Cement use for roads: developers demand three-year supply at a pre-set price

Facing the prospect of having to primarily use cement for road projects, developers are seeking some comfort from the Highway Ministry to cover the additional risks that arise out of cement procurement.

In response to the Road Transport and Highways Ministry’s note that it has “decided” to make cement the “default” manufacturing input instead of bitumen, road developers said they will adopt cement for building roads only if the Ministry ensures continuous supply at prices quoted by cement manufacturers for about three years.

This stance is with respect to projects taken on public private partnership (PPP) route as the Ministry’s move can force road projects developed under PPP route to also use cement.

“Also, the three years’ duration should start in such a manner that it coincides with the period when construction starts,” said M Murali, Secretary General, National Highway Builders Federation (NHBF). The developers plan to write to the Highway Ministry on the issue.  

At present, the Ministry has asked cement manufacturers to supply at a pre-defined price for one year, according to the terms of the bids invited by the developers. The Ministry has received expressions of interest from 36 cement firms so far.

Additionally, road developers want the Ministry to compensate if cement manufacturers do not meet any of the conditions on pricing and supply. The Ministry has maintained that in case of disputes, developers and cement manufacturers will have to sort it out among themselves.

 The developers also have concerns over a clause in the cement procurement bid, where the Government has said that cement will have be procured on a cash-and-carry basis, without scope for any credit-based buying.

“If the Government wants developers to buy cement on cash-and-carry basis, will it extend advance only for cement procurement,” asks NHBF, which is an industry forum of highway contractors and developers. This clause is more apt in the context of roads to be built through engineering procurement contracts (EPC), say developers. 

 The road developers also said that use of cement should be mandated only for greenfield highway projects. This demand can nip the proposal in the bud as national highways project development has been largely brownfield, where existing roads are widened.

“Curing period of concrete is 14 days…. Traffic can be allowed on the paved concrete surface only after 14 days unlike flexible (bitumen-based) pavements where the traffic can be diverted within 24 hours. Till such time, managing traffic on the highway with high traffic intensity will be difficult,” said NHBF, specifying problems of using cement in widening existing bitumen roads.