Six shortlisted firms pull out of Bihar road projects

Six shortlisted firms pull out of Bihar road projects
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First Published: Tue, Oct 21 2008. 10 48 PM IST

Starting over: A file photo of work on NH58. The highways regulator has invited fresh bids in Bihar. Rajeev Dabral / Mint
Starting over: A file photo of work on NH58. The highways regulator has invited fresh bids in Bihar. Rajeev Dabral / Mint
Updated: Tue, Oct 21 2008. 10 48 PM IST
New Delhi: The National Highways Authority of India, or NHAI, has invited fresh bids for two road projects in Bihar after six of the seven shortlisted companies pulled out citing a mix of commercial and regulatory reasons.
While one NHAI official said the companies withdrew from the projects due to a bid regulation that capped the number of initial bids, another official with the highways regulator said it could also be due to lack of commercial viability. Both officials requested anonymity.
“In the two projects, we only got nine bids, of which seven were shortlisted,” said the first NHAI official. “Out of these seven, six declined, so we had to issue fresh bids two days back,” he said on Monday.
“Where the viability of projects is in question, why will anybody bid?” said the second official. “Some of these projects are non-viable to the extent of 65%.”
Ankineedu Maganti, director of Hyderabad-based infrastructure developer Soma Enterprise Ltd, a shortlisted bidder that withdrew from both the highway projects, said: “With whatever details we had, we had to select eight projects. We selected the eight that we are comfortable with.”
Starting over: A file photo of work on NH58. The highways regulator has invited fresh bids in Bihar. Rajeev Dabral / Mint
According to a Union government regulation, no company can place initial bids for more than eight highway projects within a two-month period. Besides, companies that are selected as winning bidders for four or more projects are not eligible to make initial bids for other projects during the period. The companies are given one week to decide which projects they want to place price bids on.
This clause was introduced to counter possible cartelization, following the government’s decision to enforce bid guidelines that shortlisted companies based on their prior experience over five years. The shortlisting guidelines were withdrawn following hectic lobbying and several legal challenges by bidders and a highway builders’ body.
These criteria are only applicable for the 53 highway projects for which initial bids were issued before the government withdrew the contentious clause that shortlisted bidders based on prior experience over a five-year period.
Madhucon Projects Ltd, which also pulled out of the projects, cited viability concerns. “We withdrew because we were not sure about how viable the projects were,” said S. V. Patwardhan, executive director, Madhucon Projects.
“In the current economic scenario, even the most viable projects are not getting closed. The reason could be funding crunch, loss of appetite. It could be a variety of reasons,” said Parvesh Minocha, managing director, engineering and project management, Feedback Ventures Pvt. Ltd, a project management consultant.
Meanwhile, the second official said NHAI was forced to increase the amount it charged for requests for qualification documents from Rs10,000 to Rs10 lakh in order to counter frivolous bids, where companies would put in initial bids for all projects and then decide which ones to continue bidding for.
“We paid Rs10 lakh to a consultant to carry out evaluations. The consultant spent a month for the evaluation, and then this happens,” the official said.
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First Published: Tue, Oct 21 2008. 10 48 PM IST