May 3, 2012

Soaring Bitumen Prices hits Malta

Asphalt price hikes may hit road building

Asphalt is made by mixing aggregate with bitumen, which in turn is mainly obtained as a residual product from petroleum refineries after higher fractions like gas, petrol, kerosene and diesel are removed.
Since 2009 the price of bitumen has shot up. Its price fluctuates with the price of oil, which currently stands at nearly $ 120 per barrel.

The present situation is being compounded by difficulties that road contractors are facing to procure bitumen from just five suppliers on the island, themselves road contractors.
This has already led to a slowdown in the government's residential roadwork programme. Now, with no contractors committing themselves to carry out jobs unless the rates are revised, the whole programme risks coming to a standstill.

The deteriorating situation became evident last week when road projects in Luqa, Birżebbuġa, Żejtun and Mellieħa stalled. One of the projects received no bids while the other three received bids with a proviso: that the work could not be carried out at the rates agreed upon four years ago.
Bad roads and potholes are the island's scourge so this situation is likely to fuel motorists' frustration.
Transport Malta has asked the Director of Contracts to put in motion a clause in the 2009 framework agreement signed with 14 road contractors that allows for the rates to be re-negotiated. The framework agreement expires at the end of this year.

Sources said auditing firm PricewaterhouseCoopers has been engaged to verify the new rates being proposed by contractors so that they would at least be able to cover their costs.

The government had signed a framework agreement under which road projects are assigned to different contractors at pre-agreed rates. It ensured that work could proceed at a fast pace as there was no need for calls for tenders – jobs were awarded to contractors according to what they could take on.
More than 400 residential roads have been constructed since 2008, most of them for the first time, with another 100 programmed by the end of the year. Around half of these had been promised prior to the last general election.

By  Matthew Xuereb -Source- Times of Malta

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