Brick shortage could hit market hard

Price of bricks hiked by 15 per cent and could still soar higher


Sujata Awale

Kathmandu

The price of bricks has increased by 15 per cent since the beginning of March, as production could not meet soaring demand. As green clay worth Rs one billion was destroyed due to the heavy rainfall in mid-February, the supply of bricks was hit. production of bricks dipped by as much as 4

According to the Federation of Nepal Brick Industries (FNBI), the production of bricks is limited to 25 per cent of the target. With lower production and high demand, the market will soon face a shortage of bricks. The price of bricks have already been hiked up by 15 per cent — Rs two per piece — as compared to the price set before mid-February. Bricks were priced around Rs 10,000 to Rs 12,000 per thousand units early this fiscal. However, now it costs Rs 14,000 to Rs 15,000 per thousand units.

President of FNBI, Mahendra Bahadur Chitrakar, said, "With the positive vibe seen in construction and real estate, the demand for bricks has increased since the last two years. However, we are not able to meet this soaring demand due to unfavourable conditions." Citing that rain was the main hurdle for production, he said, "We have to work under the sky and if it rains, already made green clay gets destroyed which means 50 per cent loss."

Due to huge losses, a few brick kilns in the valley have already come to closure. Reportedly, 110 brick kilns were operational in the valley last year, however, of late only 100 factories are operating. There are altogether 800 brick kilns across the country. "The shortage of bricks has already hit the Western and Far-Western region of the country hard," he informed, adding that industrialists there could only produce 10 per cent of their target. He said that if the shortage of bricks continued, the only alternative would be importing from India.

The production for bricks is a seasonal business in the country that starts from December to June. Due to the rain, the production of bricks have decreased in the prime season. "There is no doubt that we had a hard time due to rain. And this will certainly hamper our total production this season," said Jacky Maharjan, Proprietor of Bhairab Itta Bhatta. Citing that they produced six million units last season, he said, "This year we can only produce four million units if there is no heavy rain." He also stated that as the production is low, price has been hiked. According to him, they have limited stocks and produce as per the placement of order.

Brick production is a manual job that depends upon climate and workforce. "The trend of migration for better opportunities has created a severe labour crunch in the business," said Bikash Maharjan, Proprietor of Shree Loknath Itta Udhyog. He said that there is a competition among producers to retain staffs. According to him, they used to have 900 staffs previously, but of late the number is limited to 600. "We witnessed 30 per cent increased demand as compared to last year but as there is an acute shortage of manpower, we could only produce one third of our target." The company has a production target of 30 million units this season but, it will hardly manage 10 million.

Maharjan stated that if it rains in days to come, there will be a shortage of bricks. According to him, they have only 1.5 million units in stock, which will be only enough for a few weeks. He further said that the price hike of coal is another factor that led to increase in the price of bricks. He said, "The coal mine at Assam has closed, and we have to import from another part of India paying 50 per cent more." According to him, they used to pay Rs 17,000 per tonne of coal from Assam while they pay Rs 25,000 per tonne these days.

0 per cent due to the rainfall. Untimely rainfall, labour crisis and lack of raw materials are major hassles to the brick industry. Although, the demand for bricks has increased by 15 per cent as compared to the last year, producers could not cash in on the potential.

Published on THT Property Plus/ March 28, 2015

Mismanaged and total mess

Systems and infrastructure at TIA outdated and insufficient


Sujata Awale

Kathmandu

The sole international airport of the country — Tribhuwan International Airport (TIA), has been in the news for all the wrong reasons in the last few weeks. The crash landing of a Turkish Airlines A330 aircraft that blocked the runway forced the closure of the airport for four days. Kathmandu was cut off from the rest of the world as airlines could not land in Kathmandu and were diverted. As many as 165 scheduled international flights were cancelled due to the incident and some 50,400 inbound and outbound passengers were stranded in different countries and faced a hard time. The incident caused severe financial losses to airlines in terms of managing passengers' accommodation in hotels, fooding and compensation for baggage missing in the mad rush after the airport was opened. Airlines operated 197 extra flights after the incident from March 7 till the midnight of March 11.

On March 13, merely a week since the Turkish Airlines incident, TIA faced runway blackout for two and a half hours leading to diversions of seven incoming flights and some delayed takeoffs.

Table of losses

Stakeholders stated that as Civil Aviation Authority of Nepal (CAAN) and the respective ministry could not crack down on time the situation went from bad to worse. Lack of preparedness in the face of emergency and poor infrastructure, equipment and expertise aggravated the situation. The exact data on the total loss incurred during the period is yet to be disclosed by respective airlines.

"Lack of the government's will, accountability and determination to play a constructive and decisive role during the crisis made the situation worse," said Bhola Bickram Thapa, Vice Chairman of Board of Airlines who is also the President of President Group of Companies. Citing that it is sheer negligence on the part of CAAN, he said, "It is the responsibility of CAAN to respond to emergencies promptly and push the government to solve the issue. But, both CAAN and the ministry stayed quiet and irresponsible." He further said that the huge lose to airline companies and added woes to passengers is because of CAAN's failure to act, therefore, it must compensate the airlines. "We have already written to all airline companies to prepare a report on financial losses they faced. As soon as we get it, we will claim compensation," he asserted.

Airline companies had a tough time for eight days — four days during and four days after airport closure. Many passengers reported baggage missing and untimely delivery. The country itself got negative publicity. Because of cancellation of flights for four days, most hotel bookings were cancelled. Inbound travel agents lost incoming clients, treks, travel agents, porters, domestic airlines all lost out on revenue worth millions of dollars.

Economic Analyst, Sujeev Shakya, said that authentic data for the total loss has not yet been tabulated. However, he said, "Eighty thousand people are directly and indirectly affected by the incident. The total loss would be around Rs 250 million." According to him, there is still confusion over who will bear the total loss in the aviation sector. "As many airline companies are waiting for their insurance to cover the loss, they are not disclosing the amount," he said. Extra fuel charge, TIA cost, fooding and accommodation of passengers are the main expenditure heads for airline companies. "It is not only the financial losses but the tourism of the country will also suffer," he added.

No planning, no vision

The government's unpreparedness was highlighted by the fact that Nepal has no alternative runway, alternative international airport or jet removal kit to clear the only runway. Stakeholders stated that the four days closure not only left thousands of passengers stranded but it also raised serious questions about safety measures and the professional approach that international airports are expected to have.

“The incident showed the world how the government is operating TIA,” said DB Limbu, President of Nepal Association of Tours and Travel Agents. Citing that the infrastructure of the TIA expired 10 years ago, Limbu said, "TIA has a single runway and Nepal has no other international airport. It is high time the government planned for alternative international airports in the country.”

According to him, TIA collects about Rs five billion revenue every year, which is more than enough to renovate and maintain physical infrastructure. However, he said the government lacks will power and proper plans and vision for management of TIA. Stressing on the need to speed up the construction of the proposed second international airport at Bhairahawa, he said, "The government has to take the lead and implement the plan. Otherwise, the country will be cut off from the world in case of any natural disaster in the city."

Nepal has adopted its ‘Vision 2020’ plan with a target to attract two million tourists. “The negative message that the international market got will certainly hamper tourism,” he said, adding that the government should plan properly to invite tourists.

On this, Director General Ratish Chandralal Suman said that CAAN has learnt a lesson from the incident and is working on both preventive and proactive measures. He said, “As a preventive measure, we are planning to have an alternative international airport at Bhairahawa and also discussing about owning removal kit in case of any unforeseen incident.”

Where are the facilities?

TIA charges Rs 1,000 per passenger as an Airport Development Tax (ADT). The collected fund is meant for the enhancement of infrastructure and facilities at the airport for passengers. According to CAAN, it collects Rs 1.5 billion ADF per year in an average.

It has been a year since CAAN is collecting ADT, however, the utilisation of funds for the right purpose is still a far cry. While stakeholders blamed TIA and CAAN for not being accountable, the only answer they could come up for their own state of inactivity is that their work is in progress.

"We have sketched an airport rehabilitation programme of Rs three billion to enhance passenger facilities such as elevators, toilets, security technology, check-in counters among others," said Suman. He further said that they have already started asking for tenders to bid for the project. "We will complete the Rs one billion project in this fiscal," he assured.

Limited facility, excessive load

Officials at TIA admitted that the infrastructure at the airport is not sufficient to cater to the present air traffic and flow of passengers. According to TIA management, the passenger handling capacity of the airport terminals are 1,325 per hour while the flow of passengers surge up to almost 3,500 per hour. "The system and whole infrastructure of TIA is outdated and insufficient to cater to our daily passengers," admitted Teknath Situola, Chief of Terminal Management Division at TIA — Civil Aviation Office. In TIA, there are 18 washrooms, four x-ray machines, four boarding gates, four ramp bus, limited wheelchair facility and three-baggage belt. Of which, one baggage belt, a ramp bus and two x-ray machines hardly operate properly.

While questioning about the state of existing equipment and facilities, he said, "We do not have a system to acknowledge all details of the property and as soon as we are informed about the problem, we will solve it.” He also stated that as there are 36 different government bodies inside TIA, they face problems in coordination. Citing that available space is limited to add on adequate facilities, he said, “We are planning to add a floor for immigration to ease the flow.”

President of Airline Operator's Committee — Nepal, Bharat Kumar Shrestha, said that half of the problem of terminals would solve if the TIA officials operate existing resources fully. Shrestha said, “We have asked TIA officials many times to operate four x-ray machines full-fledgedly but we are yet to see it happen. Likewise, baggage belts and a ramp bus keeps breaking down and the management is least bothered about the situation.” He further said that due to the mismanagement of TIA, passengers have to stand in long queues delaying flight schedules.

BOX:

Upgrading Bhairawaha Airport

KATHMANDU: The construction of Gautam Buddha Airport that is to be upgraded as a regional international airport started on January 15, 2015. The regional airport upgrade work is expected to be completed by December 2017. In October last year, the CAAN signed an agreement to upgrade the existing airport with Northwest Civil Aviation Airport Construction Group of China, the lowest bidder for the project. It had quoted Rs 5.50 billion for the project, which is estimated to cost Rs 6.22 billion as per the government estimation.

The project is assisted by Asian Development Bank (ADB) and supported by South Asia Tourism Infrastructure Development Project. After upgrading, the airport with a 3,000-metre runway it will serve as an alternative to the nation’s only international airport. According to CAAN, the total estimated cost of the project is USD 97.21 million, ADB will provide USD 58.50 million (USD 42.75 in loans and USD 15.75 million in grants), while OPEC Fund will provide USD 15 million loan.— HNS






Published on March 22, 2015 on THT Perspectives

Steel rods face weak demand

Despite it being the peak season for product sales industry is suffering


Sujata Awale
Kathmandu

As the government has not been able to carry out development projects smoothly, it has directly affected demand for construction material like steel rods. Despite it being the peak season for construction product sales, the steel rolling mill industry is suffering. The steel rod industry has not only witnessed a halt in its year on year market growth of around 15 per cent til last year but it has also experienced a slump in demand by over five per cent. The market, which consumed 315,000 tonnes of steel rods last year has now been confined to approximately 300,000 tonnes of steel rods. However, there is adequate stock in the market and the price of steel rods remains the same at Rs 84 to Rs 86 per kg as in the previous year.

According to Nepal Steel Rolling Mills Association (NSRMA), the total market for steel rods is 500,000 tonnes per year. Reportedly, there are 30 registered rolling mills, out of which only 17 factories are in operation. Industrialists stated that political instability, lower development activities and non opening of new projects are the main reason for low demand of construction material. Of late, Nepal is heading towards self-dependence in steel rods, but is still dependent on India for raw materials.

“There is no demand for construction material owing to slow paced development activities in the country,” said Dhruba Kumar Shrestha, President of NSRMA, adding that expenditure from the development budget has been nominal till the end of the third quarter of this fiscal year. He said, “The government could not introduce new development projects like hydropower, infrastructure development and housings, which directly hampered our business.”

Citing that there was high demand but low production last year, he said, “Although production is smooth this year, demand is low." Complaining that load shedding is the major hindrance for the sector, he said, “Due to severe power cuts, we are confined to operate at only 50 per cent of the installed capacity.”

“Usually, the period between mid-January to mid-March is the peak season for steel rods and the price of the products also soars during this period," Biswo Pudassaini, Sales and Marketing Manager at Panchakanya Steels, adding that however, the price is the same as demand is low. “Slow-paced development activities are the main cause for lowering demand," he said, adding that the sluggish real estate sector is also a cause for low demand.

There are two types of steel rods being manufactured for construction. Steel rods made up of prime billets is superior and are more expensive while those made up of ingots are of low quality and inexpensive. Panchakanya, Himal, Sakha and Hama Steels are some companies that produce prime billet rods. "There is a healthy competition among manufacturers using prime billets while there is unhealthy competition among manufacturers using secondary billets and ingots," said Pudassaini. According to him, Panchakanya enjoys 20 per cent market share in the rolling mills industry.

"We have witnessed 20 per cent growth in sales this year," said Raju Kumar Thapa, Deputy General Manager at Hama Steels. He informed that Hama Steels have resumed operations eight months ago after upgrading with new technology and 600 tonnes installed capacity. "We are using the latest technology and are the first one to use primary root base billets to produce quality steel rods," he said. "As of now, there is no sign of new projects opening. However, we are expecting some next month," Thapa opined. According to him, they enjoy 10 per cent market share.

"Customers here are still unaware about the quality of steel rods. They look for affordability rather than quality," said Thapa, adding that they plan to have campaigns to make people aware of the significance of quality products. According to him, the unique selling proposition of their products is ductility, strength and uniformity of consistency.

Government buildings at risk

Although the government knew that the government buildings, schools, hospitals and residential buildings are vulnerable and their lifespan has expired long ago, it could not react on time. And the result is all we know.

#devastating_earthquake_April25

Judha Barun Kendra, Pulchowk Photo By: Prakash Mathema, AFP

Durbar School, country's oldest school,  at Bhotahiti Photo By: news.xinhuanet.com

In case of a disaster, government’s day to day function will crumble

Sujata Awale

Kathmandu

Most government offices in the valley built before 2003 are vulnerable to natural disaster and poor in condition according to data maintained by the Department of Urban Development and Building Construction (DUDBC). DUDBC is working on a Building Maintenance Information System (BMIS) to maintain a database of the status of government buildings across the country. Till date 1,053 government buildings have been updated in the database, of which 85 per cent are in poor state and over a thousand buildings have yet to be updated in the software.

In the system, DUDBC has recorded 83 office buildings in Kathmandu, 18 in Lalitpur and 43 in Bhaktapur. Data shows that Juddha Barud Yantra at New Road and Pulchowk, Central District Offices of Lagankhel and Babarmahal, Kathmandu Valley Municipal Development Planning Committee at Anamnagar, Department Of Hydrology and Meteorology at Babarmahal, Land Reform and Management, Water Induced Disaster Prevention Division-4 at Sipadole, among others are in a very poor state and in need of major repair and maintenance works. The department is responsible for scrutinising other buildings and looking into the need for retrofitting.

The study found that most government office buildings have an RCC frame structure, brick and stone masonry in cement mortar with RCC roof, brick or stone masonry in cement mortar with asbestos sheet and CGI sheet.

“We have found that more than 85 per cent of government buildings built before 2003 in the valley are vulnerable to natural disaster as the life span of these building have already expired,” said Prakirna Tuladhar, Senior Divisional Engineer of Building Maintenance and Evaluation Section at DUDBC. He said, “There are some buildings used for government administrative work since 1903, these need immediate retrofitting and restructuring for the safety measures.”

On who is responsible for the vulnerable state of government offices, Tuladhar said, “Earlier the government buildings were built without paying any heed to National Building Code(NBC). It was only in 2003 that the Cabinet decided make the NBC mandatory.” DUDBC is responsible for the design of buildings, implementing NBC and conducting maintenance work on government buildings. He however passed the buck by saying that they do not have adequate budget for conducting detail vulnerability assessment and restructuring work.

According to him, government buildings inside Singha Durbar, Ministerial Quarters, public hospitals, schools, et cetera need immediate vulnerability assessment to control probable damage to the property. Informing that they plan to introduce their ‘Safer Building Construction National Planner Action’ project within a month, he said, “This project will be of 30 years where five years will be spent on documentation and the rest on retrofitting all public structures across the country for safety measures.”

Although DUDBC has initiated having vulnerable assessment, it is yet to conduct a detailed survey to figure out the exact scenario of the risk that government buildings pose. “The state of government offices in the valley is critical and the worst part is there is no assessment of the vulnerability of those buildings,” said Bijay Krishna Upadhyay, Earthquake Risk Reduction Professional at National Society of Earthquake Technology. He further said, “Most buildings operating as government offices are not built for the same purpose which means they are not adopting vulnerable measures.”

Many reports showed that the valley is in a high-risk seismic zone. Citing that government agencies responsible for rescue and resource mobilisation themselves are at high risk, he questioned, “How can common people be provided reliefin the event of a catastrophe?” He opined that the government has been negligent about the probable situation in case of a natural disaster and lacks farsightedness. “The government is working on disaster preparedness plans but there is a lot to do. It should focus on a business continuity plan.” He warned, “If the government doesn’t care about the present status of the government offices, in case of any disaster, day to day function will crumble making the whole system a failure.”

According to him, there is an immediate need to safeguard properties by implementing earthquake resistance methods and retrofitting and restructuring for existing vulnerable structures.

Published on The Himalayan Times, March 7, 2015