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Road building industry grinds to a halt

17 Oct 2011

The South African road building industry almost came to a halt on Friday, 14 October 2011, after months of desperate attempts to find a solution for the ongoing shortage of the petroleum product bitumen have proved fruitless. The slowdown spells difficulties for thousands of contractors, who will have to cover the costs of unproductive workers and machinery.

In addition, contractors - many of whom are small contractors - can't claim payment as they are unable to complete their road building projects.

According to Phillip Hechter, managing director of Much Asphalt, the country's biggest asphalt manufacturer, and chairperson of the Southern Africa Bitumen Association (Sabita) the situation is the worst in his 30 years in the industry. Bitumen is a by-product of refineries that produce petrol, among other things, and there are only four suppliers in the country. Road building projects in Namibia, Zambia and Botswana receive their bitumen from South Africa as well.

The situation, said Hechter, has reached crisis proportions after the re-opening of Durban's Sapref refinery was postponed for an annual-maintenance shutdown. In addition, Engen's Enref refinery in Durban closed on Tuesday following a fire and is expected to re-open only at the end of November. The Caltex refinery in Cape Town produced about 400 tonnes of bitumen on Wednesday, which would keep road builders going for less than half a day. Hechter said he found it baffling that Engen had exported a shipload of bitumen early this month, despite the critical domestic demand. Engen declined to respond to enquiry on Friday.

Read the full article on www.fin24.com.