Shortlisting criteria in bidding scrapped

Shortlisting criteria in bidding scrapped

New Delhi: In a major concession to highway contractors, the finance ministry has done away with a contentious rule—prequalification of firms bidding for highway stretches based on prior experience—after hectic lobbying and legal challenges.

This means all companies that fulfil the minimum threshold criteria such as having a net worth of 25% of the project cost (relaxable to 15% for projects worth at least Rs1,000 crore) will now be allowed to put in price bids. The ministry passed an order to this effect on 22 September.

The shortlisting criteria, issued by the finance ministry and ratified by the Prime Minister’s committee on infrastructure in May, were made applicable to the so-called PPPs, or public-private partnerships. The companies were to be ranked based on development and construction experience in the infrastructure sector over five years.

According to the shortlisting criteria, more weightage was given to companies that had developed projects, as opposed to merely constructing them for a fee. Only between five and seven top-ranked companies—depending on the project—were allowed to bid for highway projects.

A National Highways Authority of India, or NHAI, official confirmed that the shortlisting clause will not be a part of documents for initial bids called after 22 September. The 60 projects for which initial bids have already been called, however, will be evaluated using the shortlisting norm, said the official who declined to be named.

“A special dispensation for the roads sector has been made because of the volume and the non-complicated nature of work," a finance ministry official, who also did not wish to be identified, said. “The applicability for the other sectors are closely being examined by a committee."

On 28 December, Mint had reported about concerns on cartels being formed if the rule came into effect. The National Highway Builders Federation, or NHBF, a trade body of highway contractors, challenged the rule in the Delhi high court in January.

Last month, Reliance Infrastructures Ltd, Madhucon Projects Ltd and the GMR Group also filed suits challenging the bid evaluation process for a road project in Andhra Pradesh, in which the contentious guidelines were used. All these cases are likely to be heard on 30 September.

NHBF director general M. Murali said the organization will not withdraw its case against NHAI, the Planning Commission and the finance ministry.

Madhucon’s executive director S.V. Patwardhan said the company would also not withdraw its case because it was challenging only the Hyderabad-Vijayawada road project.

A Reliance Infrastructures spokesperson said: “We are not going to withdraw the case because the order does not affect our existing projects." GMR’s spokesperson couldn’t be reached for comment.

Partha Mukhopadhyay, an infrastructure expert and senior fellow at New Delhi think tank Centre for Policy Research, said it would’t be difficult to amend the guidelines for projects that had already been bid for.

“The question to ask is, if it was decided that the new approach is the right one, why is it not being used for all projects?" he asked.