Road Construction Projects in Karnali Affected by Bitumen Shortage and Price Hikes

Surkhet. The Karnali government is constructing approximately 13.9 kilometers of road on the Baddichaur-Khambagade section of the western Surkhet under the Madan Bhandari Highway. The work, which began in July 2022, was supposed to be completed by June 2023, but has been delayed due to a lack of progress. The deadline has been extended to next June, and work only gained momentum after the recent Tihar festival. The contractor company, Anak Construction, had planned to blacktop at least 8 kilometers by June. However, the work has come to a standstill due to a shortage of bitumen, a key material for road surfacing. Shankar Rawat, a representative of Anak Construction, stated that the blacktopping work could not begin due to the bitumen problem. He mentioned that they would focus on graveling and constructing drainage systems. The physical progress on this road section, with a cost of 42.4761 million rupees, has only reached about 40 percent. The blacktopping of the Mulpani-Ranighat road in Birendranagar, considered another important project of the provincial government, has also stopped. According to Premchandra Pandey, an engineer at the Infrastructure Development Directorate, 1.6 kilometers have been blacktopped so far. Although 7 kilometers were supposed to be completed by June, the work has been halted due to a shortage of bitumen and petroleum products. These two roads are not the only ones affected; numerous large and small road projects of the Karnali Provincial Government are in crisis due to bitumen shortages, rising fuel prices, and increased construction material costs. Even major road development projects under central government bodies operating in Karnali Province, such as the Madan Bhandari Highway, Karnali Highway, Bheri Corridor, and Karnali Corridor, have been impacted. According to the Road Division Office, Surkhet, the Surkhet office had planned to blacktop 2 kilometers of the Karnali Highway section this year. The deadline was until August, but the work has now stopped. Similarly, Rupesh KC, Information Officer at the Road Division Office, Surkhet, stated that the plan to blacktop 20 kilometers of the Chinchu-Jajarkot road section within this year has also been affected by reasons including bitumen shortage. He mentioned that contractor companies are using their existing stock of bitumen in some places, but most of the work requiring new bitumen purchases for blacktopping has stopped. The period from February to June is considered crucial for road project construction. However, stakeholders say that the price increase of essential construction materials due to the West Asian (Iran) war has affected the overall pace of road development in Karnali. Premchandra Pandey, an engineer at the Infrastructure Development Directorate, Surkhet, stated that some road projects are affected by bitumen shortages and rising petroleum prices, while others are delayed due to payment issues. He added that contractors using existing bitumen stock are facing higher costs for other materials, which is likely to impact projects that were supposed to be completed this year and multi-year road infrastructure projects. The increase in international fuel prices due to the Iran war has disrupted the supply of construction materials. The provincial government is concerned that the pace of capital budget implementation this year may not even reach 40 percent due to the halt in infrastructure work. The province had an annual capital budget of 19.9827 billion rupees for the current fiscal year. As of the end of March, only 17.16 percent, or 3.4287 billion rupees, had been implemented. The Karnali Provincial Government had set a target to blacktop 161 kilometers of roads within the province this year. However, only 53 kilometers have been blacktopped as of the end of March. The remaining roads need to be blacktopped within the next three months, but this is unlikely to be possible due to the Iran war. The provincial government aims to construct 139 kilometers of gravel roads, 184 kilometers of maté roads, and 96 kilometers of drainage and other related works. The provincial government's plan to build 44 road bridges and 51 buildings has also been affected. To achieve these targets and plans, the Ministry of Physical Infrastructure and Urban Development was allocated a budget of 11.0422 billion rupees this year. However, as of the end of March, only 19 percent of the budget had been implemented, with the implementation of the development budget being particularly weak. Government officials state that nearly 50 percent of development work has decreased due to the rise in diesel and petrol prices, which has impacted bitumen availability. Ramesh Subedi, spokesperson and CDE of the Ministry of Physical Infrastructure and Urban Development, said that most of the road infrastructure projects scheduled for completion this year will likely require an extension of their deadlines. He mentioned that while the prices of petroleum products have increased due to the Iran war, bitumen is not available even at the increased prices, which is severely affecting blacktopping. He also noted that construction entrepreneurs are reporting increased prices for cement and rebar. He added that important road infrastructure work under RCIP projects, which were nearing completion, has been halted due to the impact of the Iran war. He estimates that only about 70-75 kilometers of the 161-kilometer blacktopping target will be completed by the end of June. The provincial government is concerned that the capital budget implementation rate may not reach 40 percent this year due to the halt in infrastructure work. The province had an annual capital budget of 19.9827 billion rupees for the current fiscal year. As of the end of March, only 17.16 percent, or 3.4287 billion rupees, had been implemented. A provincial government minister stated that even reaching 50 percent of capital expenditure may be difficult if a significant portion of the remaining budget for infrastructure is not implemented in the remaining time. Difficulty in completing 50 percent of blacktopping under central government projects. Not only the province, but the Road Division Surkhet under the central government had set a target to blacktop 35 kilometers of roads, including the Karnali Highway Corridor, Bheri Corridor, and Dailekh Road, within this year. Rupesh KC, Information Officer at the Road Division Office, Surkhet, stated that due to the current problems, it seems unlikely that more than 10 kilometers can be blacktopped. He added that most of the work has stopped, and any work requiring new purchases is completely halted. He also mentioned that they are in no position to force the issue. Price hikes causing stress for construction entrepreneurs. Manav Bam, General Secretary of the Federation of Construction Entrepreneurs, Karnali Province, stated that since February, there has been a shortage of construction materials along with an unexpected price increase, due to which projects are not progressing as planned. He noted that according to Nepal's practice, the time for construction work and capital expenditure is typically March, April, and May. He explained that the price hike in petroleum products has significantly impacted everything from the transportation of construction materials to the operation of equipment and road blacktopping projects. According to him, the price of diesel has increased by 100 percent since before February, from 130 rupees per liter, and kerosene prices have also risen. Similarly, the price of bitumen has increased from 80-90 rupees to over 150 rupees plus VAT. Even at the increased price, bitumen is not available. He mentioned hearing that it is available in Birgunj, but there is no certainty about when it will be delivered. Demand for extension of deadlines for all projects, including compensation. Construction entrepreneurs working in Karnali have demanded an extension of deadlines for all projects due to the excessive and unexpected price increase in fuel-related materials and the shortage of construction materials, which has brought the construction industry to a standstill. The Federation of Construction Entrepreneurs, Karnali Province, issued a press release stating that there is no possibility of completing the construction projects within the predetermined time due to the current serious situation. Therefore, the Federation has submitted a request to all relevant government bodies to take necessary steps for extending the deadlines of all projects, including bank guarantees, insurance, and additional compensation.