Road Transport and Highways Minister Nitin Gadkari wondered if construction companies like L&T could tie up with National Highways Authority of India (NHAI), make a joint venture and revive some of the cement factories that are not functioning after discussion with the Heavy Industries Ministry.
He was interacting with the industry body ASSOCHAM through a virtual platform on Friday, where ASSOCHAM President Vineet Agarwal asked government to reach out to the industry for oxygen supply.
Agarwal said that the need for continuing infrastructure project is even more critical as daily wage workers are suffering.
The joint venture can produce and sell cement with a rate contract – when the rates are fixed for a duration – to highway developers. This will ensure availability of low-cost cement for highway building. Also, Road Ministry is working on a proposal to permit import of cement and bitumen.
Gadkari said this in response to a concern raised by Dip Kishore Sen of L&T, who pointed out that the company’s concrete paver equipment, which L&T had bought are now lying unutilised. This was after the Minister spearheaded a policy asking road contractors to shift to concrete roads, which was part of the contract.
“I am sorry…..at that time, we were trying to make 100 per cent concrete roads. Almost 40 per cent of cement was being acquired by NHAI..…then…. cement factories were not getting enough demand, they used to come to us asking us to procure cement…Now they have increased rates in a manner that is not acceptable,” said the Minister, saying that he takes quick decisions in the given circumstances that can prove wrong in hindsight or when market conditions change.
He also urged ASSOCHAM to speak with such raw material producers who are members of the industry body on whether they can supply products on cost plus basis.
Gadkari also asked all industry members to suggest ideas for alternative materials that can replace cement and steel construction. He said that the raw material cost of iron ore.
Gadkari said, there is no rise in cost of electricity, taxes and royalty and still they (cement manufacturers) are increasing prices every-day. “The cost of iron ore is ₹4,000 per tonne. The steel cost is ₹66,000 per tonne,” he said.
“I know you have written to the Prime Minister Office, Steel Minister, Industries Minister…it will become a huge issue for every one,” said BK Goenka, Welspun Group, this is becoming challenging. “Banks are not supporting us to the extent expected... regarding challenges faced. We are thinking instead of bank guarantee, we should ask companies to make bank deposit,” he said adding that the deposit can be withdrawn after construction milestones are reached.
Gadkari asked the road contractors for accepting international practices regarding lower use of cement and steel without compromising on quality. He pointed out that some road contractors have good speed of construction but are found wanting on quality.
Responding to aggressive bids that the road sector is witnessing, Gadkari said that he made a mistake by diluting the financing and technical conditions in a move to expand competition. Recently, there was a negative bidding – when a company offered to pay NHAI to bag the rights to operate-maintain and transfer a stretch of highway.