Feb 1, 2007

Govt to release stockpiled sand from today to ease shortage

By Tan Hui Yee & Jessica Cheam

THE Government will be releasing sand from its stockpile from today, about one week after Indonesia banned the export of sand used for construction.

The sand, said the Building and Construction Authority (BCA), will help make up for any immediate shortfall and stabilise prices for the next few months.

Indonesia said the ban was aimed at preventing more damage to its environment and to protect its borders. It takes full effect on Monday.

As Indonesia was Singapore's main supplier of such sand, the ban caused the price of ready-mixed concrete - which is made with sand - to jump by about 30 per cent or more.

Some contractors stopped work because of a temporary halt in supplies of concrete.

On Monday, 400,000 tonnes of sand bought by the Government from a regional country arrived at Jurong Port to shore up the supply here.

In a statement yesterday, the BCA said it had met construction industry groups and key government procurement agencies to work out ways to minimise disruption to construction work.

It did not say how much the sand being released from its stockpile will cost, but said it expected the price of sand to rise because it will cost more to ship it here from sources further away.

The BCA urged developers to work out a cost-sharing arrangement with contractors and concrete suppliers for ongoing projects.

'Government agencies will take the lead to bear part of the increase in the cost of sand for its existing projects,' it said.

The honorary treasurer of the Ready-Mixed Concrete Association of Singapore, Mr Chua Eng Him, said BCA's announcement brought relief to an industry stunned by the sudden ban.

'Everyone must join in and help each other through this difficult time,' he said.

Then, speaking in his capacity as the director of concrete-supplier Transit-Mixed Concrete, Mr Chua said concrete suppliers were 'not profiteering' from the situation. They had to raise their prices because the Indonesian suppliers of sand had raised theirs.

'We can't blame them for this. They will lose their business completely after the deadline,' he added.

Sources say that the Government is expected to bear up to 75 per cent of the cost increase for sand for its ongoing projects.

While many government-sector contracts have some features protecting contractors from fluctuations in price of raw materials, this is not as common in the private sector, where work tends to be done for a lump sum.

Construction demand hit $16.1 billion last year, with the private sector accounting for $12.5 billion of it.

The project director of contractor Teambuild Construction, Mr Cheong Geok Meng, was hopeful that private developers will pitch in to share in paying for the increased cost of sand.

'If they are not willing to, you will not have much recourse,' he said. 'You either complete the job on time or they will impose liquidated damages on you.'

The Singapore Contractors Association said it was working with the BCA and industry players to come up with 'acceptable' methods of compensation.

On its part, the Real Estate Developers' Association of Singapore said it supported the idea that developers bear a part of the cost increase.

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