KARACHI, March 19: Surging prices of construction materials coupled with long delays in release of payments has created financial crunch for contractors who are presently executing government projects.

The central executive committee of the Karachi Contractors Association (KCA), in a meeting held on March 15 under the chairmanship of S M Naeem Kazmi, observed that the government authorities had no control over the prices of construction materials which had been surged by about 150 per cent in the last one year.

Around 400 contractors of ongoing 100 to 125 projects of different government civic bodies including City District Government Karachi (CDGK), towns, union councils and Karachi Water and Sewerage Board (KWSB) were unable to cope with increase in steel, cement and other materials rates.

KCA Media Secretary Saeed Ahmed Mughal told Dawn that contractors were facing price escalation on the one hand and non-payment of dues against work completed on different projects of these civic bodies on the other.

He said construction material prices had risen by 15 to 20 per cent in last week had directly affected the contractors who were bound to complete the projects, already in their hands, at agreed price.

However he urged the authorities concerned to formulate a system to resolve the price escalation issue.

He pointed out that under the Pakistan Engineering Council rules adjustment owing to price escalation was allowed but no government body was abiding by this rule forcing contractors to complete the project at already agreed rates.

KCA chairman S M Naeem Kazmi informed the participants of the meeting that around Rs1.5 billion were outstanding against several government civic bodies and organisations.

Giving the break-up, he said Rs400 million were held back by the CDGK against work completed by KCA members, the KWSB owed around Rs250 million, Union Councils Rs900 million and 13 towns were not paying to contractors against their bills of Rs150 to Rs200 million.

This situation has created serious liquidity problems for KCA members to continue their work on ongoing projects, he added.

“Normally a single contractor works on more than one project at a time and on getting payment from one client the funds are used on other project and this is how a cycle keeps moving,” he elaborated and added that the entire cycle of funds of the contractors had been broken due to non-payments from these departments.

He said 13 towns out of 18 were yet to clear payments of contractors against the work completed in these towns. The KCA chief said bills submitted by contactors were lying with finance department which said cheques could not be issued as there were no funds in the bank.