CHANDIGARH: With the 2027 Assembly elections less than four months away, the Aam Aadmi Party (AAP)-led Punjab Government is desperate to showcase that it has upgraded road infrastructure across the state during its poll campaign to the electorate. But it has hit a stumbling block as the prices of bitumen have doubled due to the US-Iran conflict in West Asia, which started earlier this year.
Thus, these projects are also facing a fund crunch as the contractors’ clause mentions, “variation in bitumen price will be taken into account during the period of execution of the contract.”
The slowdown is being driven by a shortage of bitumen, a key petroleum product used in road surfacing, with contractors reporting a sharp mismatch between demand and supply, and the maintenance contracts are being hit the hardest.
Sources added that in the past few months, the price of bitumen has doubled due to the US-Iran war, which started earlier this year, from Rs 4,000-4,500 per quintal before the conflict to around Rs 9,000 per quintal now, and is further expected to increase. The imported bitumen is more expensive by around Rs 3,000 per quintal.
Sources said that the state government had planned to showcase the upgrade of 40,968 km of roads across the state by the Public Works Department (PWD) and the Punjab Mandi Board and another 4,000 km to be upgraded by the local civic bodies in their respective municipal limits.
Both the PWD and Mandi Board were undertaking upgradation works of 16,497 kilometres of roads. But work on only 40 per cent of the total road length of 16,454 km has been completed.
While 3,813 km of roads being upgraded by the PWD and 2,529 km by the Punjab Mandi Board are awaiting bitumen for the top layer, only 6,342 km of roads have reached the coarse stone-laying stage and are awaiting the laying of the bitumen top layer.
An official on condition of anonymity said that these projects are also facing a fund crunch as Punjab Mandi Board requires Rs 6,884.34 crore for the 20,096 km of roads under its programme, while a sum of Rs 3,826.09 crore is available with the board, and it is learnt to be receiving funds under the Union Government’s Scheme for Special Assistance to States for Capital Investment.
While Rs 4,915 crore was budgeted for 2025-26 and 2026-27, to be given in three phases as a 50-year interest-free loan, Rs 2,165 crore has been received so far. Also, the state PWD department is facing a fund crunch.
Sources in the state government said that the contractors are asking both the state PWD and the Punjab Mandi Board to increase their rates as the cost of bitumen has doubled in the last few months, so it is not viable for them, as the contractors’ clause mentions that variation in bitumen price will be taken into account during the period of execution of the contract.
Already, the Central Government has increased the bitumen prices for projects undertaken by the National Highways Authority of India (NHAI). Now, the state government is considering increasing the price on par with the Centre for its projects.
According to industry experts, the supply shock is compounding existing structural constraints. Domestic bitumen production has stagnated at around 5 million tonnes even as consumption has risen to 8.74 million tonnes, creating a persistent deficit. Refineries are prioritising higher-margin fuels such as petrol, diesel and jet fuel over bitumen.
A leading bitumen transporter and contractor of the state said that if the road contractors do not get escalation for the ongoing projects from the state government, then they will have no choice but to abandon the projects as during the given time period they were unable to finish the respective projects due to non- or less supply of bitumen. “In some projects, the government gives escalation and in other projects they have increased the time period, and if the state government takes up the issue with the oil companies that the production of bitumen in both Panipat and Bathinda refineries should be increased, then the work can be completed on time besides giving escalation,” he added.
He further said that earlier, before the US-Iran war, daily more than 100 tankers were filled with bitumen at Panipat refinery in Haryana, but at present only 35 to 40 tankers are filled, and also the time period has been reduced by three hours. Before, filling continued till 8 PM in the evening; now it is stopped at 5 PM, as earlier overtime was done by the refinery, which they are not doing now.
“The only positive side in the ongoing bitumen crisis in the state is that the Bathinda refinery in Punjab has increased its production. Earlier, only around 40 to 50 tankers were filled, and as the war started, the waiting period increased, but now for the last two to three days around 90 tankers are being filled,” he added.
A senior officer on condition of anonymity said, “Now this matter has to be discussed by the Finance Department with the PWD and Punjab Mandi Board and Local Bodies Department, and if agreed to increase the project cost as prices of bitumen have increased, then only it will soon be brought before the State Cabinet for approval.”
