Soaring metal prices taking toll on construction firms

June 21, 2021 Ryan Ponce Pacpaco 677 views

A HOUSE leader has called on the government to look into the plight of local construction firms affected by the rapid increase of metal prices in the global and Philippine markets amid the coronavirus pandemic.

“Over the past months, metal prices have surged nearly 200 percent and this sharp uptick is mainly attributed to China limiting its export, and high prices of steel and iron ore products in the global market,” House Deputy Speaker and Bagong Henerasyon (BH) party-list Rep. Bernadette Herrera said.

“Projections of such elevated price scenario will remain at the high side in the coming months or maybe up to 2022,” Herrera said.

Herrera lamented that soaring metal prices have taken a heavy toll on domestic construction firms, especially those involved in the “Build, Build, Build” program of the Duterte administration.

“This situation has proved difficult for the construction sector that is still suffering from disrupted or reduced operations and financial constraints brought about by the COVID-19 pandemic,” she pointed out.

“Government intervention is necessary to help the construction companies in their difficult situation as the costs of sheet piles, steel bars and other construction materials have dramatically increased,” Herrera added.

Taking up the cudgels for the construction sector, Herrera recently wrote a letter to the Department of Trade and Industry (DTI) asking it to consider the possibility of implementing price adjustments in government construction contracts due to high metal prices and COVID-19.

In response, DTI Secretary Ramon Lopez said it is the National Economic and Development Authority (NEDA), not the DTI, which determines contract price adjustments or escalations pursuant to Republic Act (RA) 9184 or the Government Procurement Reform Act.

Lopez, however, endorsed Herrera’s letter to NEDA, Government Procurement Policy Board (GPPB) under the Department of Budget and Management, and Department of Public Works and Highways (DPWH) for appropriate action.

According to Lopez, applications for contract price escalations are covered by Section 61 of the Implementing Rules and Regulations (IRR) of RA 9184, which provides that contract price adjustment may only be considered during extraordinary circumstances and upon prior approval of the GPPB.

Such requests, he said, shall be submitted to NEDA together with the endorsement of the procuring agency, which in this case is the DPWH

The DTI chief declared that the COVID-19 pandemic falls within the definition of “extraordinary circumstance” as contemplated in Appendix 15, Section 4.3 of the said IRR.

He added that the DTI “commits to assist in the process, particularly on providing inputs, if needed, to supplement or validate data on ‘Price Indices’ as contained in Annex A of Appendix 15 of the said IRR.”

Lopez also recommended that a policy discussion be initiated by the GPPB or NEDA to determine how to expeditiously address contract price adjustments during the period of public health emergencies without the necessity for each contractor to individually seek NEDA confirmation of price escalation.

Herrera thanked Lopez for his help in bringing the matter to the attention of NEDA, GPBB and DPWH.

The party-list solon also disclosed that NEDA Secretary General Karl Chua and DPWH Secretary Mark Villar have assured her that their respective agencies are now looking into matter.

She expressed hope the concerned agencies will “act act quickly, with the utmost urgency” in addressing the plight of local construction companies.

“We hope that the NEDA will be able to determine with reasonable dispatch the price adjustments to be enforced by the DPWH on all its ongoing and existing contracts,” Herrera said.