The Road Transport and Highways Ministry is considering an option to make use of concrete cement mandatory as a part of the bid for fully Government-funded projects as well as public-private partnership projects. The Ministry discussed the issue at some recent meetings.
In his first media briefing after taking over as Roads and Highways Minister, Nitin Gadkari had stated his preference for concrete cement roads as opposed to bitumen.
The Ministry is also considering entering into rate contracts with companies to buy concrete and cement so that builders and contractors can acquire the material at cheaper rates.
“For Government-funded contracts, we have already started evaluating cost options for various projects to use concrete cement where there is a lower life-cycle cost,” said a source.
In a rate contract, the price of a material is finalised in advance by the procurement agency and vendors. As and when the procurement agency or its arms require the product, the vendor supplies it at the agreed rate. This also involves commitment on volumes. Procurement of large volumes for national highway projects raises the possibility of discounts.
Cost variations Usually, concrete cement roads cost less than bitumen surfaces on a life-cycle basis (over a 20-year period). Though the initial outlay on concrete roads is higher, the maintenance costs are less, said a Government official. In bitumen roads, the reverse is the case.
Depending on various factors, including the location of the road, the initial cost of building a concrete road could be higher by 5-30 per cent.
Despite lower life-cycle costs, private developers managing long-term (20-30 years) projects have so far avoided building concrete cement roads. The exceptions include those who won the rights to make six-lane roads out of four-lane ones built with concrete cement.
Best price In this context, while inviting bids the Ministry might stipulate that the roads must be built using cement concrete. So, in a fully Government-funded project, the costs will go up. The project cost of government-approved PPP projects is also likely to rise, and this will allow the private sector to borrow more from banks. But to do this, the developers will have to be on board. They have expressed concerns on concrete-cement not being the best option for all climatic conditions.
About 3,500 km of highways, some of which have been funded by the World Bank, have been constructed using concrete cement. Another option is to mandate the use of cement only for Government-funded roads, said an official.
Also, implementing a rate contract in the road sector may be difficult, as such contracts are usually easier to execute with a single-agency buyer, such as the Railways. The Railways buys diesel through a rate contract with oil marketing firms, but the final price varies depending on local taxes and transportation costs.
As road contracts are awarded to separate companies, which procure material and build roads, one option under consideration is that the Road Ministry or National Highways Authority of India (NHAI), or a Government procurement agency, could sign rate contracts with cement manufacturers.
This can also be done through the road developers association, which as they may be asked to negotiate the best price. The developers can buy cement at a lower price after getting an authorisation letter from the Roads Ministry or NHAI.