Include price variation clause in construction tenders, FBCCI committee urges govt

As building materials continue to surge in the domestic and international market, the country's apex trade body has urged the government to include a price variation clause in construction tenders.

The Federation of Bangladesh Chambers of Commerce and Industry's (FBCCI) Standing Committee for the Construction Sector made the call on Sunday following a discussion on the ongoing crisis in the sector.

They also urged to discourage the participation of foreign companies in the government infrastructure projects, reads an FBCCI press statement on Sunday.

Construction raw material prices have surged remarkably during the Covid-19 pandemic due to supply disruption, increased freight charges, and price inflation.

Prices of all construction inputs have shot up by at least 30%. Steel prices have recently reached a whopping Tk80,000-Tk82,000 per tonne from Tk50,000-Tk52,000 per tonne in November last year, The Business Standard reported last week.

The abnormal rise in the cost of raw materials has forced about 70% of steel mills in the port city of Chattogram to halt production. Moreover, LGED Contractors Association in the city threatened to stop all ongoing government development projects if the prices of construction materials are not readjusted within 15 days on 23 November.

Industrialists hoped the situation in the construction sector will improve as the country's economy continues to recover. So far, the situation remains dire for the industry.

Addressing the situation, speakers at Saturday's meeting said the recent surge in raw materials prices has made it impossible to complete construction works as per the pre-agreed costs.

In addition, the government's fiscal policy, including AIT and VAT, is often changed after tenders are submitted.

Considering the situation, members of FBCCI's Standing Committee for Construction have suggested including a price variation clause in government tenders, according to the press statement.

After 56 days of the deadline, the speakers proposed charging interest for late payments.

They also urged to discourage the participation of foreign companies in government infrastructure projects.

FBCCI President Md Jashim Uddin presided over the meeting held at the federation's office in the capital.

He said most of the projects in the country are being implemented through foreign companies. As Bangladesh becomes a developing country, it needs to increase its reliance on local construction companies.

FBCCI would take maximum initiative for the progress of local organisations, he added.

FBCCI Senior Vice President Mostofa Azad Chowdhury Babu, Vice President Md Aminul Hoque Shamim, Director Rejul Kariem Rejnu, and Director in charge of the Standing Committee Engineer Ghulam Md Alomgir, Chairman of the Committee Engineer Khan Md Aftabuddin, were present at the meeting among others.