KATHMANDU: The government has approved a special price adjustment mechanism for public construction contracts, providing relief to construction businesses affected by unusual increases in material prices.
A Cabinet meeting held on Monday decided to implement the special price adjustment under Section 55(1A) of the Public Procurement Act, 2063.
According to Infrastructure Development Minister Sunil Lamsal, the adjustment will apply to ongoing public construction contracts whose performance period remained active after March 29, 2026.
The measure covers petroleum products, bitumen, HDPE pipes, cement and steel whose prices increased unusually due to international conflicts and disruptions in the global supply chain.
Contracts without an existing provision for annual or price adjustments will also be eligible if they meet the required criteria. For contracts that already have a price adjustment provision, the amount received under the existing contract terms will be deducted before calculating the additional special adjustment.
The government said the mechanism will cover only price increases caused by extraordinary circumstances, rather than normal market fluctuations. The amount will be calculated based on actual consumption, verified quantities and relevant prices to prevent double benefits or unnecessary payments.
The decision aims to prevent construction projects from being halted due to unusual international conditions, ensure continuity of ongoing development projects and address the financial imbalance faced by the construction sector.
