New Delhi: Indian authorities are reviewing a selection process used to identify bidders for a highway project in Andhra Pradesh worth more than Rs1,000 crore after at least two companies, including billionaire Anil Ambani-led Reliance Infrastructure Ltd, asked for clarifications when they failed to make it to the shortlist.
Roadblocks: A file photo of NH 58. The guidelines for selecting firms for public-private partnership projects are being challenged in court by National Highway Builders Federation. Photograph: Rajeev Dabral / Mint
The review by National Highways Authority of India, or NHAI, and the Union ministry of shipping, road transport and highways will further delay the issue of tender documents for the 176km stretch of National Highway 9, between Hyderabad and Vijayawada in Andhra Pradesh, at least two contractors told Mint. The documents were to be issued from 2 July.
Reliance Infrastructure and Hyderabad-based Soma Enterprise Ltd confirmed that they have sought clarifications.
“Some companies had made representations. A two-member committee was looking into the issues,” said an NHAI official on condition of anonymity. The official said the committee had recommended that the companies not in the shortlist be asked for clarifications on some aspects of their proposals, a process that could delay the bidding even further.
Once the companies clarify their stand, the NHAI board would have to take a decision on whether the shortlist could be expanded, the official added. Companies for projects that involve public-private partnerships, or PPPs, are selected on guidelines issued last year by the finance ministry and the Planning Commission, the apex policy planning body.
These rules assign scores to companies based on the cost of projects they have undertaken in the past five years.
“We are not sure on what basis they did it (the shortlisting). We believe we should have been in the shortlist, based on what our score was,” said a Soma Enterprise, who did not wish to be identified.
“But, we were told that our score was not taken into consideration because our foreign partner (in the consortium) could not establish its relation with many of the SPVs (special purpose vehicles) that executed the projects.”
Six entities were selected to bid for the highway project that is estimated to cost at least Rs1,141 crore. They include the GMR group, GVK Industries Ltd, Hindustan Construction Co. Ltd, Larsen and Toubro Ltd, Madhucon Projects Ltd, and a consortium of Maytas Infra Ltd and Nagarjuna Construction Co. Ltd.
“I am not aware that the companies have made a representation. We would still bid for the project if it gets delayed,” said Isaac George, chief financial officer of GVK Industries. “But we would like this to be resolved fast.”
“I am told the the main problem is in the language of the auditors certificates that the companies (had) submitted,” said an executive with one of the shortlisted companies, who did not want his and his company to be named.
Meanwhile, the PPP guidelines by the finance ministry and the Planning Commission are being challenged in the Delhi high court by industry body National Highway Builders Federation, or NHBF, which says the rules will keep out small firms.
Some companies have also alleged that a list of eligible bidders for a Rs1,300 crore container terminal in Ennore Port in Tamil Nadu was complied arbitrarily, Mint had reported on 7 April.
“These questions have been raised before, too. I think the questions that are being raised are basically whether the process is correct and whether the process is being applied correctly, and in this case I think it is the same,” said Amrit Pandurangi, who heads the transport and infrastructure practice for audit and consulting firm PricewaterhouseCoopers.
According to a Planning Commission official, who did not wish to be named, the NHAI has said many times that it is unsure of the right way of evaluating proposals, especially when companies submit lists covering projects across several sectors.
“We had shown them how it is done. They keep saying they are unsure of the process, but when we ask them where they have problems, they don’t respond,” he said.