Source: The Hindu, Friday June 23, 2006

Rising bitumen prices hit road works

Karthik Subramanian

CHENNAI: While the hike in prices of petrol and diesel has had a direct impact on the public,
consistent rise in bitumen prices, an oil by-product that is a major constituent of road works, is
affecting the public exchequer.

The cost of bitumen (80/100 grade) has gone up from Rs. 13,005 a tonne on June 16 last year to Rs.
21,021 on June 1 this year. Similarly, the cost of lower grade bitumen (60/70) has gone up from Rs.
13,844 a tonne last year to Rs. 23,150 a tonne this year. According to contractors, bitumen takes up
about 45 per cent of the overall cost in road works.

The Chennai Corporation has planned road works in the current fiscal to the tune of Rs. 93 crore,
including Rs. 15 crore for bus route roads and Rs. 74 crore for interior roads. It is now pushing ahead
with its plans to complete all works ahead of the monsoon and, more importantly, the local body
elections.

Officials said the civic agency's most recent roadwork tenders took into account the bitumen price
hike by corroborating the latest bitumen prices from oil corporations. However, there would be no
price adjustment on tenders already passed. This was likely to exceed substantially the budget
estimates of Rs. 93 crore.

The Paver Finish Road Builders Association, a group of contractors who take up road works for the
Chennai Corporation and the Highways Department, said the increase in bitumen prices was a "body
blow" for road contractors.

R. Sivakumar, its member, said the price had increased every 15 days over the past year and it had
become difficult to quote prices for road works.