High bitumen prices slow road work
Luong Quang Thi, director of Trade, Investment and Construction Joint Stock Company (Trico), said last month the price of one tonne bitumen was US$500, excluding value added tax, while crude oil from which it is made has fallen from $147 to $50 a barrel.
"This is totally absurd!" said Thi, adding that the bitumen price had remained the same since July when the price of crude oil was at an all-time high.
Nguyen Thuy Nguyen, director general of the Van Cuong Construction Company, said sky-high prices had caused a big problem for companies engaged in road and bridge construction.
A representative from a road construction company engaged in rehabilitating National Road 48 said bitumen was now double the price in December 2006 when his company bid for the work.
"On average, we lose about VND3 billion ($183,000) on bitumen for each kilometre of road (11 metres wide capped with 12cm of bitumen)" he said.
The high price is a major contributor to the delays in many road construction projects. Several companies have slowed down their work waiting for the bitumen price to go down.
Luu Van Dung, director general of Project Management Unit (PMU) 6, affiliated with the Ministry of Transport, said the Government had adopted a special policy for road construction companies.
According to Circular 09/ 2008/TT-BXD, it will compensate them for any differences in bitumen prices.
For example for the rehabilitation of National Road 70 by the PMU 6, compensation is expected to reach VND30-40 billion.
This month, several major roads are being covered with asphalt, including the Ho Chi Minh Highway-Trung Luong, the National Road 70 linking the northern provinces of Yen Bai and Lao Cai and the third ring road in Ha Noi.
This means the Government has to spend a huge sum of money in compensation.
A representative from Shell-Viet Nam company, one of the five major bitumen suppliers, said the price hike for crude oil plus increasing demand from China and other Southeast Asian countries had pushed prices up.
"This is the consequence of an imbalance between supply and demands," he said.
