Govt Issues Regulation on Infrastructure Project Costs Escalation


The government approved the proposed price adjustment or contract escalation for infrastructure projects in the 2022 fiscal year. This is stated in Finance Ministry Letter No. S-940/MK/2022 on the proposed Finance Minister Regulation (PMK) for escalating construction work contracts due to rising fuel and asphalt prices.

The letter is a follow-up to the Public Works and Public Housing Minister Letter No. HK.0102-Mn/2154, sent on Oct 26. The letter states that the proposed cost escalation will be processed by the Government Goods/Services Procurement Policy Institute (LKPP). However, Deputy General Chairperson of the Association of Indonesian National Construction Contractors (Gapensi) Didi Iskandar Aulia assessed that granting a contract escalation permit was too late. According to him, many construction contracts had been completed in November, "So the contract escalation has no effect," he said on Monday.

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