Government tightens bidding norms for highway projects
28 Apr 2010
The government has amended bidding norms for projects under the National Highway Authority of India (NHAI) in a move to keep black-listed entities and non-performers out and to curb intentional or accidental accumulation of the projects by bidders, who may overstretch themselves with resultant difficulty in securing financing.
The new norms also aim to curb name-lending while also ensuring that the benefits accruing to a consortium are aligned with the equity structure of the combine.
The norms, which have been revised on the recommendations of the NHAI board, are intended to accelerate implementation of projects, R P N Singh, minister of state for road transport and highways informed the Rajya Sabha today.
The changes include introducing of net worth criterion for the consortium as a whole and for individual members of consortium who will now have a minimum net-worth of 12.5 per cent of total project cost (TPC) in the immediately preceding financial year. For the consortium as a whole, NHAI has prescribed the following net worth criterion:
- For projects with TPC value of less than Rs2,000 crore - a combined minimum net-worth requirement of 25 per cent of the TPC value.
- For projects with TPC value of Rs2,000 crore or more but less than Rs3,000 crore - a combined minimum net-worth of Rs500 crore plus 50 per cent of the amount by which the TPC value exceeds Rs2,000 crore.
- For projects with TPC value of Rs3,000 crore or more - a combined minimum net-worth of Rs1,000 crore plus 100 per cent of the amount by which the TPC value exceeds Rs3,000 crore.
Bidders will have to mandatorily provide an undertaking to NHAI that the EPC works of the project would be executed only by such EPC contractors who have completed at least a single package of more than 20 per cent of the TPC or Rs500 crore, whichever is less. It is also decided that any change in the name of EPC contractor would be with prior consent of NHAI.
The RFP document has a clause that makes a bidder ineligible for bidding if, for projects with TPC less than Rs3,000 crore, as on bid due date, the bidder, its member or any associate, either by itself or as member of a consortium has been declared by NHAI as the selected bidder for undertaking 3 such projects and the bidder is yet to achieve financial closure.