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LATEST NEWS UPDATES | Long-term deals with cement companies for concrete roads on cards -Dipak Kumar Dash

Long-term deals with cement companies for concrete roads on cards -Dipak Kumar Dash

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published Published on Jun 16, 2014   modified Modified on Jun 16, 2014
-The Times of India
 

NEW DELHI: The highways ministry is looking at entering into long-term contracts with cement majors across the country to purchase the construction material at a lower cost and shift to concrete roads, which are seen to be more durable although they cost more than those made using bitumen.

Road transport and highways minister Nitin Gadkari - who had announced his support for concrete the day he took charge - has already ordered a cost analysis. Sources said the average upfront investment for concrete roads could be around 15% higher than bitumen roads.

But this issue can be tackled through a reduction in the cost of cement, prompting discussions around long-term contracts with cement manufacturers. Sources said the minister has said that a long-term deal can help reduce the cost of a bag of cement, which costs upwards of Rs 270 a bag in Delhi, by Rs 100 a bag, which is a discount of over 37%.

The other problem, sources said, is that the government will enter into long-term contracts with cement companies for roads that will be built by contractors or by developers.

Government officials, however, defended the minister's plan saying, "This will help the cement industry to revive and also to build higher quality road that needs insignificant expenditure on maintenance."

Representatives from Cement Manufacturers Association (CMA), the industry lobby group, as well as some businessmen with interests in the cement sector have also met the minister.

Sources said the ministry is exploring the option of inviting global tenders from cement manufacturing companies for the rate contract so that there is abundant availability of the material across the region at "agreed price". Since the ministry would make it clear how much cement would be lifted annually based on their yearly work plan, officials feel companies would quote very competitive prices. The companies have to adhere to the specifications.

To take a final view on all these issues, Gadkari has called a meeting on Tuesday with ministry and NHAI officials, which will also be attended by his advisor and former bureaucrat R C Sinha. The retired IAS officer is credited for successful completion of the Mumbai-Pune expressway, a cement concrete project.

Some serving and former engineers with NHAI, road ministry and from the private sector welcomed the proposal. However, they added that there has been a trend of cement companies pushing their prices as soon as there are signals of more use of the material in road construction. This had happened during the Atal Bihari Vajpayee regime. "Soon after the government announced to build at least 10% cement concrete roads, there was sharp rise in prices," said a former NHAI official.

He added that since there was huge scope of a few having monopoly, the government must have a strong price control regime.

Sources also said that while more use of cement will help reduce bitumen import, it will also push the government agenda to utilize domestic products to boost the economy. The cost of fine bitumen has now touched Rs 56,000 per tonne.

However, to make cement road projects successful, the government has to have a robust quality monitoring mechanism. Poor quality can prove to be an economic disaster since repair of concrete roads is very expensive. Moreover, there have been numerous cases of tyre bursts on such roads.

This is not the first time that a new government is pushing for cement concrete roads. Ministry officials said there were similar demands when Kamal Nath took charge of the ministry. It was repeated during C P Joshi's tenure and also when Oscar Fernandes took charge.


The Times of India, 16 June, 2014, http://timesofindia.indiatimes.com/india/Long-term-deals-with-cement-companies-for-concrete-roads-on-cards/articleshow/36625546.cms


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