Kathmandu, July 11: Nepal’s construction sector is facing mounting pressure as more than Rs. 20 billion in payments for around 500 completed and ongoing projects remain pending, while a severe shortage of bitumen has slowed road construction across the country.
Shiv Hari Ghimire, general secretary of the Federation of Contractors’ Associations of Nepal, said the government has allocated the budget but contractors have not received payments because many projects have not been granted contract extensions.
According to him, completed and running projects whose deadlines have expired cannot be processed through the government’s Line Ministry Budget Information System (LMBIS). Since the system rejects payment requests without approved contract extensions, billions of rupees remain frozen.
The federation has urged the government to extend expired contracts and revive stalled projects so pending payments can be released.
Contractors are also struggling with an acute shortage of bitumen, a key material for road construction. Suppliers have sharply increased prices, citing the conflict in the Middle East and higher international costs.
Despite falling fuel prices, bitumen prices have continued to rise. Ghimire said the price has increased from around Rs. 155 per liter to between Rs. 170 and Rs. 180. Supply has become equally problematic.
“Even after contacting 20 suppliers, we can barely secure four truckloads of bitumen,” he said.
The shortage has reportedly led to black marketing in some areas, limiting road construction to just 15 to 25 percent of normal capacity. Contractors have asked the government to adjust project costs to reflect rising prices, warning that many projects could become financially unviable without compensation.
The Nepal Bitumen and Barrel Industry Association said imported bitumen prices rose again from June 30 after Indian suppliers increased prices by about Rs. 800 per barrel. As old inventories have been exhausted, all new imports are arriving at the higher rates, leaving little chance of an immediate price decline.
The Department of Roads acknowledged that rising bitumen costs and earlier supply disruptions affected this year’s construction targets. Information officer Yonjan Dahal said work has resumed on major projects, including the Nagdhunga Muglin and Suryabinayak Dhulikhel road expansion projects, after temporary interruptions.
However, he said the department’s overall physical progress stood at only about 50 percent by the final week of the fiscal year, as shortages hit during the peak construction season.
Contractors met Prime Minister Balendra Shah on Thursday to discuss delayed payments, contract extensions, price adjustments, project management, banking challenges, and capital spending.
They said the payment process has become simpler than before, but unresolved contract extensions continue to block payments. Contractors also urged the government to speed up contract renewals, release pending payments, and improve the system to ensure timely wages for workers in the labor-intensive infrastructure sector.
People’s News Monitoring Service
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