The steady price uptrend in global petroleum and petroleum products has put immense pressure on the road building sector, with the price differential between concrete and bitumen roads narrowing from 60% to 20% now.
Bitumen prices, entirely determined by the oil companies, have gone up by 20% per tonne over the last one-year. Bitumen, a byproduct of petroleum, accounts for 15-20% of the cost of a highway project.
According to Samiran Sen, vice-president of the Indian Roads Congress (IRC), the cost for a two-lane bitumen road is more than Rs 5 crore per kilometre. "The impact of today's price hike on bitumen prices would be around 2-3%. But the cascading effect is larger," he said.
Typically the investment of a two-lane, 10 metre wide road with --- sub-base, sub-grade, water bound macadam (WBM), bitumen macadam (BM), premixed carpet and seal coating ---- ranges from Rs 5 crore to Rs 7 crore per km, depending on the terrain character.
"Even a few years before the cost of building a concrete road was almost 60% higher than that of a bitumen road. States preferred building bitumen road even if the life span of a concrete road is much higher," he said.
According to him, a concrete road now 20-25% more expensive than a bitumen road.
Kshiti Goswami, West Bengal's PWD minister said, it is becoming difficult for the states to construct bitumen road. It seems that we would have to shift towards constructing concrete roads even when the price of cement is also appreciating."
Present at a press conference to announce the 69th Indian Roads Congress, a think-tank organisation under ministry of Road Transport and Highways, in Kolkata, he said the cost bitumen has increased by almost Rs 3,000 per tonne recently.
PK Deb, vice-president of the IRC, said that, with the increase in input costs, governments are being forced to look for alternative measures to fund the roads projects.
According to S.K. Hamirwasia, vice-president (infrastructure) of Subhash Projects & Marketing Ltd, the cost of projects will increase by 1% taking into account only the petrol & diesel price hike.
Source -Financial Express