Road construction costs may go up

Bitumen prices in international markets have gone up by around 24 per cent this month, for which upcoming road construction and repair costs are expected to rise since Bangladesh is very much dependent on imports.

Each tonne was selling for $310 on the first week before rising to $385 at the end of the month. It was going for $370 in January.

Overall project expenditures can increase by as much as 10 per cent, according to the users, mainly government bodies such as the Roads and Highways Department (RHD), Local Government Engineering Department (LGED) and city corporations.

Bitumen is obtained as a residue in the distillation of crude oil. Gravel, sand and other fillers are mixed with bitumen as a binder for use in paving roads.

Currently, around 90 per cent of Bangladesh's annual demand for 5 lakh tonnes of bitumen is met through imports.

In fiscal 2019-20, around 3.8 lakh tonnes of bitumen were imported by Bangladesh.

In 2019, around Tk 1,721 crore was spent behind importing bitumen, according to AKM Manir Hossain Pathan, additional chief engineer (planning and maintenance) of the RHD.

Bangladesh Petroleum Corporation can provide only 70,000 tonnes of bitumen as a by-product from Eastern Refinery Ltd, he said.

The RHD is the main consumer of this locally produced bitumen.

According to the private importers, the pandemic had an impact on economic conditions, causing a rise and fall in prices of goods and commodities, including bitumen.

Initially when the pandemic broke out in 2020, bitumen prices had dropped 30 per cent.

The whole year witnessed ups and downs and unpredictable fluctuations. December recorded the lowest point before it started to rise again.

"Earlier the contractors used to purchase imported bitumen at Tk 46,000 per tonne," said SM Khorshed Alam, president of the Bangladesh Association of Construction Industry. 

"Now it is at Tk 60,000 per tonne, which would increase road construction or repair costs by around 10 per cent," he said.

This will prompt contractors to stop working on ongoing projects, causing wastage of public money and depriving citizens of benefits, he said.

He believes the current price rise resulted from a surge in demand internationally, which might even lead to the import and use of low quality bitumen.

As per its weather condition, Bangladesh uses bitumen of a "60/70 grade".

Mir Nasir Hossain, a bitumen importer and former president of the Federation of Bangladesh Chambers of Commerce and Industry, said the contractors have no scope to adjust prices of projects which they have already been awarded.

According to him, the price of bitumen fluctuates in tune with that of crude oil in the international market.

Now the price of crude oil is on a rising trend, for which the impact has fallen on the bitumen market globally, he said.   

Crude oil is currently selling for $83.57 per barrel whereas it was $50 in January.

Pathan of the RHD said there was no scope to change prices mentioned in ongoing projects.

However, he said the impact of changes in the international market would definitely befall the local market as the country was still very much dependent on imports.

According to him, the RHD and LGED are the major buyers of bitumen and the use has annually increased by about 10 per cent to 15 per cent.

Different government bodies are liable for constructing and repairing different roads and highways around the country. The scenario can be best understood imagining moving from cities to rural areas.

Within cities, city corporations are responsible. Outside, the RHD caters to the highways. The LGED takes care of the subsequent rural roads.

The RHD oversees for some 22,000 kilometres of highways. Besides, the government is expanding all national highways from four to six lanes.

The LGED has 354,000 kilometres, of which 105,000 kilometres is paved.