Construction sector hit by steep rise in material cost, claims CAP

LAHORE: Unbridled increase in the construction materials during the last one year has brought the construction sector on the brink of virtual collapse while pushing the housing sector out of the reach of a common man.

Construction materials have registered on average about 43 percent rise in prices from March 2020 to October 2021 making the construction of houses or meeting the commitments by the constructors of official projects unviable. According to details, steel prices have registered 76 percent increase as it reached from the level of Rs 104,000 per tons in March 2020 to Rs 183,000 per tons in October 2021.

Likewise cement has reached Rs 730 per bag in October 2021 from Rs 480 in March 2020, sand Rs 38 per cubic foot to Rs 64 per cubic foot showing an increase of 68 percent, bitumen from 67,700 per tons to 130,600 per tons thus showing an increase of 101 percent in the same period. Similarly G.I. Sheets prices rose to 225,000 per tons in October 2021 from Rs 160,000 tons of March 2020 showing an increase of 41 percent. Ceramic tiles prices rose from 850 per meter to 1050 per meter showing an increase of 24 percent. Likewise prices of aggregates, aluminum, pvc pipes, cable and other material also registered hikes in their prices.

Constructors Association of Pakistan (CAP) Chairman Engr Kamal Nasir Khan claimed that overall prices of construction materials have registered an increase of 43 percent from March 2020 to October 2021 making constructors unable to even continue the ongoing official projects.

He drew the attention of the government towards soaring prices of construction material and called for allowing inflation effect for ongoing contracts to help save the constructors from defaults.

He said that the federal government had allowed such an inflation impact in 2004 through SRO No 26/(183)Plan Cord-II/PC/2004 dated 11th June, 2004.

He appreciated the government plan for construction of five million houses as when construction moves, the country moves. However, being partner in the construction process for materializing the government vision, they think that continuation of work on awarded rates is not possible now.

Kamal Nasir said the construction sector which is the second largest sector, after agriculture, is creating employment and runs more than 40 allied manufacturing industries are directly involved with construction. However, like other sectors pandemic COVID-19 has also impact on growth of this sector because of phenomenal increase in the prices of its raw material. The CAP chairman said with overall increase in prices by 43 percent, current construction contracts have become unviable, pushed housing beyond reach of common man and unemployed skilled/unskilled labour and other technicians.

Calling for immediate mitigating steps, he requested the government to allow inflation effect, revise escalation formula where already escalation is provided, allow import of steel bars/billet and bitumen on zero tariff and banning cement exports for reduction of its prices in the local market. He was of the view that these steps could help the dwindling construction industry.

Copyright Business Recorder, 2021