Most road construction projects across the country are foot dragging while some are currently suspended as the foreign exchange(Forex) volatility triggered hike in price of bitumen, a critical component in road construction, NATIONAL ECONOMY learnt.
This development has led to readjustment in the funding of road construction projects while some had their delivery dates shifted forward as a result of this scenario. Bitumen, a major component used in the production of asphalt, soared by 150 per cent within a period of seven months, precisely, between August 2023 and March 2024 even as the price hike continues till now.
Checks from NATIONAL ECONOMY showed that 20 tons of bitumen, which was sold at N854,375 in August 2023, now sells for over N2million in August 2024. The road contractors are also concerned about foreign exchange differentials, rising prices of cement, diesel, granite, and crushed stones.
While some of the contractors have abandoned construction sites, others are having tough discussions with their clients on the need to renegotiate contracts and reconcile the variations in materials costs.
An impeccable source at the Lagos Public Works disclosed that, the cost per ton of asphalt as of August 2023 was N70,000, but it escalated to N155,000 in March 2024.
Given the progression of the inflation rate in the price of bitumen between August 2023 and March 2024, the source said, 20 tons of the product cost N854,375 in August; N1,121,175 in September; N1,082,775 in October; N1,301,000 in November; N1,351,000 in December 2023; N1,366,000 in January 2024; N1,770,280 in February and N2,008,330 in March, respectively.
Various factors such as inflation, volatile foreign exchange, fuel subsidy removal, government budget deficit and reliance on importation of materials have been adduced as reasons for the rising cost of bitumen and other construction materials.
Meanwhile, the minister of works, David Umahi, had warned contractors engaged by the ministry for federal road projects that the government would not pay them variation for any project delayed by them.
Speaking on road construction sector, Umahi reiterated his stand on the use of either asphalt or concrete in the construction of federal roads across the nation, stressing that, there remains no controversy over the issue. He said each technology has conditions attached to its deployment on Nigerian roads. This was as he reinforced his stance on the six main policies of the ministry of Works to guide road construction sector in the country.
According to Umahi, the clarification became important because several factors came up over the alternative of concrete technology only because “all things are not equal and can only be understood by professionals and not by people who have no knowledge about them.”
The national chairman of the Nigerian Institutions of Highway and Transportation Engineers (NIHTE), Saidu Hassan, maintained that, the rising cost of bitumen was bound to impact the cost of road construction.
Hassan said, till date, the price of bitumen had witnessed about 150 per cent increase, having risen from N1.4 million per metric tonne in December 2023 to N1.770 million in the current month. He said the government, as an important stakeholder in the use of bitumen, should intervene to boost its supply for the delivery of road projects across the country.
FOCI president, Vincent Barrah, hinged the appeal on the relentless inflation of construction materials and the price of diesel that has plunged the industry into a unprecedented hardship, jeopardising the viability of countless projects and threatening the livelihoods of millions of workers
Barrah emphasised that the costly construction materials like cement, steel, gravel and asphalt have significantly escalated project costs, adding that the situation has rendered players in the industry insolvent.
The skyrocketing price of diesel, a critical fuel source for construction machinery and vehicles, has further compounded the financial burden on companies, exacerbating their already precarious financial situation.
