According to The Business Standard article published on February 26, 2023, the government has revised up the schedule of rates for construction materials, including bricks, bitumen, cement and rods, in projects as the contractors have been urging the authorities to readjust the price of projects in line with the hike in construction material prices.
The price of first class over-burnt bricks, commonly known as jhama bricks, has increased from Tk10 to Tk13 while the price of grade one brick made by automatic machine has increased from Tk11.5 to Tk16.
The schedule of rates for construction works of various ministries and departments of the government has been revised with an increase in brick prices by 30% to 39%.
Under the notification issued by the Ministry of Finance, apart from bricks, the price of bitumen has been increased by 42%, cement by 22% and rod by 28%.
According to the notification, the new prices will be effective for the price schedules of all government departments.
The notification also asked the concerned to submit the total cost based on new prices of materials.
According to the Ministry of Planning, about 1500 ongoing projects under the Annual Development Program (ADP) are estimated to cost more than Tk1,762 lakh crore. The size of ADP for the current financial year has been slashed to Tk2.28 lakh crore from Tk2.47 lakh crore.
As more than 80% of the government's development work is construction-based, experts fear the cost of implementing the ADP will increase a lot.
In the finance ministry circular, the price of each 1st class Jhama standard brick in Dhaka, Mymensingh, Chittagong and Sylhet divisions is Tk13. In the current schedule of rates, the price is fixed at Tk10. As a result, the price of Jhama brick is increasing by Tk3 or by 30%.
In Rajshahi and Rangpur division, the price of jhama brick has increased from Tk9.6 to Tk12.5 while in Khulna and Barisal, it has increased from Tk9.8 to Tk12.5.
The price of automatic machine made bricks has been increased by Tk4.5 across the country – 39% increase.
Bitumenper kg retail price is increasing by Tk23 in Dhaka and Mymensingh divisions – from Tk69 to Tk92, which is a 33% increase. The retail price of the same grade bitumen is increasing by 32% in Chattogram and Sylhet divisions while 34% in other parts of the country.
The bulk price of similar grade bitumen is increasing by 41% in Dhaka and Mymensingh – Tk63 to Tk89 per kg. In Chattogram and Sylhet, the wholesale price has increased by 38% while in other regions of the country, it increased by 42%.
Similarly, prices of other grades of bitumen in retail and bulk procurement are also increasing significantly across the country.
It has been decided to increase the price of Ordinary Portland cement by Tk70 per bag at the retail level and Tk80 for bulk procurement. Retail cement price has been increased by 14% from Tk490 to Tk560 while the price of each bag of cement has been increased from Tk440 to Tk520 for bulk quantities. As a result, wholesale cement prices have increased by 18%.
Shah cement is being sold at Tk550-560 per bag in the capital market while in several areas including Nilphamari, Kurigram, this cement is being sold at Tk600 per kg.
The retail price of Portland Composite Cement rose by 14% to Tk525 per bag from Tk460. According to this, the price per bag has increased by Tk65. And for bulk procurement, the price of the same quality cement has increased by 22% – from Tk410 to Tk500.
According to TCB data, prices of different grades of rods have increased by 15% to 17% in the last one year. In continuation of this, rod prices have been increased by 15 to 28% in the new schedule.
MS Ribbed/Defonned Bar (Grade 400) is priced at Tk91 per kg in the retail level which was priced Tk75 in the existing schedule. So, the price of rod has increased by Tk16 or 21% per kg. In bulk procurement, the same grade of rod is priced at Tk89 per kg which was Tk72 in the previous schedule.
According to TCB, 40 grade rod is selling at Tk83,000 to 85,000 per tonne. And the price of 60 grade rod is Tk90,000 to 93,000 per tonne. However, in various shops in the market, rods are sold at Tk96,000 to 99,000. As such, in the new schedule, the price of rod is lower than the market demand.
Various development project directors (PDs) and contractors of the government have been claiming that the pace of development work had slowed down due to the increase in the cost of construction materials.
In the wake of the Russia-Ukraine war, which followed the Covid pandemic, supply chain disruptions have caused contractors to stop work due to raw material shortages and rising material prices.
They believe that the work will speed up after the new rate schedule.
Dr Md Waliur Rahman, project director, Improvement of Elenga-Hatikamrul-Rangpur Road to a 4-Lane Highway, told TBS that many projects stalled as the contractors stopped work.
Contractors will benefit as the prices have been revised and projects will speed up, he said.
In response to the question of how much the overall cost of the project will increase, he said in each project, there is an additional allocation of 4% as contingency. Apart from this, there is some scope for increasing expenditure in the light of inflation data produced by the Bureau of Statistics.
He also thinks the cost of the project will not increase much outside the contingency.
However, the decision will increase the pressure on the government's budget, said Professor Shamsul Haque of BUET civil engineering department.
"Considering the speed of the projects, the decision deserves praise. The contractors were not working for a long time due to losses as the cost of materials increased," said the transportation expert.
"However, it should also be seen that the revenue of the government is not increasing as expected. On the contrary, government's expenditure has increased in various sectors. In this situation, due to the increase in the price of materials, the cost will also increase quite a bit," he commented.
Bangladesh Association of Construction Industry (BACI) President Shafiqul Haque Talukder said that due to the increase in the price of materials in the market, many projects were stopped. In this situation, considering the problems of the contractor and the market situation, the contractors will get some relief thanks to the increase in the raw material prices.
Reviewing the new rates, he said the price of each item has been set slightly lower than the market price.
"If the price increases in the future, the contractors will be in trouble again," he said, urging to review the prices and update the rate schedule from time to time.
