Rajesh Rai | Phuentsholing
For more than two years, the construction sector has been one the most affected sectors due to the Covid-19 pandemic.
Constructions of any size or kind during this period required huge operation costs due to factors such as shortage of labour and lack of construction materials.
This was further hampered due to lockdowns and other Covid-19 protocols and restrictions.
Although the country now has seen some major relaxations, the sector still faces a hurdle—cost escalation.
Contractors in Phuentsholing said that in the past two years, construction cost increased mainly because of increasing cost of imported materials.
At one point, Bhutanese labourers were encouraged but they asked for higher payments while they did not have skills. Today, there are not many Bhutanese workers in the construction jobs, according to those in the construction business.
After the border gate was closed in March 2020, over 1,260 foreign workers were allowed from Phuentsholing that year. In 2021, about 7,851 were allowed. This year, until June, 9, over 7,423 foreign workers were allowed to enter from Phuentsholing.
“Now, when the pandemic is almost over, there are cost escalations,” one contractor in Phuentsholing said. “There is still scarcity of construction materials, which is worsened by hike in rates of fuel and construction materials.”
An engineer at a construction site in Phuentsholing, Anil said that contractors today cannot quote prices as per the Bill of Quantities (BOQ).
“If we don’t quote higher, we will be at a loss,” he said.
According to the engineer, the rod price has touched Nu 90 per kg today. It increased from Nu 60 to Nu 65.
“It is all due to the pandemic,” he said.
However, Anil said that the transportation cost is being borne mostly by construction companies with sites beyond Phuentsholing.
A hardware shopkeeper in Phuentsholing said the cost of most of the materials had increased.
“The copper wire, which used to cost Nu 1,000 increased to Nu 1,500 to Nu 1,700, depending on the brand. They say the price of even the low quality copper wire will not be Nu 1,000 today.”
Meanwhile, there are more than 2,600 construction companies across the country today. Most of the works have been given time extension.
The vice president of Construction Association of Bhutan (CAB), Damcho Tshering, said there is a major impact in the increase of construction materials, especially, with the key construction materials.
“Cost of cement, rod, and petroleum products other than fuel—like bitumen—has increased,” he said. “Transportation cost has increased.”
Bitumen’s cost is Nu 10,000 to Nu 11,000 per barrel today, he said, explaining that it used to be Nu 5,000 to Nu 6,000 before. The diesel price today is Nu 101 in Phuentsholing and Nu 103.55 in Thimphu.
Due to such an increase in cost, Damcho Tshering said the blacktopping works cost has increased by over 70 to 80 percent.
Although there are materials that are lower in price such as sand and aggregates, transportation has increased, Damcho Tshering said.
“Due to this there is a huge increase in cash flow, while the income has remained the same,” he said.