Government discourages bitumen in roads, introduces price-adjustment mechanism for contracts

The government has introduced two new provisions discouraging the use of imported bitumen in road blacktopping and allowing special price adjustments in construction contracts.

The Public Procurement Monitoring Office has recently issued the Directive on Promotion of Use of Domestic Products, 2083. The directive makes the use of domestic cement concrete roads almost mandatory instead of imported bitumen in road construction. This is expected to save foreign currency and benefit the domestic cement industry. However, questions have been raised about the cost, the technology involved, and possible collusion between contractors and industrialists under this policy.

Meanwhile, the Cabinet has approved and implemented the Special Price Adjustment Procedure, 2083, under the Public Procurement Act, 2063. The procedure will apply to projects where the cost of material, labor, fuel, equipment or transport has risen abnormally due to supply-chain disruption caused by international wars.

For projects that meet the specified conditions, 10 percent of the price increase will be deducted and only the remaining amount adjusted. The amount added in this way can be up to a maximum of 25 percent of the original contract amount. The Federation of Contractors' Associations of Nepal has welcomed the government's decision, saying it fulfills a long-standing demand.