Indian Oil Corporation (IOC) and French oil and gas major Total have formed a 50:50 joint venture to manufacture and market high-quality bitumen derivates, which will cater to the construction of roads across India.
“The operations of the JV will commence by taking over an existing plant of Total at Jodhpur,” says S.M. Vaidya, chairman, IOC, adding that it would cater to B2B customers involved in road infrastructure development in the government and private sector.
The JV will set up six new greenfield plants at IOC’s refineries at Panipat, Koyali, Haldia, Barauni, Visakhapatnam and Chennai, in the first four years, with an investment of Rs226 crore. The new JV will manufacture and market polymer-modified bitumen, crumb rubber-modified bitumen, bitumen emulsions and other specialty products.
Bitumen is a common binder used in road construction. It is principally obtained as a residual product in petroleum refineries after higher fractions like gas, petrol, kerosene and diesel, etc, are removed. The Indian Standard Institution defines bitumen as a black or dark brown non-crystalline soil or viscous material having adhesive properties derived from petroleum crude either by natural or by refinery processes.
While IOC is the largest producer of bitumen in India, Total is a leading producer of bitumen in Europe. Earlier, the two had joint ventures in manufacturing LPG and fuel additives.
The JV will also explore the possibility of catering to other South Asian markets. General uses of bitumen include construction of roads, railways and platforms, water proofing, canal lining and tank foundation. In industries it is used in electrical cables and junction boxes, in battery manufacture as a sealing compound, in ceramics, and in the paint industry for manufacturing black paints and anti-corrosive paints.
The Indian bitumen market was valued at $2.8 billion in 2018, and was projected to reach $3.6 billion by 2026, growing at a CAGR of 2.8 per cent.
Cementing business
The key players operating in the Indian bitumen market include IOC, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Ltd, Oil & Natural Gas Corporation Ltd, Total India, among others.
“India is a strategic country for the future of Total. This JV is further cementing our business cooperation with IOC,’’ says Patrick Pouyanne, chairman and CEO Total.
Total Oil India Private Limited (TOIPL) is a wholly owned subsidiary of Total SA and started its marketing operations in 1993. In India, their products include lubricants for automotive and industrial applications, LPG for domestic and commercial applications, modified bitumen products and special fluids.
In October 2019, Total acquired a 37.4 per cent stake in Adani Gas Limited for Rs6,155 crore, as it saw India moving towards a gas-based economy to address climate change concerns by using cleaner and greener fuels.
The JV between IOC and Total was formed keeping in view the expanding road network in India.
Meanwhile, the Indian government has focused on developing the country’s road infrastructure with mega projects like the ‘Bharatmala pariyojana’ project which envisages development of 34,800 km of roads at an approximate investment of over R5 lakh crore ($66 billion) during the first phase (that began in 2017 and was to end in 2022). However, according to rating agency ICRA, this phase is now likely to be completed by 2026 due to the pandemic.
The government, through a series of initiatives, is working on policies to attract significant investor interest. A total of 200,000 km of national highways is expected to be completed by 2022. In the next five years, National Highway Authority of India (NHAI) will be able to generate Rs1 lakh crore ($ 14.30 billion) annually from tolls and other sources.