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Steel, cement supply disruption affects highways construction; 250 projects resume work

Economic activities, including highways sector, have come to a standstill following nationwide lockdown

Nirbhay Kumar | April 23, 2020 | Updated 11:44 IST
Steel, cement supply disruption affects highways construction; 250 projects resume work

Key Highlights

  • Construction work has resumed in 250 projects following lockdown relaxations
  • Disrupted supply of steel, cement and bitumen affecting highway construction
  • Highway developers keep inventory of cement for 2-3 weeks and steel for 2-3 months
  • Steel, cement companies cite shortage of workers, drivers for supply glitches

Even as several highway developers kickstart operations, disrupted supplies of key inputs such as steel, cement and bitumen threaten to hamper construction work. Private developers have demanded these items should be included in essential category to ensure smooth passage of trucks carrying them.

Inventory level for steel and cement varies from company to company. A highway developer usually keeps inventory of cement for 2-3 weeks while that of steel for 2-3 months. Some developers flush with working capital keep higher inventory to take advantage of low market price.

"The supply chain for steel, cement and other items have been broken. There are issues related to inter-state movement of trucks carrying these items. The government may declare inputs for highway construction as essential items. An earlier decision would ensure construction activities pick up," said Rohan Suryavanshi, Head, Strategy & Planning, Dilip Buildcon. Steel and cement companies have cited shortage of workers and drivers for supply glitches.

Economic activities, including highways sector, have come to a standstill following nationwide lockdown. Prime Minister Narendra Modi on April 14 extended the 21-day lockdown for another 19 days to May 3. However, he said some sectors would reopen from April 20 on compliance of strict social distancing norms and hygiene.

Given the delay in highway projects could result in both time and cost overruns, Road Transport and Highways Minister Nitin Gadkari has emphasised on resuming construction work.

"We already have bids under evaluation for more than 1,300 km of length, which can be awarded immediately. Another 1,500 km is ready for bidding," the Minister said recently.

National Highways Authority of India (NHAI) expected to resume work in nearly 400 road projects following the April 20 relaxations, but work has so far started in only 250 projects.

Apart from supplies of steel and cement, the highway developers are also facing labour shortage as a large number of migrant workers returned to their native places after the lockdown was announced. The workers currently present at various project sites want to return home as soon as public transport is allowed.

A senior executive of a large construction company said that work the firm has resumed work at many sites. The executive said 1,200 migrant workers had stayed back despite family pressure to return home. "There is family pressure on them to return but they (workers) would prefer to stay back at the sites till the onset of monsoon," he said.

The executive said that his firm was currently not facing problems with regards to supplies of cement and steel but many players in the sector were grappling with the issue as they did not have enough stock before the lockdown.

Also read: Coronavirus: Lockdown in India has affected 40 million migrants, says World Bank

Also read: Coronavirus lockdown: Only 'negligent' employers to be penalised, clarifies govt

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