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Thukten Zangpo

Despite the finance ministry notifying to re-schedule the completion of the on-going construction works, contractors said that some procuring agencies are not adhering to the notification.

According to the ministry’s notification on June 21 this year, the procuring agencies were asked to review all on-going projects as per present situation and determine whether the existing duration is sufficient or insufficient to complete the work.

The projects also include any work re-scheduled earlier and projects that have entered liquidated period.

The construction works were disrupted by the Covid-19 pandemic, and the import of construction materials and labourers was a challenging task, which led to delays in executing the projects.

The notification also stated that for the projects that are either not affected or the agreed duration is sufficient to complete the project, the contract duration shall be retained as per the existing contract signed.

However, the ministry asked the procuring agencies to reschedule the intended completion date for the on-going construction works and issue a new one-time intended completion date for construction works order for each project site for the projects that are affected by the pandemic or agreed on duration as per existing contract is insufficient to complete the project.

A contractor said that although the finance ministry has asked to reschedule the works, some dzongkhags and departments’ procuring agencies do not accept it.



“Without the time extension, we will have to leave the on-going works and it would be a huge loss for the contractors as well as for the government,” he said.

A contractor said that the availability of raw materials such as cement, sand and bricks was still challenging.

To import raw materials from India, contractors have to hire Indian drivers paying them between Nu 1,000 to Nu 1,500 for a bolero, he said.

He added that the government allows only 35 vehicles for the transport of essential items and others in a day, which is not adequate for the transport of raw materials.

Another contractor said that there are no skilled workers in the country who can repair the parts of the heavy earth moving equipment and have to send it to India. “Earlier it took three days to bring back the repaired parts, but now it takes more than two weeks.”

A contractor also said that with bank guarantees closed by the banks, the contractors are not able to continue the works since their property is mortgaged with the banks.

The Construction Association of Bhutan’s Executive Director, Tshering Younten, said that the association has requested the Royal Insurance Corporation of Bhutan and Bhutan



Development Bank Limited for a bank guarantee.

He added that the association has also requested the financial institutions to accept the third- party collateral of immovable assets provided there is a legally binding document.

However, Tshering Younten said that the government has reduced the performance security from 10 percent to 5 percent of the quoted price.

As per existing practices, the performance security may be submitted either in the form of bank guarantee, cash warrant, demand draft, or online submission through any bank prior to formal signing of the contract agreement.

The contractors also requested the government to consider paying an additional 20 percent for cost escalation of the construction works and to do away with liquidated damage.

A contractor said that although Covid-19 has been relaxed and it has become normal, the situation in the construction sector has not improved.



“Fuel price hike has cost us a lot, Nu 500,000 has to be spent for diesel now compared to Nu 250,000 earlier. Material costs have gone up by almost three times,” he said.

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