The cost of construction material like steel has increased almost by 86.06% in a few months
A steep increase in the price of raw materials for construction has shot up the construction cost in the country.
According to the Executive Director of the Construction Association of Bhutan (CAB), Tshering Yonten, prices of most of the construction materials including cement, steel, cables and pipes have gone up by almost 40-60%.
Similarly, the rate of steel has gone up by 86%. A kilogram of steel, which was sold at Nu 38 per kilo before, is priced at Nu 78 per kilo recently, and the bag of cement which was available at Nu 300-350 before is now available at Nu 500.
A contractor, who is building a house in Babesa, said the price for a truckload of iron bars for construction has gone up by almost Nu 100,000.
“We don’t know whether it is because of the Covid or the Russia-Ukraine war. But it was Nu 100,000 less for a truckload of iron bars,” he added.
Another contractor in Tsirang said, “The cost of building materials is rising and fluctuating to a degree where we can no longer accurately quote a project that we are trying to bid and win.”
According to him, for instance, if a contractor based their bid on current rates, they may lose a large amount of money when purchasing goods months from now. And if they use the costs of materials they predict to be in six months when bidding for new projects, they are likely to lose contracts.
Apart from the rise in the cost of construction materials, the steady rise in fuel price is claimed to be the main cause for the rise in the costs of construction materials. The suppliers and transporters have passed on the additional fuel cost on the construction materials.
However, Tshering Yonten said that their only hope was for the government to look into the situation and act.
He added that they were disappointed because the notification from the Ministry of Finance on February 26 did not include the cost escalation difficulties, despite repeated requests to the government.
“With materials’ costs at an all-time high, some major factors are driving up prices and causing a huge distress in the construction sector,” the Executive Director said.
“Due to health protocol or regulatory restrictions, contractors of various projects have faced and continue to experience work stoppage or lowered output,” he added.
Another contractor based in Thimphu said, “We can deal with the situation if the upward revision is in the range of 3% to 5%. However, the prices of a majority of construction materials have increased by 40-80%, which is causing significant difficulties for the contractors.”
Meanwhile, most of the construction materials like steel, cement and planks are being supplied from Pasakha.
Meanwhile, an official from Bhutan Bearing, one of the major material suppliers in Pasakha, said that the main reason for the sudden increase in material prices is due to an increase in the prices of raw materials from India.
“The price increase combined with the cost of transshipment during the pandemic, automatically raises the prices of the final products. The price of raw materials was fair just a few months ago, but it has since skyrocketed,” he added.
Tshering Pelden from Thimphu