Contractors demand Rs 200m for project cost overruns

Nepali contractors have demanded that the Indian Embassy provide them Rs 200 million to compensate for the cost overruns on the projects funded by it. They said that delays in payment had hit the contractors and the projects under construction.

There are 32 infrastructure projects whose costs have gone up due to swelling prices of construction materials during the fiscal year 2007-08. The contractors have been saying that they will not hand over the projects until they receive payment in accordance with the increased costs.

The government has already decided to adjust the cost of the projects awarded between the period mid-December 2006 to mid-July 2008 keeping in mind the heavy hike in the price of building materials. During this period, the price of iron rods, bricks, cement and timber is reported to have increased by 30 to 100 percent.

“Despite the government’s request and the provision to adjust the cost based on the price hike, the Indian Embassy is not showing any interest in doing so,” said Yakshya Dhwoj Karki, president of the Federation of Contractors Associations of Nepal (FCAN), addressing a press conference. He added that the government and the Indian Embassy must reach a decision to this effect at the earliest.

Three months ago, a committee comprising officials from the government and the Indian Embassy was formed to solve the dispute. However, it has not come up with any concrete decisions so far.

“We have been informed that the committee is holding a meeting on Thursday,” said Keshav Prasad Gautam, member secretary of the struggle committee of Indian Embassy-funded projects. He added that even though most of the projects had already been completed, they would not hand them over to India without resolving the issue.

All the projects had been funded by a grant assistance from the Indian Embassy and the costs were below Rs 50 million each. Contractors have been demanding extra payment ranging from Rs 700,000 to Rs 8 million based on the price hike of the construction materials and the size of the projects. The projects include schools, colleges, hostels and hospitals in various parts of the country.

FCAN has also demanded that the government implement the 45-point agreement reached last year and maintain peace and security to let them work freely. They said that the trend of kidnapping, thrashing, extortion, destruction of machinery and equipment were on the rise. 

An unidentified group had torched two excavators and destroyed them completely at the Jorpati-Sankhu-Melamchi Road Project on Feb. 18, according to contactors. “There is no favourable condition to go to the field to work,” said Karki. “Two contractors, Kishor Sherpa and Surya Tamang, were kidnapped by a criminal gang in Dhankuta on Feb. 25. They are still out of contact.”
source: The Kathmandu Post

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