The Federation of Construction Industry (FOCI) has asked the federal government to conduct a comprehensive review of existing contract templates and procurement guidelines to incorporate flexible provisions for addressing inflationary impacts on materials.
The Federation lamented the rising prices of construction materials, including cement, steel, gravel, and asphalt, adding that it has significantly escalated project costs, rendering them financially unfeasible for both public and private stakeholders.
Addressing a press conference Thursday in Abuja, FOCI President, Chief Vincent Barrah, said the skyrocketing prices of diesel, a critical fuel source for construction machinery and vehicles, have further compounded the financial burden on companies, exacerbating their already precarious financial situation.
According to him, the current exchange rate has doubled the cost of spare parts and further reduced the investment opportunity to expand or replace current pieces of machinery.
He said: “The current economic climate characterized by soaring rates has unleashed a cascade of adverse effects on our operations, pushing many companies to the brink of collapse.
“The consequences of these inflationary pressures are manifold and deeply concerning. Construction projects are experiencing unprecedented delays and disruptions, as companies struggle to procure essential materials within budgetary constraints.
“Furthermore, the adverse effects extend beyond the construction sector, permeating the broader economy and impeding Nigeria’s overall development trajectory.
“Infrastructure projects vital for transportation, housing, energy, and water supply are being hampered, hindering progress towards national development goals and impeding efforts to improve the standard of living for all Nigerians.
“The variation of prices provision, which is intended to cater for fluctuations in material costs during the execution of projects, has proven to be grossly inadequate in the face of the current inflationary environment.
“The predetermined price adjustments stipulated in contracts are no longer sufficient to offset the substantial increases in material prices, leaving contractors with no recourse but to absorb the additional costs or seek renegotiation of contracts, both of which pose significant challenges and implications for project delivery.”
While demanding a review of existing contract templates, the FOCI President also asked for strengthened monitoring and reporting mechanisms to track changes in material prices and assess their impact on project costs in real time.
“Enhanced financial support mechanisms, such as access to low-interest loans and grants, should be made available to construction companies to mitigate the financial strain caused by inflation and facilitate project continuity,” he said.
Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.
