Construction entrepreneurs have issued a warning to suspend all construction activities if the rising prices of cement and steel rods persist. The Federation of Contractors Association of Nepal (FCAN), an umbrella organization of construction entrepreneurs, stated that cement prices have increased by over Rs 200 per bag, and steel rods by Rs 15 per kilogram within the past month.
In a letter to its members on Tuesday, the federation instructed them to approach relevant authorities to claim compensation for the increased costs in their ongoing projects. Members have also been encouraged to inform the concerned project stakeholders about the potential suspension of construction work if the price hikes are not addressed. The federation accused cement and steel rod manufacturers of forming a cartel to raise prices without a valid reason.
The Ministry of Industry, Commerce, and Supplies had previously announced on December 11 that an agreement was reached between cement manufacturers and construction entrepreneurs to cap a limit on the maximum prices of cement. Industry Minister Damodar Bhandari had urged cement producers to lower the increased rates.
However, FCAN President Ravi Singh expressed concerns over the escalating costs, describing the situation as a significant obstacle to completing construction projects. He noted that the price hikes are particularly problematic since project budgets were determined based on older market rates.
"We demand that rates be adjusted according to the current market prices. Without this adjustment, no projects can be completed. If the government fails to address the impact of this price hike, we will have no choice but to halt all construction work," Singh told New Business Age .
Singh also recalled the previous agreement during discussions between the FCAN and the Cement Producers Association at the Ministry of Industry, Commerce, and Supplies. The agreement stipulated that Ordinary Portland Cement (OPC) would be sold at Rs 700 per bag and Portland Pozzolana Cement (PPC) at Rs 600 per bag within the Kathmandu Valley. However, Singh claimed that the industries have ignored the agreement, now pricing OPC at Rs 705 per bag and PPC at Rs 680 per bag.
He further alleged that manufacturers are using reduced production as an excuse to create artificial shortages and justify higher prices.
In response, Nepal Cement Producers Association President Raghunandan Maru refuted the allegations. He stated that the price adjustment reflects current market realities rather than an actual increase.
"The price of cement is lower than last year. Due to reduced economic activity, the cement industry is incurring losses. Our priority is to ensure the viability of the industry rather than reducing prices," Maru said, adding, "There is no possibility of further price reductions. The industry will continue to make its own decisions."
Meanwhile, Director General of the Department of Roads Ramhari Pokharel noted that the rise in cement prices might not significantly impact long-term projects. He explained that while short-term projects could face challenges, those with longer timelines are allowed to claim compensation proportional to the price increase, based on the price index issued by Nepal Rastra Bank.
