New Delhi: Petroleum and natural gas companies without any experience in executing infrastructure projects will no longer be able to bid for projects under the public private partnership (PPP) model.
In its new pre-bidding guidelines for PPP projects, the finance ministry has removed petroleum and natural gas from the definition of core sector, which could be awarded PPP projects.
Now, the core sector would include metro rail and logistics park instead of petroleum and natural gas.
This means that petroleum and natural gas companies which do not have experience in core sector— telecom, power, ports, airports, railways, industrial parks, metro rail, logistics park, irrigation, water supply, sewerage and real estate development— would not be able to compete for PPP projects.
“Definition of PPP and core sectors has been modified... to exclude petroleum and natural gas and include logistics park and metro rail,” the guidelines on Request for Qualification (RFQ), that amended norms issued in 2007, said.
Sources said petroleum and natural gas companies were also bidding for infrastructure projects without any experience in executing such projects.
So, guidelines have been amended to allow only those companies having experience in infrastructure projects to compete for PPP projects, the sources said.
Even though core sector will continue to include real estate development, standalone housing would not be included in this category while townships and residential complexes would continue to qualify.
It means that those having experience in building townships and residential complexes would continue to compete for PPP projects, whereas standalone housing companies would not be able to do so.
The new guidelines were issued by the finance ministry on the recommendations of a taskforce, headed by Planning Commission member and former cabinet cecretary B K Chaturvedi.
The new guidelines also said that an application would be disqualified if an investor or its associates holds at least 5% in another company which is applying for the same project, directly or indirectly.
Earlier, this conflict of interest could have arisen if the stake was at least 1%.
The sources said, the equity requirements for conflict of interest is raised on industry requests that earlier norms were too harsh.
The new guidelines also allow consultants of National Highway Authority of India (NHAI) to work for private entities for six months prior to the issue of RFQ or three years after the operation of the projects begins.
As per norms earlier, applicants were disqualified if any legal financial or technical advisor of the NHAI is engaged by the applicants.
If a consortium applies for a project, its members will now have to bear at least 5 % of the total project cost for a period of two years after commissioning of the project, besides holding 26% equity in the special purpose vehicle constituted for the project.
Commenting on the new norms, Planning Commission principal advisor Gajendra Haldea said, “PPP norms have not been changed. Only some fine-tuning has been done, based on experiences of the concerned ministries and key representatives from industry organisations to address some issues.”
PPP refers to infrastructure projects where the government and private partners enter into an agreement to execute these projects on payment of user charges.