Bitumen imports jump as highway expansion drive picks up pace
Latest News »
- Nasa launches satellite to help astronauts talk to Earth
- Infosys promoters lose Rs2871 crore in notional wealth on Vishal Sikka resignation
- New Apple iPhone with OLED tech gives little-known suppliers long-awaited payday
- RBI to shortly issue new Rs 50 notes
- Reliance Nippon Life AMC files IPO papers, eyes Rs18,000 crore valuation
New Delhi: India’s roads and highways expansion drive has led to a sharp annual growth in import of bitumen, a refinery by-product used in laying the surface of roads and highways, opening up a growing market for shipments from Iran, the UAE, Malaysia, Singapore and Greece. Indian refiners, in the meantime, are focusing on capturing the global market for high-end finished petroleum products.
While India’s refining capacity rose by 21% since 2010-11 to 234 million in 2017-18, bitumen imports rose by a phenomenal 823% during the period to 905,000 tonnes as demand outpaced production and refineries opted for maximising output of other high-revenue-yielding finished petroleum products such as petrol, diesel and jet fuel with an eye on export markets, data from oil ministry’s arm Petroleum Planning and Analysis Cell showed.
Imports from Malaysia and Singapore rose sharply in the April-February period of 2016-17 from a year ago in rupee terms, showed data from the commerce ministry.
The pace of road construction has picked up in the last few years. During 2012-14, highway construction was around 9km a day, which rose to 17.2km a day in 2015-16 and to approximately 22km a day in 2016-17.
A record 47,350km of roads were constructed during 2016-17, the highest-ever in the last seven years, under the Pradhan Mantri Gramin Sadak Yojana (PMGSY). This contrasts with 25,316km of roads built in 2013-14, 36,337km in 2014-15 and 36,449km in 2015-16.
Experts said the trend of rising import of bitumen will get more pronounced in the coming years as the country makes more rural roads to improve connectivity.
Binaifer F. Jehani, director, industry and customised research, CRISIL Research, said the demand for bitumen is expected to grow at a compounded annual growth rate (CAGR) of 5.6% to 8 million tonnes in 2020-21 due to a 6-7% CAGR in lane kilometres, largely driven by the expansion in rural roads . “Imports are also expected to increase due to strong growth in bitumen demand but major part of it will continue to be supplied by domestic refineries,” said Jehani.
An official from the National Highways Authority of India (NHAI) said, on the condition of anonymity, that import dependence will expose states, which rely on bitumen for laying roads, to price and currency volatility, while the Central government is making a transition from bitumen to cement and concrete for laying national highways. “Most of the road estimates being prepared for NHAI are now based on cement and concrete, which costs roughly around 10-20% more,” said the official.
Refineries in the country, in the meantime, are eying the higher end of value-added refinery products with the hope of becoming major regional suppliers. “Bitumen is said to be at the bottom of the barrel, which implies its position among the set of refinery products. It, therefore, makes sense for refineries to maximise production of higher end items such as petrol and diesel, that could fetch them better margins. Production of bitumen also depends on the kind of crude used,” said R.S. Butola, former chairman of Indian Oil Corp., the largest refiner in the country. That approach has resulted in Indian companies exporting 15.4 million tonnes of petrol and 27 million tonnes of diesel in 2016-17, showing a growth of 14% and 34%, respectively, from 2010-11 levels.