusting the price according to the agreement with the government," Singh said. A complex situation has arisen due to the fact that the government cannot pay even the contractors who have completed their projects within the fiscal year, according to Singh.

Due to bureaucratic red tape, not only is the government trying to destroy the construction industry of the country, but the construction entrepreneurs have started ‘self-immolation’, according to the federation. 

Due to the fact that the government has already set up its own 'infrastructure company' for construction work and there is no condition for construction workers to carry out construction work, entrepreneurs from all over the country are ready to submit their licenses to the state.

FCAN said that the government is in confusion due to the serious impact of the Covid-19 pandemic on the construction sector worldwide, price increase, projects under the control of the local, provincial and central governments during the implementation of federalism and the budget allocated to them and the lack of a clear decision as to who these projects will be under. There is a situation where the work of such projects has been suspended and could not be completed on time.

"Due to the federal, provincial elections and local elections, the mobilization of construction workers has been affected because funds have not been released from the state on time for the construction works. The construction professionals have yet to receive payment of about Rs 70 billion for the completed projects," Singh said. The federation has declared a 'construction holiday' as a protest against the unexpected and excessive price hike of construction materials.

The balance of payments in the state's financial system has not been maintained, so there is a problem in opening the Letter of Credit (LC), added Singh.

The government stopped the excavation of river and mining construction materials with the instructions issued by the Ministry of Home Affairs last December. Due to the extreme shortage of such materials, construction works could not be done in time, said Singh. 

According to Singh, the supply chain is in disarray due to the effects of the federal and provincial elections held in November 2022, the government’s failure to pay the entrepreneurs in addition to the excessive price hike in the market, and unavailability of loans from banks. As a result, the deadline for about 3,000 more projects will have to be extended.

Since the deadline of those projects has not been extended, the financial burden on the Nepal government will increase and the projects will be stalled, the federation warned. 

 
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