Punjab sand crisis: As prices hit sky high, dealers blame shortage, progressive bidding

In Bathinda, in the hinterland of the Malwa region where there are no sand mines, the retail price of a tipper truck of crusher sand ranges from Rs 45,000 to Rs 55,000. “Normally, the end user will order only a tractor-trolley of 100 cft. But the less you order, the more it costs. So it can cost as much as Rs 5,000 to Rs 6,500 per 100 cft,” says Sandeep Bhalla, a sand merchant in Bathinda town.

“I get calls from people enquiring about the prices. Many have put on hold the construction and renovation of their houses hoping things will get better. Those who cannot postpone for pressing reasons like an upcoming wedding are the only ones going ahead with their plans,” Bhalla says.

Across Punjab, it is the same story. Sand prices have gone through the roof everywhere. And builders, sand suppliers, mixers and even miners have a sob story to tell. Vinod Bansal of Bansal Ready Mix Concrete Plant in Bathinda says he got no business in the last month because of the high prices.

“Last year, I was selling ready mix concrete (a mixture of cement, gravel and sand) at Rs 40,000-45,000 per quintal. Today, it is Rs 1.35 lakh per quintal. Just imagine the hike. I have virtually not got a single order for at least a month for construction of a house. I just get queries and it ends there. My plant is running only for supplying concrete to the refinery project. Otherwise, I would have shut it down. I have already signed contracts with the refinery. So, I have to bear the cost. I am paying from my own pocket.”

Ashwani Kumar, a builder from Patiala, says his project is on hold. “What can I say? All work is at a standstill. My partner and I were planning to construct apartments, but we have postponed it for now. The construction cost will go up and already there are no buyers in the market. It is better to wait,” he said.

In March 2017, suppliers could buy at the pit head, a tipper-truck or 900 cft for Rs 8,000 in Hoshiarpur, Ludhiana, and Moga. Now, the same tipper of fine sand costs the supplier Rs 17,000. Add to this transportation charges, highway toll taxes, distance from the mine. By the time it reaches the retailer, the price shoots up even more. The current high cost of fuel has only added to the price.

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A retailer in Ludhiana, who did not wish to be named, said he was selling river sand for Rs 30 per cft and crusher sand for Rs 36 per cft, an all-time high for both.“People are complaining, but what can we do? We cannot help the prices as the suppliers are already charging us a fortune for every truck,” he said. Mannu Nayyar, a supplier from Pathankot, says the increase in toll tax has only added to their woes. “We used to pay a toll tax of Rs 950 for a truck earlier. Now, it is Rs 1,750. All this adds to the cost of the commodity to the end user.”

In Amritsar, a supplier paid the mining contractor Rs 13 per cubic feet for river sand last year. Now it costs between Rs 20.50 to Rs 21. For the retailer, it costs Rs 31. In Jalandhar, a cubic feet of directly mined river sand costs the end user between Rs 31-31.50. In Kapurthala, it is Rs 32, in Hoshiarpur Rs 28 to 29. In Bathinda, due to the distance from rivers where mining takes place, the price is higher, Rs 45-55 per cft.

Two types of sand, washed crusher (obtained after crushing stones) and fine sand (obtained from rivers directly), are used in construction industry. While fine sand is used for plastering the walls, the washed crusher is used for RCC roofs and for raising walls. The washed crusher is more expensive as it is considered of higher quality. About 70 per cent washed crusher is used in construction industry and laying highways.

Sand mining department officials blame the bidding policy that was introduced last year, under which the highest bidders won mines. Called “progressive bidding”, it was introduced by the new Congress government and was stated to have earned the exchequer more money than the previous system of “reverse” bidding, in which the mines went to the lowest bidder.

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The government made an estimated Rs 250 crore from the auction. “Contractors bid crores for their mines. It is implicit in progressive bidding that the price of sand will go up,” says an official.

In the reverse bidding policy that the SAD-BJP government came up with, the prices at pit-head were controlled, but the suppliers added on huge transport costs to increase retail prices. But even those prices pale in comparison to sand prices now.

“In reverse bidding, the price of sand at any pit-head could not go beyond Rs 1.7 per cubic feet as the government had put a cap on prices. Now, it is high at the pit-head and it is being sold for as much as Rs 17 per cubic feet. We cannot cap the prices at the source. And still, contractors come and tell me that they are running in losses, “said an official.

For Tony Arora, the Faridkot based-dealer, it’s a double blow, as he is also a Congress worker. “Our government came to power promising to bring down the prices of sand, but that has not happened,” he says. The Amarinder Singh government believed the contractors would fix prices given the high volumes of mined sand and its easy availability in the market. But that has not happened. Adding to the high cost of sand is the severe shortage of the material in the market.