The Government of Nepal has introduced the Special Price Adjustment Procedure, 2083, under the authority provided by Section 74(1)(f) of the Public Procurement Act, 2063. The procedure establishes a mechanism to address exceptional increases in construction costs resulting from international conflicts, supply-chain disruptions and abnormal market conditions. It applies to eligible public construction contracts where the prices of construction materials, labour, equipment or fuel have risen significantly beyond normal expectations, making it difficult for contractors to complete projects at previously agreed rates. The framework aims to provide financial relief in qualifying circumstances while supporting the continuity of public infrastructure development.
Under the procedure, special price adjustments are permitted only in specified circumstances, particularly where international conflict has disrupted supplies and caused extraordinary price increases that cannot be adequately addressed through existing contractual adjustment provisions. The adjustment is restricted to the portion of a price increase exceeding 10 percent of the applicable base rate, and payments cannot exceed the calculated eligible amount. Contractors must also demonstrate that the increased costs are genuine and supported by documentary evidence. The procedure excludes cases involving previously determined compensation, certain contractor-responsible delays and situations where compensation has already been addressed through contractual mechanisms.
Construction businesses seeking compensation must submit formal applications to the concerned public entities, accompanied by supporting documents such as evidence of original contract rates, actual quantities of completed work, bills and invoices demonstrating increased costs, and progress reports. Applications must be submitted within the timeframe prescribed by the procedure, including the provision that requests may be made after one month from publication of the relevant government notice. Public entities are responsible for verifying submitted claims, assessing actual construction quantities, reviewing market prices and ensuring that contractors do not receive duplicate compensation or undue financial benefits. The procedure also specifies responsibilities for examining applications and determining eligible adjustment amounts.
The procedure includes a mathematical formula for calculating special price adjustments: P = [Ri − (Ro × 1.1)] × Q, where P represents the adjustment amount, Ri is the applicable revised rate, Ro is the base rate and Q is the verified quantity of construction work. An example provided in the document shows that when the base bitumen price is Rs 100 per litre, the revised price is Rs 130 per litre and the quantity used is 5,000 litres, the eligible adjustment totals Rs 100,000. Separate calculations must be carried out for individual construction materials before determining the total eligible compensation. The framework seeks to balance contractor protection against exceptional market volatility with accountability and financial discipline in government procurement.
