New Delhi: Amid concerns that large infrastructure companies may form cartels and edge out smaller firms, the road transport and highways ministry has said a company can only bid for a specified number of road projects.
A company won’t be considered for a project if it has made 12 or more initial bids—also called requests for qualification—in the four months before floating of the tender for that project, said a ministry official who refused to be named. This has been done on the recommendations of the Planning Commission, the country’s apex plan body, he added.
Companies that have been shortlisted for at least eight projects or won four projects during the same period will also not be eligible for prequalification and shortlisting, he said.
Experimental step: A file photo of work being carried out on a stretch of NH 58. The new bidding rule will, for now, apply only to projects handled directly by the ministry and not to those administered by NHAI. Photograph: Rajeev Dabral / Mint
Currently, the ministry or the concerned authority invites initial bids for road projects. The companies are then ranked on experience in the past five years. Between five and seven companies are finally shortlisted and invited to place price bids.
“We are doing this on an experimental basis because a lot of people raised concerns of cartelization,” the official said.
The new rule will for now apply only to projects handled directly by the ministry and not those administered by roads regulator the National Highways Authority of India (NHAI), the official added.
The ministry, rather than NHAI, will administer the upgrade of two-laned roads under the recently approved phase four of the National Highway Development Programme, or NHDP, because the road regulator said it “has its hands full”. NHAI will continue to administer other five phases, including the sixth phase of NHDP.
“I think it is logical considering it solves not just cartelization concerns but also addresses the capacity issue,” said Harsh Shrivastava, vice-president of marketing for consulting firm Feedback Ventures.
“Since these are two-lane roads, the large companies will not be interested in them. And smaller companies may not have the capacity or the management bandwidth to undertake more than a few projects at the same time. This regulation will address this issue,” Shrivastava added.
“It doesn’t do anything,” said an executive with an infrastructure company who did not wish his or his firm’s name to be identified, citing ongoing government work. “If I have applied for 12 projects, then I do not know if I am going to win any of them. This will not change anything.”