Print Edition - 2017-08-31 | MONEY
Heavy equipment imports soar on rising demand
Aug 31, 2017-
Demand for heavy construction equipment has gone up along with increased construction activities across the country. Infrastructure projects like hydropower, airport, road and irrigation, among others, are being implemented all over. The projects are also much larger compared to what the country has been used to seeing. At the same time, there are tight deadlines and manpower shortages. For all these reasons, builders have to rely on modern equipment, and so suppliers of heavy construction equipment have been importing the latest machinery to fulfil their requirements. According to traders, computerised equipment, which is portable and can perform multiple tasks, is in high demand.
Imports of heavy construction equipment almost doubled in the last fiscal year, as per the Department of Transport Management. According to its statistics, 12,712 new excavators, backhoe loaders, cranes and heavy trucks were registered in fiscal 2016-17 compared to 8,328 units in the previous fiscal. Figures show that imports of heavy equipment have swelled five-fold in the last five years. Although demand for construction equipment slowed in 2013-14 owing to low investor confidence resulting in delays in construction projects, it has started to pick up lately.
Sushil Shrestha, director of Explore Earthmover which imports Volvo equipment, said excavators, backhoe loaders and concrete mixers were among the fastest selling heavy construction equipment. According to him, excavators are used for digging up the ground and crushing large boulders while backhoe loaders perform multiple tasks such as quarrying, loading and transporting. Similarly, computerised concrete mixers are in high demand at bridge construction sites.
Shrestha said the market for construction equipment was changing from traditional machines to efficient devices. “This development began to be seen mainly after the April 2015 earthquake,” said Shrestha, adding that they expected to sell 150 units of heavy equipment this year compared to 72 last year.
Sales of heavy construction equipment in Nepal are expected to have reached $2 billion in 2016, as per industry sources. “Customers are ready to invest Rs80-100 million for a single piece of heavy equipment for their projects,” Shrestha added.
Machinery sellers in Nepal are reaping the benefits from a boom in infrastructure programmes. Ongoing and planned infrastructure projects in Nepal point to a surge in demand for construction equipment in the coming years, dealers of heavy duty equipment said.
According to the Federation of Construction Associations Nepal (FCAN), demand for construction equipment has been growing by 25 percent annually. Excavators, backhoe loaders, dozers, dumpers and cranes are being imported in large numbers.
As per the FCAN’s estimate, the construction industry in Nepal accounts for around 10 percent of the GDP and consumes about 35 percent of the government budget. It is estimated that the sector provides 1 million jobs.
Tanka Bhatta, general manager of Continental Trading Enterprises, the authorised distributor of Komatsu excavators in Nepal, said the market for heavy equipment surged mainly due to an increase in infrastructure construction following a rise in capital expenditure by the government. “This year too, the market is likely to post a growth of over 50 percent,” Bhatta said.
According to Bhatta, the import figure includes a large number of trucks. He said that an estimated 1,400 excavators and 3,000 backhoe loaders were imported in 2016-17.
As per industry sources, the sector has been facing a number of challenges including procedural problems while getting loan approval from banks. “Interest rates as high as 14 percent per annum, need to put up extra collateral to get bank loans, unorganised contractors and a defective Public Procurement Act are among the main challenges that the sector has been facing,” Bhatta said. There are 10-15 dealers of heavy construction equipment in Nepal. Along with an increase in demand, new heavy equipment brands are also being launched. Komatsu, JCB, Caterpillar, Apollo, Bharat Earth Movers, XCMG, Volvo and New Holland are the new brands that were introduced in Nepal in the last few years.
Nepal imports heavy equipment from India, China, Korea and other countries.
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Published: 31-08-2017 08:45