Expressing concern over the abnormal hike in prices of iron rods and cement, the Department of Commerce, Supplies and Consumer Protection (DoCSCP) has called on the manufacturers and sellers of the construction materials for discussions.

Recently, manufacturers have raised cement prices by as high as Rs 100 per sack. At the revised rate, the market price of PPC cement has reached between Rs 600-650 per sack, while that of the OPC cement is between Rs 700-750 per sack. The entrepreneurs have hiked the price of the construction material on the pretext of incurring loss on cement business.

The price of iron rods has also increased by up to Rs 15 per kg. According to traders, iron rods now cost Rs 110 per kg on an average, which used to be around Rs 96 per kg two weeks ago.

The contractors have blamed the manufacturers of carteling to raise the price of construction materials when the peak season of construction has just started. “While raising the prices, the manufacturers have even curtailed their supply in the market,” said Roshan Dahal, general secretary of the Federation of Contractors’ Associations of Nepal.

On the other hand, the manufacturers say that they are compelled to increase the prices due to increased cost of production. According to them, the prices of cement and iron rods have not changed for the past six years.

Rajan Poudel, director general of the DoCSCP, said they have taken initiative citing growing complaints over the excessive surge in prices of the construction materials. “We can decide on what actions to be taken only after finding the real cause of the problems,” said Poudel, adding that the department has scheduled to hold talks with these stakeholders on Sunday.

At a time when the construction sector is facing a slowdown in growth rate, the hike in prices of the construction materials is likely to aggravate the situation. According to the contractors, the sector is adversely affected by slow capital expenditure of the government, delay in payment for the completed works and disruption in power supply, among others.

The National Statistics Office (NSO) has projected the growth rate of the construction sector to remain at a negative of 2.07 percent in the current fiscal year. In 2022/23, the sector’s growth rate was around seven percent, which fell to negative 1.1 percent in FY 2023/24.

The records with Nepal Rastra Bank show that there was an increase in private sector lending of commercial banks by only 2.5 percent in the first three months of the current FY. The credit by the banks to the construction sector, which makes up a major proportion in the total private sector lending, grew only by 2.2 percent in the review period.