KOTA BARU: The Works Ministry expects the Variation Of Price (VOP) mechanism, to help contractors affected by rising costs of construction materials, to be implemented in a few months.
Its deputy minister, Datuk Seri Ahmad Maslan, said so far, the ministry had recorded the construction materials costs to have increased between seven to nine per cent.
"During a meeting between teams from the Works and the Finance Ministries as well as the Construction Industry Development Board (CIDB) last week, we had requested for the VOP clause to be implemented on the contractors who have been affected by the recent targeted diesel subsidy.
"The contractors are from all levels of G1 to G7 and they had been involved in projects before the government decided to implement the diesel subsidy rationalisation.
"The Finance Ministry has agreed to the proposal and will decide soon on the quantum of VOP they will give to the contractors involved.
"The Works Ministry hopes that the VOP clause can be implemented as soon as possible to ease the burden of the contractors," he said.
Ahmad, who is also the Umno Supreme Council member, said this at a press conference after opening the Kelantan Malaysian Malay Contractors Association's 47th annual general meeting here today.
Also present was the association's president Datuk Mohd Rosdi Ab Aziz.
Ahmad said contractors who carried out projects before the diesel subsidy rationalisation was introduced on June 10 were unaffected.
On July 14, Finance Minister II Datuk Seri Amir Hamzah Azizan said the VOP clause, if implemented, would only apply to contractors whose projects were affected by the targeted subsidy.
He said the contractors, however, will need to justify how the increased diesel prices had impacted them.
The data, he said, must be shared with CIDB and the contractors should justify if there was a sudden increase (in prices) and inform the CIDB.
In his statement earlier, Amir Hamzah said the government has agreed in principle to implement the VOP clause to help contractors cushion the impact of the targeted subsidy approach.