Global energy crisis punctures Jal Jeevan Mission pipeline works

Nagpur: The global energy crisis due to the US-Iran war is having impact deep in the hinterland, even on rural water supply schemes like Jal Jeevan Mission (JJM). Under JJM, the arterial network that takes the supply to the last mile is built through high-density polyethylene (HDPE) pipelines. A petroleum derivative, HDPE manufacturers are grappling with a major supply constraint of the material due to the conflict. Due to rising crude prices following the war, even rates of HDPE have jumped by over 50%, exceeding the escalation range available to cover the regular price rise in govt contracts. HDPE rates that were Rs1.03 lakh a metric tonne (MT) in February have now risen to Rs1.62 lakh MT, said market sources. Contractors say they may have to evoke the force majeure clause, which is available as a shield against unforeseen events.Supply constraints and high prices have slowed down JJM contracts, said contractors. JJM works had already taken a hit due to slowing down of payments in a number of states, said sources. Arun Lakhani, chairman of Vishwaraj Group, a company that takes up water supply contracts including those under JJM in Uttar Pradesh, Maharashtra and Karnataka, confirmed the shortage. "The rates have gone beyond the reasonable levels. But HDPE supply constraints are having a bigger impact on the contracts," said Lakhani. Anirudh Hazra of Hi-Tech Polyplast said manufacturers are facing shortage along with the price hike. "This has affected the supply to contractors. The escalation clause in govt contracts depends on indices that cover prices of a whole gamut of commodities. The sharp increase in HDPE prices is much beyond what is covered under the clause," he said adding that reduction in import duty has brought down rates to a certain extent, but availability remains a challenge.Vishal Agrawal of RC Plasto Tanks and Pipes said the shortage and price hike has affected his industry too. "Ultimately, tanks are needed to store water. The demand goes up during the summer season apart from requirement for govt contracts," he said.