Firms also asked to exempt or cut liquidity damage
Construction firms have appealed to the government to work in containment mode during the lockdown in a letter addressed to the Minister of the Ministry of Works and Human Settlement on February 6.
The letter stated that the surge of Covid-19 positive cases in the country and enforcement of lockdowns in various dzongkhags have hampered the daily operation of worksites and overall work progress.
“The contractors are still spending money on the workers or their daily expenses, but there is no output at the end of the day, which is causing huge losses to the firms.”
Construction Association of Bhutan Executive Director Tshering Younten said that foreign workers come to Bhutan not only to work for a Nu 600 daily wage, but also to earn more from overtime work.
He said that foreign workers are threatening to return to their homeland since they are not able to work due to restrictions of the lockdown.
“Should they be released, it would be a huge loss to the firms as well as to the country since a huge amount of money has been spent to bring them into the country,” Tshering Younten said.
The construction firms also asked the government to consider at least one vehicle (e-pass) to carry essential construction materials from the source to the project site with the Covid-19 standard procedures in place.
Tshering Younten said that the construction materials should also have easy movement like essential items during the lockdown.
“Lockdown in the country is partly closed and open,” he said, adding that raw materials for construction are either imported via Phuentsholing or transported from Wangdue in the west and Mongar in the east.
Tshering Younten said that although the green zones are allowed to work, because the raw materials have to be transported from red zones, it has delayed the projects.
“The procuring agencies are pressuring the contractors to complete the work on time despite the lockdown at the source for the construction’s materials and levy liquidity damages (LD),” he added.
The firms requested that all the LD for the projects completed during the pandemic be considered and refunded back.
It was found that although many contractors had tried their best and handed over the projects, some procuring agencies had already deducted their LD of 10 percent, fearing there would be an objection from the Royal Audit Authority.
Contractors who are not able to complete the work on time are penalised on LD, with a maximum of 10 percent of the total project cost.
The firms also questioned the cost escalation budget of the work which was considered as per the notification by the Ministry of Finance for the balance of work carried out after August 24, 2021.
No procuring agencies had paid the cost escalation of the work, stating that there is no mention of the source of budget for the additional fund for the cost escalation, an appeal stated.
The firms also requested that the government carry out further studies for every project and pay the additional cost escalation for projects, since the costs had not been incorporated into the initial project.
The cost of construction materials and workers has doubled in the market due to the pandemic, and at least Nu 38,000 per worker had to be spent while importing workers, including the quarantine expenditure.
The appeal letter also stated that the government could consider exempting the LD for the workers delayed during the pandemic.
Tshering Younten also said that the time extension of the projects equivalent to the number of days of lockdown is not adequate. He added that an additional 10 days are required to mobilise the workers in sites since most of the Bhutanese workers leave their homes during the lockdown.
“If it is not considered, most of the contractors will be bankrupt as they had mobilised and spent the funds from the overdraft facilities they have with financial institutions.,” it stated.
The ministry said that the letter has been received and is working on it to be submitted to the cabinet for discussion.
Construction firms representing 32 contractors also held a Zoom meeting with the minister of finance and minister of works and human settlement to discuss these issues on February 8.