Soaring construction costs brings university projects to a standstill

Contractors working on government university projects halt construction owing to price hikes in construction materials. According to Girma Habtemariam, president of the contractor’s association, contractors working on more than 700 projects of government universities have stopped their operations.

As Girma elaborates so far contractors have about 756 projects in universities across the country with the total cost of the projects being worth about 92 billion birr. As an option, contractors have requested the government to revise their agreements. "We have submitted a letter to the Ministry of Finance to revise the agreement, mainly the price," stated Girma.

The ministry has also been in talks with pertinent stakeholders on the issue and as Girma clarifies, his association has high hopes that the issue will be solved sooner rather than later.

"The prices of construction materials are heaping up from day to day," lamented the head of the association. Construction delays more often than not occur due to the escalation in material prices, which contractors also underline as one of the major challenges they face in their projects. According to the central statistics service’s latest update on the month of February, the price of construction materials has shown an increase of 17.9 percent up from 15 percent in January.

Most of the stakeholders claim that there are few control measures taken by the government on the market, and they pin this as the main problem of the price spike. The illegal increasing price of cement in the open market for the past several months has sparked challenges in the construction industry. To this end, government has been taking a number of steps to improve the supply chain and increase the price of cement which is the main input for the construction sector. Cement producers on the other hand are tackling a long list of challenges including, unfavorable supply-demand balance, higher cement prices, escalating production costs, low utilization rates, social unrest, and a lack of foreign currency.

The Ministry of Mines said the problem related to cement production and supply is due to the fact that the Association of Manufacturers and Producers does not pay attention to cement production. In a letter to 14 cement factories a week ago, the ministry said man-made problems in cement production and supply were on the rise, coupled with the lack of close supervision of cement production, factory management and limited producers. Based on the problems, the Ministry of Mines conducted a joint survey with the relevant institutions in a letter to the companies, highlighting the major problems identified in the study.

“The main problem is that the management members and sector leaders of the cement factories have not paid due attention to the production of cement. We are waiting on the government to make the rearrangements on the contract, considering the current situation,” opined Girma.