Prolonged lockdown has caused distress in the construction sector, according to the CAB
The Construction Association of Bhutan (CAB) wrote an appeal letter to the Ministry of Works and Human Settlement (MoWHS) on February 6, requesting the government to consider construction firms to work in containment mode.
According to the construction firms, they are still paying workers for their daily expenses even though the workers have no output at the end of the day, resulting in huge losses.
CAB’s Executive Director Tshering Yonten said, “It is against our humble will to push the government at such difficult times, but unfortunately we have no options.”
Following the appeal letter, the Ministry of Finance (MoF) in coordination with the MoWHS and the CAB convened a virtual consultation with the contractors to take stock of the issues pertaining to the construction industry on February 9.
The appeal letter also requests the government to at least consider one vehicle (e-pass) of the firm to carry essential construction materials from the source to the project site with Standard Operating Procedure (SoP) of the Covid-19 in place.
Further, Tshering Yonten said that they would be relieved if the government allowed at least one hardware store with construction materials to operate in each zone, similar to how grocery stores function in the zones during the lockdown.
However, Tshering Yonten said the two most significant appeals to the government currently are to allow works in containment mode and to permit one vehicle to transport essential materials.
“We already have workers at sites, but they are unable to work due to the lockdown and even if the government approves the containment mode work, there would be materials shortage,” he said, adding that the contractors have already paid the workers and if the lockdown continues, the completion of projects will further prolong causing huge losses.
Meanwhile, the MoF and MoWHS, during the meeting, assured the sector that the issues will be examined with the National Covid-19 Task Force and the health ministry in order to determine the containment mode of operation.
According to Tshering Yonten, another source of concern is that while many contractors did their best and completed the projects, some procuring agencies had already deducted a 10% Liquidity Loss (LD) in anticipation of a royal audit objection.
“Some of the procuring agencies due to fear of royal audit do not take risk but they advise the contractors to approach arbitration to save themselves, if the case is decided for the contractors by the arbitration, the concerned official may be held responsible for not doing work diligently,” states the appeal letter.
Meanwhile, it was assured by the MoF that they will look into the matter and those contractors who are truly attempting to complete the work will be considered accordingly. However, it was also informed that necessary research will be conducted as some contractors may simply not complete the work and blame it on the Covid-19.
The MoF also reportedly stated that the LD may be reduced to a maximum of 5% after consulting with the stakeholders. Currently, the LD is 10% of the overall project cost.
Aside from the above issues, another concern was the cost escalation.
According to Tshering Yonten, cost escalation was considered as per the notification by the MoF for the balance work which were carried out after August 24. But no procuring agencies had paid till date, stating that there is no mention of the source of budget for additional funds for the cost escalation. However, it was assured during the meeting that the problem will be quickly remedied with the MoF having issued a notification to the Department of Public Accounts and having urged all the budgetary bodies to take necessary measures to ensure that bills are paid on time.
Tshering Pelden from Thimphu