Builders seek govt’s support as input cost rises
PHOTO: REUTERS
The construction industry has once again requested the government to provide some relief to the sector from the skyrocketing prices of construction material.
Talking to journalists on Wednesday, Constructors Association of Pakistan (CAP) Chairman Kamal Nasir Khan mentioned that due to inflation, builders were unable to meet their commitments to the ongoing projects of the public sector. He pointed out that the builders had not participated in any new tenders for the last two months.
Giving details, Khan said that prices of construction material like steel, cement, bricks, etc had, on average, increased by 75% in the past one and a half year.
While the price escalation in public sector projects was just 10-15%, the builders had to bear additional expenses of around 60%, he claimed. “Escalating prices of construction material impact both the developers and contractors of government projects.”
Private sector developers could add these expenses to their end-product cost, but contractors in the public sector had to follow the agreed prices, he lamented.
“Price escalation is not covered in provincial contracts at all, due to which the industry is fast heading towards complete destruction,” he added.
Around 80% of the builders in public sector development projects were small contractors, Khan pointed out. “If immediate relief is not given, then work on projects worth trillions of rupees will soon come to a halt.”
He underlined that small contractors did not even have working capital, as they completed the projects through payments made by the government. Big contractors have the capacity to complete the projects, even in loss, by borrowing from banks or selling their assets to save their reputation, he noted. “However, small contractors involved in the construction of streets, small roads, etc do not have that capacity.”
Published in The Express Tribune, January 27th, 2022.
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