The Indian government is facing a significant shortage of bitumen due to the ongoing conflict in West Asia, which is expected to impact the construction and maintenance of tar roads. Since the conflict began, the price of VG-40, the most commonly used grade of bitumen, has nearly doubled, while its availability has dropped sharply compared to the estimated requirement of around six lakh tonnes needed only for highway projects by July 15.
Crude Oil Availability and Bitumen Supply
Industry insiders have noted that although crude oil availability in the country remains comfortable due to imports of Russian oil, this has not improved bitumen supply. Sweet crude from Russia cannot produce the bitumen grade suitable for Indian weather conditions. Russian oil contains very low levels of sulphur, which naturally yields lower bitumen grades like VG-10 or VG-30 without specialized processing.
“VG-40 is produced from crude that we get from West Asian countries, and even most of the finished products were imported from these nations through the Strait of Hormuz. The conflict has hit this supply, and the ripple effect is felt on the maintenance and construction of highways,” said a person aware of the developments.
Government Concerns and Impact on Construction Pace
The issue was also raised at the last meeting of the informal Group of Ministers (iGoM) headed by Defence Minister Rajnath Singh, highlighting how the non-availability of the required quality of bitumen has reduced the pace of highway construction to one-fourth in April, according to sources. Officials said the impact is similar for rural, municipal, and state roads.
Industry players stated that while the road transport ministry has notified that highway builders in all types of projects will be adequately compensated for the higher price of bitumen, the key challenge is to obtain the required supply before the monsoon for timely maintenance. The price of one tonne of VG-40 at different oil marketing companies (OMCs) increased from Rs 53,000-58,000 on March 1 to over Rs 1 lakh on May 1.
“The prices are increasing further. But the larger challenge is how do we get bitumen to complete our work even at a higher cost. There have been several and continuous deliberations with officials and OMCs as well. Going by the trend of current availability, the supply will be far less than the requirement,” said a senior executive of a highway construction company.
Officials said that although the current availability of bitumen with OMCs is much less, efforts are underway to increase supply, including through imports even at a higher price.
