Construction material prices surge as output falls, Hydropower and infrastructure projects hit

KATHMANDU: Nepal’s construction sector is facing growing pressure as prices of key materials such as cement, steel rods, bitumen and plastic products continue to rise amid reduced production and supply concerns.

Industry stakeholders say the recent increase in global fuel prices—linked to tensions in West Asia—has pushed up transportation costs, directly affecting the price of construction materials across the country.

According to Independent Power Producers’ Association of Nepal, the rising fuel cost has increased overall construction expenses by around 10 percent. “Prices of cement and steel are changing almost daily, making it difficult to estimate project costs,” said Balaram Khatiwada.

Hydropower Projects Under Pressure

Developers say the impact is already visible in the hydropower sector, where projects under construction are facing cost overruns and uncertainty.

Around 35,000 MW worth of hydropower projects are currently under construction in Nepal. However, rising material costs have already increased estimated budgets.

According to Prakash Dulal:

1. Cement prices have increased by more than Rs 50 per bag
2. Steel rod prices have risen by up to Rs 5 per kg

He said it has become difficult to predict final project costs due to continuous price fluctuations.

Developers have also raised concerns that some manufacturers are reducing production and increasing prices. “There are signs of artificial shortages and market manipulation under the excuse of global conflict,” Dulal said.

Supply Concerns and Delays

Apart from rising prices, builders are also worried about supply disruptions. Delays in getting materials are increasing project timelines and costs.

Projects such as the 4.3 MW Fedi Khola Hydropower and 8 MW Tadi Ghyangfedi Hydropower are currently under construction but facing challenges due to rising input costs.

Developers have urged the government to strengthen market monitoring and ensure smooth supply of materials.

Cement and Steel Prices Climb

According to the Nepal Cement Manufacturers’ Association, cement prices have increased by around Rs 50 per bag in recent days.

• OPC cement has risen from around Rs 680 to Rs 750 per bag
• PPC cement has increased from Rs 780 to Rs 850 per bag

Association अध्यक्ष Raghunandan Maru said the price rise is mainly due to higher fuel costs driven by international factors.

Bitumen Prices Spike, Artificial Shortage Reported

The situation is more severe in the case of bitumen, a key material for road construction.

Business sources say:

• Bitumen prices have increased sharply, with reports of up to Rs 14,000 rise per barrel
• Prices have jumped multiple times within weeks

Some suppliers are also accused of creating artificial shortages by limiting supply to selected buyers.

This has forced contractors either to pay higher prices or halt construction work.

Road Projects at Risk

The ongoing Narayanghat–Butwal road project is among those likely to be affected due to rising costs of bitumen, cement, steel and fuel.

According to project officials, the gap between contract rates and current market prices has widened significantly, making it difficult to continue work under existing terms.

Contractors have already notified the project about “uncontrollable conditions” and are preparing to claim compensation for losses caused by price hikes.

Government Monitoring Underway

Department of Commerce, Supplies and Consumer Protection said it is closely monitoring the market.

Information officer Narahari Tiwari said transport costs have increased due to fuel price hikes of Rs 15–30 per litre, leading to higher material prices.

He added that while some increase is natural, action will be taken if excessive pricing or artificial shortages are found.

Economic Risks Rising

Economist Dilnath Dhungana warned that prolonged conflict in West Asia could have long-term negative effects on Nepal’s construction sector and overall economy.

He said rising oil prices could double the cost of imported materials, disrupt projects, and affect employment. There are also concerns about the impact on remittances from Nepali workers in the Middle East.

With Nepal still dependent on imported raw materials for cement and other products, global price volatility is directly affecting the domestic market.

Industry stakeholders warn that if the current trend continues, many infrastructure and hydropower projects could face serious delays or even halt operations.