Another rider; bids seen delayed more

Another rider; bids seen delayed more
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First Published: Tue, May 27 2008. 11 22 PM IST
Updated: Wed, May 28 2008. 04 38 PM IST
New Delhi: In a move that could further delay revamp of the New Delhi railway station, the Indian Railways has added another layer to the standard procedure that was put in place by the government last year for inviting bids for infrastructure projects.
An advisory put out by the railways on 13 May requires that companies submit a technical bid for the Rs6,000 crore modernization project. As a result, the deadline for submitting of financial bids has been pushed back by two months from 5 September originally.
The guidelines issued by the finance ministry and the Planning Commission, the government’s top planning agency, in May 2007 had removed the technical bid stage in tendering infrastructure projects for private investment. It had proposed a two-stage process that required companies to first submit a request for qualification and later a financial bid.
According to officials at the railway ministry, the bid process has been changed to ensure that every consortium that bids for the project has at least one partner with experience in successfully carrying out large transport infrastructure projects where utilities had to be shifted without interrupting the flow of traffic. This, the railways believes, is particularly significant in the case of the New Delhi railway station, which handles an average 350,000 passengers and 276 trains a day.
The issue of changing the bidding process came up when the ministry held a pre-bid meeting earlier this month. “It was then that we realized that most of the groups interested in the project had real estate expertise. So we were worried that a project of such complexity cannot be handled unless there were participants in the tender who have expertise in shifting key services even while keeping them running continuously,” a railway official, who did not wish to be named, said.
Mint had reported on 8 February that about 20 companies, including Larsen and Toubro Ltd, Hindustan Construction Co. Ltd, Lanco Infratech Ltd, DLF Ltd, Reliance Industries Ltd, GMR Infrastructure Ltd, Dalmia Cement (Bharat) Ltd, Videocon Industries Ltd and Bharti Enterprises Ltd had shown interest in the project.
The railways proposes to raise at least Rs1 trillion of the Rs2.5 trillion it needs over the next five years from public-private partnerships. The modernization of the New Delhi station, built on 87 ha of land, is seen as one of its most ambitious, and potentially lucrative, schemes, because it offers the concessionaire development rights to prime property in the heart of the Capital. It is one of the 22 railway stations that the railways eventually plans to hand over to private partners.
While analysts say the necessity of technical bids will remain a subjective issue, a Planning Commission official said the agency had not been taken on board about the change in the procedure.
“If you see the guidelines, it only says in the case of exceptionally complicated projects, this (technical bids) may be done. When this model document was being made, it was widely deliberated and it was found that there was no real need for a technical proposal. Besides, it would only delay the process even more. Sometimes, ministries don’t have the competence to study technical proposals from five or six companies. I think...state what you want and leave it to to the concessionaire,” said the commission official, who did not wish to be identified.
“The question is, do you want an acceptable station at the lowest price, or the best station at a slightly higher price,” said Amrit Pandurangi, who heads the transport and infrastructure practice at audit and consulting firm PricewaterhouseCoopers. “If you are setting the acceptable criteria and only cost is the factor, then there is no need for technical bids.”
The railways may have to make arrangements, including stopping trains at some other stations, when the construction is on. “Some alternative arrangements will have to be made while the modernization work is in progress,” the railway official said.
rahul.c@livemint.com
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First Published: Tue, May 27 2008. 11 22 PM IST