Now Reading: Centre may extend bitumen relief for highway contractors
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Centre may extend bitumen relief for highway contractors
The road transport ministry may extend beyond September a relief mechanism for highway contractors hit by rising bitumen prices linked to West Asia disruptions, two people aware of the matter said. The…
The road transport ministry may extend beyond September a relief mechanism for highway contractors hit by rising bitumen prices linked to West Asia disruptions, two people aware of the matter said. The mechanism, already extended once to September, could now run until December or year-end after the ministry reviews market conditions next month.
Under the relief, contractors can claim compensation based on actual bitumen consumption and prevailing prices. It covers EPC, HAM, item-rate and certain maintenance contracts lacking price-escalation clauses, for projects bid before March 2026 and executed this fiscal year.
Bitumen prices surged from Rs 48,892 per tonne in February to Rs 82,122 in April at Mathura refinery, before easing to around Rs 75,000. India imports 33.8% of its bitumen, almost entirely from West Asia, exposing projects to supply risks around the Strait of Hormuz. Contractors say the relief should also cover fuel and other input costs.
Indian Opinion Analysis
India's bitumen import dependence is structural, not temporary. The share of imports in consumption has more than doubled in a decade, meaning any disruption around the Strait of Hormuz directly hits project costs. Contractors are effectively bearing a risk they cannot diversify away from because domestic refining capacity has not kept pace with the National Highways Authority of India’s own construction targets. The ministry’s compensation mechanism is a stopgap, not a solution, it reimburses price increases on contracts bid before March 2026, so projects bid later will have to price in the higher risk themselves. The outcome of the ministry’s review in the next month will signal whether the government expects the price spike to persist, or whether it treats this as a one-off that markets will absorb.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
