Government Decides to Provide Additional Payments to Contractors Amid Rising Construction Material Costs
The government has introduced a special price adjustment mechanism to provide additional payments for eligible public construction contracts affected by abnormal increases in material costs.
The government has decided to implement a special price adjustment mechanism to address abnormal increases in construction material prices caused by international conflicts and disruptions in the supply chain.
Under Section 55(1a) of the Public Procurement Act, 2063, special price adjustments will be provided for petroleum products, bitumen, HDPE pipes, cement, and steel bars.
The adjustment will apply to public construction contracts whose performance period remained valid after Chaitra 15, 2082, based on actual and verified consumption. Contracts without annual or existing price adjustment provisions will also be eligible if they meet the prescribed criteria.
For contracts that already have price adjustment provisions, the amount payable under the existing provisions and contract terms will be deducted, and only the remaining eligible amount will be provided as a special price adjustment.
According to the government, the mechanism is intended to address price increases caused by extraordinary circumstances rather than normal market fluctuations. The payable amount will be determined based on actual consumption, verified quantities, and relevant prices to prevent double benefits or unnecessary payments.
The special price adjustment has been introduced to prevent construction activities from being disrupted by exceptional international circumstances, ensure continuity of ongoing development projects, and address imbalances created in the construction sector in a fair manner.