Development projects may not pick up pace this fiscal year, contractors fearThe construction sector was already in the pandemic doldrums, and now contractors worry about resource shortages.
The coronavirus pandemic coupled with a potential shortage of construction materials could hamper the implementation of development projects, contractors say.
Construction activities in Nepal usually pick up the pace after the festival season. But so has not been the case this year, primarily due to the Covid-19 pandemic. Contractors are struggling to mobilise workers due to the lack of health and safety measures.
Contractors are also worried about the potential shortage of construction materials after a recent decision of the Home Ministry to prohibit aggregate mining.
The ministry has halted all mining activities until further notice, citing that the crusher plants that are already in operation need to be managed.
The decision has riled crusher plant operators across the country.
“The continued threat of the Covid-19 pandemic and the potential shortage of construction materials could delay the implementation of development projects,” Rabi Singh, president of Federation of Contractors’ Association of Nepal, told the Post.
He says contractors are in a dilemma about mobilising workers at project sites as the government has failed to introduce a health and safety protocol for which they have been lobbying for since May.
Spending in construction works covers a significant size of the government’s capital budget. As most of the construction activities were brought to a grinding halt by the lockdown in the final four months of the last fiscal year 2019-20, the capital expenditure of the federal government decreased by 20.6 percent while the spending of resources allocated under financing heading went down by 23.9 percent.
Only recurrent (administrative) expenditure grew by 9.8 percent in that period.
Capital budget spending in the final four months of the last fiscal year was lower than the previous eight months for the first time in years, according to the Finance Ministry.
Construction was one of the heavily affected sectors by the pandemic, according to a central bank study.
The study report released in August stated that 57.89 percent of construction industries remained fully closed during the four-month strict lockdown period between March and June.
As many as 37.5 percent construction industries remained partially operational and only 4.17 percent of them were fully operational in the same period, according to the study.
Even though the lockdown has been lifted, the situation does not look promising for the construction sector in the current fiscal year.
As the coronavirus infection cases continue to rise, contractors are hesitant to mobilise workers .
As of Sunday, the country’s overall infection tally has reached 220,308 while 1,321 people have died of Covid-19, according to the Ministry of Health and Population.
Shivahari Sapkota, spokesperson at the Department of Roads, which is responsible for the largest chunk of capital spending, says whether the construction activities will pick momentum depends on how the pandemic situation develops.
“It is not easy for the government to mobilise its staff and for the contractors their workers at project sites,” said Sapkota. “In many sites, workers have to be brought from India, and they may not come if the Covid-19 situation did not improve.”
With the construction sector in the doldrums and most of the capital budget spent, the Department of Roads said it could spend only around 55 percent of the budget allocated to the sector in the last fiscal year. With just eight percent of the capital budget spent till Friday, most of the capital budget should be spent in the coming months .
The situation of contractors is likely to worsen as crusher plan operators are planning to stage a protest against the Home Ministry’s directive regarding the crusher industry.
Besides halting the mining of aggregate like stones and sand, the ministry has also decided to maintain a record of the existing stock of construction materials at local police offices and sell in transparent ways, a decision that has displeased many crusher plant operators.
The ministry has also said that only those crusher plants that are supplying resources to the national pride projects would be allowed to continue their works.
Crusher plant operators allege that the government came up with such a decision to fulfil the interest of certain people.
“Why target our business in the peak construction season? This decision will only create a shortage of construction materials,” Deepak Bhandari, of the Federation of Nepalese Crusher and Mines Entrepreneurs' Association, told the Post.
A number of construction projects are getting delayed because their contractors have not been getting construction materials in time, he said.
“It will be hard for contractors to continue their work if crusher plants fail to supply the construction materials in time.”