Building costs double in 3 yrs

Building costs double in 3 yrs
Construction materials hit ceiling
eKantipur, 28-Apr-08
By Milan Mani Sharma

Prices of construction materials have hit the ceiling. Over a span of two weeks, the prices of cement and steel rods, which together take up 60 percent of building construction budgets, increased by 35 percent and 18 percent respectively.

Price records at the Nepal Construction Materials Dealers Association (NCMDA) show that cement is currently being sold at an average of Rs 750 per 50 kg sack and steel rod at about Rs 95 per kg.

Even bricks, which generally cost less during the production season, have increased to Rs 3,800 per 1,000 pieces, said Roshan Dahal, president of the association.

Cement was priced at Rs 440 per sack, rod at 42 per kg and brick at Rs 3,500 per 1,000 in mid-July 2007. Builders further stated that the cost of building a house in Kathmandu Valley has nearly doubled over the last three years. The price of materials has been on the rise from September 2007, when growing demand for steel and rising coal prices pushed up the international price of iron and billets.

The rise in cement, however, has been dramatic. It was triggered by the Indian government's decision to restrict exports of cement and raw materials two weeks ago.

As Nepal meets some 70 percent of its national cement requirements of 2 million tons a year through the import of cement and raw clinker from India, the restriction has hit consumers hard.

"There is no shortage of the product, but consumers are already panicking. Dealers have taken advantage of the situation and raised prices far in excess of ex-factory prices," said a local producer. He tagged the current prices uncalled for and flayed market inspectors and revenue officials for turning a blind eye to the black market.

India may lift export ban

Commerce Secretary Purushottam Ojha said that India could soon lift the restriction on exports to Nepal of cement and clinker, the main raw material for cement factories.

"India has responded positively to our request to lift the ban on cement and clinker exports," Ojha told the Post. He stated that India was holding inter-ministerial consultations on the issue, and a decision to lift the ban was expected in the next few days.

Pashupati Murarka, member of Nepal Cement Producers Association, said that local producers and importers have enough stocks to meet a month's demand. "If India lifted the ban soon, supply will not be affected and prices will ease as well," he said.