Higher qualification bar lowers bid response for UP highway projects

October 24, 2011

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New Delhi, Oct 20:

The number of bidders appears to have gone down for two highway development projects in Uttar Pradesh (UP) due to higher qualification and threshold criteria set by NHAI.

A broad indicator of this is the comparison between the number of bidders for these two projects and other projects that have recently been bid out, or are under bidding.

For these two projects, to be implemented on an engineering procurement contract (EPC) model, there are about seven bidders for one project and 10 for the other seeking qualification to be able to submit financial bids.

About 15-50 bidders have qualified to submit financial bids for other highway development projects, for which the earlier qualifying criteria exist.

UP PROJECTS

For developing the 165.5-km stretch between Tanda and Rae Bareilly in UP, the bidders who have applied at the technical qualification stage are HCC, IVRCL, Leighton-Welspun, Isolux, Soma, Alsim Alarko Sanayi and L&T.

To develop the 140-km stretch between Rae Bareilly and Banda, 10 bidders have applied. – GPL-Punj Lloyd, HCC, IVRCL, Galfar, Leighton-Welspun, Isolux, Soma, Alsim Alarko Sanayi, L&T and Gammon.

OTHER PROJECTS

The response is in contrast with other projects to be implemented on build-operate-transfer (BOT) – annuity basis, for which NHAI has invited bids.

This is despite the fact that BOT-annuity projects are usually riskier for a road developer compared to EPC projects. Various factors including project model, time of bidding, geographical location also affect the bid response for projects.

For developing a 289 km stretch on the Jabalpur-Rajmarg Crossing-Bareli-Bhopal section, 14 bidders have technically qualified to submit financial bids.

For developing a 66 km stretch on the Jhalawar-MP/Rajasthan border section in Rajasthan, 52 bidders have qualified.

Similarly, for developing the Dahod-Padhi section in Rajasthan, 49 bidders have qualified to submit financial bids.

In fact, the highway builders lobby – National Highways Builders Federation — which has 70 contractors as its members has represented to the Highways Ministry and Competition Commission of India against various clauses in the new ‘model concession agreement’ for EPC projects.

These clauses limit competition by raising the bar for qualifying norms, NHBF had contested.

Source: www.thehindubusinessline.com