The Cabinet has agreed to provide financing to contractors working on public projects to offset the rising cost of materials due to inflation.
The Irish Examiner reports that the government could offer up to €160 million by the end of the year under the new scheme, aimed at ensuring that public projects, such as new roads, public buildings and infrastructure civilians, remain viable and are delivered on time.
Public Expenditure Minister Michael McGrath said the measures were necessary because the inflation rate soared in recent months, which has challenged construction companies that have embarked on public projects in fixed price.
Mr McGrath said the scheme will also allow “an element of retrospective inflation cost recovery on payments already made on the project from January 1 this year”, in recognition that inflation was rising at that time. time in anticipation of Russia’s invasion of Ukraine.
No time limit has yet been set for the program, McGrath added, given the current uncertainty surrounding inflation.
“Not far enough”
Construction industry representatives welcomed the announcement, but said the system of public works contracts needs to be reformed.
The Construction Industry Federation (CIF) said the funding was a “positive step”, but “won’t go far enough to address the sector’s high cost base”.
“It is disappointing that these measures are only applied to all projects from January 1, 2022 and do not resolve the exceptional period of inflation since January 21,” said CIF chief executive Tom Parlon.
“The current situation has highlighted the need for essential reforms of the public works market and the ability of companies to accept the transfer of risks beyond their control.
“The CIF and its members have consistently called for more collaborative contracts, which manage risk in a more balanced and sustainable way.”