Road Builders: Due to the Sharp Rise in Costs, Road Projects in Latvia May Come to a Halt 0 6

He noted that the price of bitumen has the greatest impact on the construction of roads and bridges, followed by fuel and gas prices, and currently there is a significant increase in all these areas.

Berziņš also emphasized that there is no risk management system in annual contracts — risks are entirely borne by entrepreneurs, while the client does not participate in this process.

"The only way to try to save this year's construction season is to turn to the government and say: introduce some mechanisms for indexing, algorithms, so that the price at which energy resources can currently be purchased is somehow compensated and remains adequate," he said.

He added that several weeks have passed since the conflict in Iran began, and although it was clear the next day that energy prices would rise, government agencies have still not taken appropriate action.

"Unfortunately, I have to say that there is quite a lot of silence, and we do not even know how to act now — whether to start construction or not," the head of the association noted.

According to him, road builders are fully ready to start work, but at the prices that were in effect, for example, in January of this year when annual contracts were concluded, it is already impossible to carry out the work. He added that work under two- and three-year contracts, where risk management is provided, has already resumed.

"We could have been working for two weeks already. And now we are essentially just stalling," he said, emphasizing that the construction season in Latvia is relatively short, and such delays reduce the opportunities to complete all planned work.

The association "Latvijas ceļu būvētājs" sent an open letter to the government at the end of March regarding the emergency situation in the road and bridge construction industry.

The letter states that the conflict that began in February between the USA, Israel, and Iran has created an emergency situation in the industry, which is further exacerbated by the war in Ukraine. These conflicts have sharply destabilized global energy markets and created a situation that cannot be resolved by the efforts of individual companies or sectors.

"Market conditions are so unstable that they are completely beyond our ability to predict, insure, or otherwise influence them," the letter states.

It is noted that, for example, the price of bitumen rose by 15–20% in March, and its availability on the market decreased — supplies are prioritized, and each order must be confirmed again. The price of natural gas has increased by about 60%, and diesel fuel by 20–43% compared to 2025.

The letter also states that fuel costs account for an average of 30–40% of the operating costs of machinery in construction projects, leading to an overall increase in project costs of about 21%.

"In such conditions, leaving the resolution of problems to the builders themselves, in our opinion, contradicts the principle of good faith enshrined in the Civil Code," the letter emphasizes.

It also notes that such a sharp rise in costs could not have been anticipated even with the most thorough risk analysis, creating a situation in which companies, without jeopardizing their solvency, will not be able to cover the difference between estimated and actual costs of work.

"For the members of the association, it is important that all public resource managers — the state and local governments — conduct procurements under equal and non-discriminatory conditions. The current situation, where each client applies different risk management tools or does not apply them at all, is absurd, as it threatens the principle of fair competition and creates structural inequality among companies in the industry," the letter states.

The association believes that only a monthly recalculation of prices can ensure an objective balance between clients and contractors.

According to the letter, swift and decisive measures are needed, including the introduction of price indexing mechanisms, granting clients the right to conclude additional agreements to extend deadlines in cases of force majeure, and developing a unified risk management system for state and municipal procurements, so that both parties can respond promptly to market fluctuations.

The association "Latvijas ceļu būvētājs" was established to represent the interests of companies engaged in road and bridge construction and unites 15 significant enterprises in the industry.