Price hike of construction materials spark protests

- Post Report, Kathmandu

Jan 11, 2018-

Rampant hikes in prices of construction materials have raised the ire of consumers and infrastructure developers across the country, triggering protests in at least one urban centre.

Snap surveys conducted by the Post in Hetauda, Bhairahawa and Biratnagar show that cement prices have risen by up to Rs160 per 50-kg sack and steel rods have become dearer by up to Rs10 per kg. The price rise has raised the cost of building houses and other physical infrastructure.

Consumers and infrastructure developers suspect the current price hike to be artificial. Manufacturers claim that they have been forced to increase prices due to higher costs of raw materials like clinker, gypsum and fly ash.

They have also complained about having to pay higher freight rates as cargoes are being shipped from Balrampur, 200 km from the original source of Sardarnagar, Gorakhpur. Moreover, uncooperative border officials on either side of the border have made their life harder, they added.

However, retailers and consumers claim that manufacturers have been making fraudulent excuses to hike prices unjustifiably.

In Bhairahawa, retailers have expressed their anger over unnatural price increases on clinker and iron rods by pulling down their shutters. Retailers allege that cement and iron rod producers have formed cartels to raise prices. 

They have requested the local administration and civil society to investigate why prices have been hiked several times in three weeks and take action to prevent manufacturers from artificially inflating prices. 

According to retailers, the price of both OPC and PPC cement in places around Bhairahawa rose by Rs150 per sack within a month. The price of OPC cement has hit Rs900 per sack and the price of PPC cement has reached Rs790 per sack. Steel rods now cost Rs70 per kg, up from Rs60 per kg earlier. Similarly, the price of bending wire has risen to Rs95 from Rs70. 

Retailers claim that since foreign currency exchange rates have remained stable, the price of clinker in India has not changed, load-shedding has been reduced and prices of petroleum products have risen only nominally, the prices of construction materials currently being charged by manufacturers are unreasonably high.

There are around two dozen cement factories and about a dozen steel rod factories in Rupandehi, Kapilvastu and Nawalparasi. Manufacturers claim that disruptions in the transportation of clinker, the main raw material used in manufacturing cement, from Raxaul across the border from Birgunj have been the main reason for rising prices.

Sunil Marasini, chairman of the Rupandehi Siddhartha Construction Materials Entrepreneurs Association and also a member of the delegation that went to the District Administration Office, said, “Manufacturers collude with each other to hike prices while consumers regard recent price increases as a black market. We demand that this price hike, falsely attributed by manufacturers to increased prices of raw materials, be controlled.” 

Many ongoing development projects in Biratnagar have been hit by soaring prices of construction materials. In Morang district alone, various projects worth more than Rs18 billion are currently being implemented. Santosh Dhungana, chairman of the Construction Entrepreneur Association Biratnagar, said, “Many projects have come to a halt due as the required materials are hard to come by even at the increased prices.” 

Construction entrepreneurs have complained that ongoing construction projects have been been affected not only by higher prices of building materials but also increased transportation charges. The cost of transporting stones and sand has jumped by almost Rs2,000 per tipper.

Investments in municipal and provincial level projects in Biratnagar amount to Rs7 billion. A six-lane road is being constructed from Jogbani to Dharan at a cost of Rs5.4 billion in 11 packages. Josila Construction Service is building a road linking the airport with an investment of Rs25 million. The Department of Roads is building another road costing Rs220 million from Ghinaghat to Birat Chowk. 

Rishi Johi, head of Josila Construction, said that both projects were facing difficulties due to a shortage of materials even at the higher prices. 

Ujjwal Prasai, head of Kalika Construction Eastern Region, complained that their construction projects valued a combined Rs220 million had taken a hit due to price surges. 

(With inputs from correspondents in Hetauda, Bhairahawa and Biratnagar)

Published: 11-01-2018 08:51

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