At a time when the government is struggling to expedite capital spending, new challenges have erupted to increase capital expenditure. According to the Financial Comptroller General Office, the government has spent just Rs 53.45 billion, which accounts for just 14 percent of the allocated capital budget, since the start of the current fiscal year. This rate is similar to FY 2021/22 when the capital expenditure stood at 13.44 percent in the first half of the fiscal year.
Though capital expenditure usually picks up in the second half of the fiscal year, the government’s inability to provide resources in a timely manner, shortage of construction materials in the market and liquidity crunch in the banking sector have emerged as major hindrances to accelerating the construction works of development projects.
Issuing a circular on January 4, the Ministry of Home Affairs directed all District Administration Offices (DAOs) immediately shut down crusher industries involved in quarrying and processing of stone, gravel and sand, that are operating without registration and operating permits and renewing operating licenses.
The ministry also instructed DAOs to investigate and immediately shut down quarry activities that have continued even after the completion of the various development projects, for which the crusher industries and construction businessmen concerned were granted permission to extract stone, gravel and sand.
The ministry’s instruction came at a time when the construction activities picked up. It was expected that construction works of development projects would gather pace after disturbances due to the rainy season, festivals and federal and provincial elections.
“Now several road projects, particularly the expansion works in Kathmandu valley, have been affected by the shortage of the sands and stones,” said a senior official at the Department of Roads (DoR). “We have been notified about the shortage of construction materials to concerned government agencies.”
Past experiences show that the government’s attempts to control the crusher operators resulted in a shortage of construction materials making the enforcement of the rules challenging.
Contractors handling the construction works of development projects say that most projects are facing a shortage of essential materials like sand and stones following the local administration’s efforts to enforce the rules. “Due to shortage of sands, pebbles and stones, their prices have also surged which have been unaffordable for the contractors,” a contractor said.
“As much as 80 percent of construction projects have been affected by the shortage of construction materials.”
The shortage of construction materials has come at a time when the government has been unable to provide enough resources to government agencies to continue the construction works. “Though we sought additional budget from the finance ministry to make payments to the contractors for the completed works for the last few months, we were told that there is no extra fund available for the payments,” the DoR official said, adding, ”We are now seeking approval from the finance ministry for the transferring budget to these projects from other projects that have not yet started construction works.”
Amid the sluggish economic activities in the country, the government is struggling to meet the revenue target. As of January 15, the government’s revenue collection stood at Rs 459 billion, which is barely enough to sustain the recurrent expenditure of Rs 455 billion.
Contractors say that they are also struggling to borrow money from the banks due to the liquidity crunch in the banking sector to carry on with the construction works after failing to receive payments from government agencies.
