Construction sector hit hard by price rise: FCAN

Kathmandu, May 5

The Federation of Contractors’ Associations of Nepal (FCAN) has said that the construction industry is currently facing one of the most difficult periods in its history owing to the abrupt price rise of fuels and construction materials.

Speaking at a press meet in Kathmandu on Tuesday, FCAN President Nicholas Pandey said that the ongoing conflict in West Asia has caused abnormal increases in the prices of fuel, including diesel and kerosene, as well as construction materials such as bitumen, cement and steel rods.

"The price of diesel has risen from Rs. 139 per litre to Rs. 225 in just a couple of months, while bitumen has increased from Rs. 75 to Rs. 155 per kilogram. As a result, construction costs have surged, forcing contractors into a 'force majeure' situation," he said.

The FCAN expressed dissatisfaction over the government’s inability to take effective decisions on price adjustment. It noted that weak capital expenditure by the state, sharp increases in the prices of construction materials, and policy uncertainty have brought most projects across the country to a near standstill. Only about 27 per cent of the capital budget allocated for the current fiscal year 2025/26 has been spent so far, directly affecting infrastructure development.

Pandey said that the sector—comprising around 32,000 contractors affiliated through seven provincial bodies, 77 district associations and other members—is under severe financial pressure.

Likewise, stating that rising costs and shortages of materials have halted most projects, including those of national pride, the FCAN urged the government to extend deadlines for all projects, including provisions for bank guarantees, insurance and compensation.

"While recent amendments to the Public Procurement Act, 2007 have introduced some positive provisions, key issues such as low bidding remain unresolved. Issues like price adjustment, consumer committees and monthly payments are still unclear," it said.

Similarly, the Federation warned that ongoing crackdowns on contractors and entrepreneurs have created fear within the private sector, negatively affecting investment, employment and supply systems. 

Meanwhile, the Ministry of Physical Infrastructure and Transport (MoPIT) issued a set of directives to accelerate construction works and enhance project accountability across the country. 

Secretary of the Ministry Gopal Prasad Sigdel directed the director generals and project chiefs to immediately fast-track ongoing contracts.

He also directed for the urgent reporting of hurdles related to local material extraction and supply chain disruptions, particularly regarding shortages of bitumen and fuel.

Likewise, the MoPIT warned the project chiefs that they will be held personally responsible for any stalled activities or lack of progress on-site. To ensure real-time oversight, the Ministry has mandated regular updates via virtual platforms, such as WhatsApp groups. 

It also asked the contractors to mandatorily provide detailed Resource Mobilisation Plans. The Ministry is set to conduct 'strict monitoring', and issued a warning that contractual action will be taken against those failing to meet deadline

Published in The Rising Nepal daily on 6 May 2026.