The Gorkha Earthquake 2015 had an extensive impact on private sector businesses nationwide and in coming days/years this would inevitably show up in construction businesses as well. As per the Federation of Construction Materials Business Association of Nepal (FCMBAN), consumers would face a price hike of around10 to 15 percent on cement, 10 percent on reinforcement steel bars and 40 percent on sand & aggregates. The price of bricks was expected to increase arbitrarily in the next fiscal year with around 25 percent hike in wages of workers.
Immediately after the disaster, the demand for bricks came to a complete halt while the demand for other construction materials such as cement and steel rods had been confined to 30 percent as compared to the same period in previous fiscal year. It was predicted that although there would be sufficient capacity to fulfill the demand for cement, there would be significant crisis for iron rods and bricks. Further, there could also be artificial scarcity and price hike for bricks, sand, aggregates as well as construction labor.
The Federation of Nepal Brick Industries (FNBI) predicted the damage loss to be around NPR 1.2 billion while around 90 percent brick kilns came to a complete halt. Around 70 percent of them were in need of complete renovation. The government stated that there was a market demand of at least 12 billion brick to raise the damaged buildings.
FNBI claimed that Nepal produced around 3 billion bricks every year. With the four-fold increase in the demand of bricks, meeting the demand remains a challenge for the entire brick industry until today. Around 850 brick kilns across the nation were operating before the earthquake. With over 100 damaged brick kilns within Kathmandu valley alone and a total of around 350 damaged kilns across the country, meeting the construction needs remains a major challenge for this industry.
As per Cement Manufacturers Association of Nepal (CMAN), the ban on construction after the earthquake had induced an estimated 85 percent dip in the demand for cement. As the cement factories were operating only at 50 percent of their installed capacity before the earthquake, they claimed to fulfill an extra 50 percent demand in the coming days when reconstruction would start in full swing.
According to CMAN, the annual consumption of cement totals 4.5 million Metric Tons and there are 45 cement factories operating across the country.
In the wake of the national disaster, Nepal Steel and Iron Rolling Mills Association (NSIRMA) assured that although post-earthquake Nepalese steel and iron industry was utilizing around 48% of its production capacity, it would be sufficient to meet the demand. There are around 20 steel and iron factories operating across Nepal.
This sector consists of industries like the rebar industry, corrugated iron industry, and wire industry, among others. The steel rod industry, under normal conditions has an estimated annual production capacity of 1.5million tons. Likewise, the corrugated iron industry and wire industry has an annual production capacity of around 300,000 tons and around 200,000 tons respectively.
Of the total damages and loses incurred by the country, the private sectors sustained over three times in damages and losses compared to the public sectors. The Housing & Human Settlements alone sustained about 50 percent of the total damages and losses. The impacts sustained by the construction sector businesses in Nepal have far-reaching repercussions which need to be further analyzed to support the ongoing reconstruction efforts.
It is highly expected that the demand for construction materials such as bricks, cement, reinforcement steel bar, CGI-Sheets, GI-Wires, etc. would shoot up and the reconstruction work would also suffer due to increasing labor scarcity in the country.
* * * *