Telangana Picks A Fight Over Small GST Payments And Low-Quality Bitumen

The Telangana government has decided to stop the procurement of bitumen from Hindustan Petroleum Corporation Ltd (HPCL) to ensure quality of its roads in capital Hyderabad and also save the annual outgo on taxes for getting this petroleum-based product into its territory.

Deccan Chronicle, which erroneously said Bharat Petroleum (BPCL) instead of HPCL, reported that Greater Hyderabad Municipal Corporation officials had found the efficacy and quality of bitumen to be affected during transport from Visakhapatnam to Hyderabad. Bitumen has to be stored at a particular temperature, but it was apparently not being done during the transport. The failure to maintain the temperature affected the quality of bitumen, leading to roads being damaged more quickly.

The Telangana government is of the view that it doesn’t need to pay 9 per cent State Goods and Services Tax (SGST) to Andhra Pradesh when a BPCL refinery exists in Hyderabad. The outgo on the SGST is Rs 60 crore annually. The government has earmarked Rs 750 crore in the current financial year for the development of roads, and of this, at least Rs 100 crore would go towards SGST to Andhra Pradesh if bitumen is procured from Visakhapatnam.

Recently, engineers from various government departments and Hyderabad City Mayor B Rammohan visited the BPCL head office in Mumbai and asked officials to supply to them bitumen from the BPCL refinery at Miyapur in Hyderabad.

On 3 April, Hans India reported that GHMC officials, along with Transport Department officials, visited the BPCL 450-acre plant in Mumbai to understand the process of preparing bitumen for roads that could withstand heavy rains. This Mumbai plant converts Bitumen into CRMB (crumb rubber modified bitumen) and PMB (polymer modified bitumen) that are superior to bitumen. Reportedly, BPCL officials in Mumbai, after explaining the benefits of modified bitumen, agreed to supply these varieties from the refinery in Hyderabad.

The Mayor has said that it would be the solution to bad roads. The refinery in Hyderabad would be expanded in the future, based on the state’s needs. However, it remains to be seen how the quality of bitumen will be preserved in this case, given that it will still need to be transported from Mumbai, if not from Visakhapatnam. The so-called BPCL refinery in Hyderabad is actually more of a fuel terminal.