Revised PWD bitumen rates fall short of market surge; 90% of road works hit

Bengaluru: With bitumen prices crossing the 10% variation threshold, the public works department (PWD) revised rates with effect from early April. However, contractors say the updated rates remain well below prevailing market prices, leading to a near-complete halt in road works across Bengaluru.Officials from th Greater Bengaluru Authority (GBA) report that more than 90% of asphalting projects have been stalled, as contractors are unwilling to continue under what they describe as financially unviable conditions.According to the PWD order, while cement and structural steel prices have remained within the permissible variation limit for the first quarter of 2026-27, bitumen and TMT steel have seen sharper escalations, necessitating revised rates. However, contractors argue that actual market prices have outpaced even these revisions. Contractors attribute the crisis to supply disruptions from key refining hubs such as Mangaluru and Maharashtra. "Earlier, bitumen cost around Rs 45,000 per tonne. Now suppliers are quoting close to Rs 80,000 per tonne. PWD has revised our rates based on the crisis, but due to lack of supply we're requesting a star rate so that payments reflect actual market costs. Chennai and Mangaluru are the largest suppliers, and if they are charging Rs 80,000 per tonne, where are we supposed to go?" asked GM Nandakumar, president of the Greater Bengaluru City Corporation Contractors Association. He added that while discussions are ongoing with the govt, work will resume only once approvals for such rates are granted.Plea to release payments In a representation to the GBA commissioner, the contractors' association has sought urgent release of differential payments under a "star rate" model, citing extraordinary price escalation.The association has also invoked the force majeure clause under the Karnataka Public Procurement framework, pointing to global disruptions, including the ongoing Iran-America conflict, as a key driver of abnormal increases in bitumen, cement and steel prices, affecting both ongoing works and contracts awarded in March 2026.Contractors say the cost escalation has severely disrupted the economics of road construction. Rangaswamy VH, treasurer of the association, said: "For a one-kilometre bitumen concrete road of 40mm thickness and 5-metre width, about 25 tonnes of material is required, while bitumen macadam roads require around 18 tonnes and involve a rougher mix compared to smoother bitumen concrete roads. With input costs surging, even ongoing projects have become financially unsustainable."While officials maintain that the revised rates have already been communicated and contractors have been asked to proceed, they acknowledge the ongoing standoff. "We are working on solutions. Once it is resolved, asphalting works across the city will resume soon," an official said.
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