Soaring Bitumen Prices Stall Road Works in Chennai, Tenders Cancelled
Road laying and repair works in and around Chennai have come to a halt due to a sharp increase in bitumen prices over the past few months. The price rise is attributed to the conflict in West Asia, which has driven up crude oil costs, as bitumen is a byproduct of crude oil.
The Greater Chennai Corporation (GCC) has cancelled tenders worth approximately ₹60 crore after contractors expressed reluctance to proceed due to the price escalation. Prices of key bitumen variants have surged significantly. Bitumen VG 30, used for smaller streets with light traffic, rose from ₹47,852 per tonne in December 2025 to ₹76,852 per tonne in June 2026. Bitumen VG 40, used for bus routes and highways, increased from ₹50,342 per tonne to ₹84,772 per tonne in the same period. Light diesel oil (LDO), used for heating in plants, jumped from ₹59,464 per kilolitre to ₹1,00,444 per kilolitre.
Contractors who had already started work on 26 roads in areas such as Sholinganallur and Ramapuram were unable to complete the relaying after milling, causing inconvenience to motorists. Residents have reported difficulties, especially for two-wheeler riders, and raised concerns about accidents due to uneven road surfaces. Sholinganallur resident B. Narayanan urged the government to allow contractors to finish stalled works.
While the GCC has ordered contractors to complete ongoing works, contractors argue that doing so at current prices would lead to financial losses. Work on 140 roads that require relaying after milling has also been delayed. Civic officials await a decision from the State government, expected on July 1, regarding revised rates.
The situation is similar for State Highways projects, where contractors have slowed down both relaying and repair works. A highways contractor noted that prices have more than doubled, an extraordinary occurrence, and fortunately there have been no heavy rains requiring bitumen.
Price adjustment clauses in contracts typically apply only to works lasting over 12 months. For materials like bitumen, steel, and cement, a 'pass through' feature is used where price bands are fixed during bidding, and agencies such as NHAI and CPWD bear additional costs in case of extraordinary increases. For NHAI projects, the Centre issued a circular stating that after April, for ongoing projects, the difference in bitumen price would be borne by them. However, contractors still faced challenges as they had to pay upfront for bitumen. An NHAI official source said that earlier, contractors could lift loads and make payments later, and the agency wanted to avoid slowing or stopping large projects due to the investments involved.
Contractors and government agencies now hope for a reduction in bitumen prices, as crude oil rates have recently returned to pre-war levels.
