March 23, 2011

Bitumen Still Cost Effective than Cement




Bitumen or Cement for the Roads ?

Most of the 48 new projects announced in the Budget for 2003-04 were to be executed by private players, and a third of these were to be cemented.Bitumen roads cost about half of cement roads, and the average 15-20 year concession period for private projects does not justify financial viability of cemented carriageways, say analysts.

“The use of cement is not likely to gain favour with the private players because of the steep initial costs and despite the long-lasting quality of cement roads. The benefit to a road contractor typically starts flowing in after 7-10 years for a bitumen road while break-even takes much longer for cement roads,” said a representative from a private construction company.

“The use of cement will entail a two-fold increase in the costs over bitumen. While savings in the use of cement will come over a longer time of 50 years, the concession period for a build-operate-transfer (BOT) project spans a maximum of 20 years, thereby making it unviable for operators to execute cement roads,” an expert said.

The use of bitumen entails less than 5 per cent of the capital cost initially and would involve around 15 per cent of costs for overlays during a 20 year period. Even if the government makes use of cement the higher costs would have to be absorbed, they said.

Another reason why the new set of road projects could run into trouble is because there are limited number of players in the market and they would focus on the second phase of the ongoing national Highways Development Project (NHDP) works.
While officials contend that most of the 48 new projects would be executed using the build-operate-transfer (BOT) model and the successful annuity scheme, which has been used in the first phase of the NHDP.

Apart from a few World Bank-funded NHDP sections on NH-2, not many cement sections are part of the first phase of the Rs 58,000 crore project. Nearly all the BOT and annuity sections in the first phase of the NHDP have been implemented using bitumen.

Out of the 48 projects, to be executed at a cost of Rs 40,000 crore, the Centre had so far identified 25 odd projects while the remaining are still to be identified.
A majority of these projects involve connectivity of the highway sections upgraded under the NHDP with major commercial and residential hubs lying in close proximity to these sections, government officials said.

The argument used by the Centre justifying the move to use more of cement is that this would provide a boost to the domestic cement industry and that cement roads would be more viable in the long run because of the longevity of concrete roads.
The use of cement would also reduce the country’s oil import bills as bitumen is a by-product of the oil industry, the prices of which has been on the rise because of high crude prices, ministry officials maintain.


>Analysts, however contend there are many technical factors which favour use of bitumen for highways.

Cement roads require a good amount of preparation of the sub-base before concrete is laid while bitumen roads adjust to the weight of the vehicles.

“Laying of concrete roads requires a great deal of expertise and risks are significantly higher in case of cement as compared to when bitumen is used and improper laying of cement roads could result in cracking up of sections as witnessed on the Mumbai-Pune Expressway,” they said.

Source & Courtesy- The Business Times.

http://www.business-standard.com/india/news/cmie-projects-real-gdp-to-grow-88-in-fy12/129731/


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