Contractors To Boycott Govt. Tenders Over Dated Escalation Mechanism

Lahore: The Contractors Association of Pakistan (CAP) chairman Kamal Nasir Khan while talking to the media said that the ever-increasing prices of the inputs and the dated escalation formula offered by the government are putting the contractors in real trouble and hence they have stopped participating in Contraction Tendered Offered By The Government On Old Rates. The boycott of the contractors, he said, would severely damage the development activities. This scenario if not checked by the government would lead the construction sector towards an ultimate collapse and pose a serious threat to the industries connected with the construction sector.

Mr. Khan further said that the mega-development projects are given benefits of the inflation but no such mechanism for small contractors who usually don’t have enough capital and rely greatly on running capital in the government Annual Development Program (ADP). He said that these small contractors are unable to meet the targets given by the government due to increasing prices so boycotting the tenders of the new projects. He said that the government estimated the cost of the projects much earlier along with the highest financial ceiling, and today the prices have risen to a great extent so the constructors are unable to complete the project within the government's estimated cost and boycotting the new tenders.

Khan said that the prices of inputs like cement, iron bars bricks, etc have risen to 75 percent over the last one and a half years while the Increase In The Cost Of Public Sector Projects is only 15 percent so the differential of 60 percent is to be borne by the constructors. He said, “Rise in the prices of construction material impacts both the developers and contractors of government projects, but developers can add the increased prices to their end cost for private buying, whereas contractors in the public sector have to follow the agreed prices.” He further continued that the contractors had not left any stone unturned over the last couple of years to make the government realize the delicacy of the matter but all in vain. He informed, “The government had given a onetime escalation to the constructors in 2004 during Musharraf era vide SRO No 26/(183)Plan Cord-II/PC/2004 and earlier in 1974 in Zulfiqar Ali Bhutto’s tenure.” He further added, “If immediate relief was not provided, ongoing projects worth trillions of rupees will soon come to a halt,” he informed, “These small contractors do not even have working capital and they complete projects through payments made by the government.” He said that the escalation benefit was given to constructors in 2004 by the Musharraf government as well as in the seventies by Bhutto Regime.

The representative of the CAP has urged all the concerned government departments to deeply consider the woes and worries of the constructors. He requested the planning commission, Finance Division, and Pakistan Engineering Council to come up with a mechanism to grant at least one-time escalation payment to the constructors and revise the existing mechanism according to the prevailing market mechanism to salvage the sinking ship of the construction industry.