The Hindu Business Line : Builders seek regulator to check steel, cement prices

Mumbai, April 24 The Builders’ Association of India has said that the Union Government should establish a regulatory authority for steel and cement to curb arbitrary price rise in the materials.

The Chairman of the Mumbai Chapter of the BAI, Mr Mahesh Mudda, said the growth of the construction industry was down from about 14 per cent to 12 per cent in 2006-07 and expected to drop to 9.6 per cent in 2007-08, primarily due to price rise in steel and cement.

While steel prices had gone up by about 70 per cent from about Rs 28,000 in January 2007 to Rs 48,000 in March 2008, cement prices over the past three years had risen from Rs 152 a bag to Rs 248 in 2008. “The uniform pattern of the price increases from time to time and in tandem clearly indicated cartelisation,” he alleged.

The component of steel and cement together account for 50 per cent in construction works and the steep rise in their prices was forcing member-contractors working on government contracts to slow down and seek a price revision.

While World Bank-assisted projects provided a reasonable price escalation clause, those of Government bodies, such as municipalities and public works department, had no provision to compensate for sharp increases.

Mr Muddha said contractors could not stop work as they had committed to execute the work and remitted security deposits. Further, stoppage of work would lead to the Government agencies withholding payments for other works either in progress or completed by them. The only option left was non-participation in tender processes, which they had resorted to in the case of two tenders floated by the Central Public Works Department for works related to the Commonwealth Games in Delhi.

Following a representation by the BAI, the Maharashtra Government had formed a committee to look into the issue and submit its report within a month, he said.

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