Ending the controversy over the cap of the top five-six bidders for financial bidding of national highways projects, as prescribed in the model concession agreement for PPP projects approved by the government in December 2007, the Delhi High Court on Monday dismissed the plea of highway builders challenging the clause.
The clause was challenged by the National Highways Builders Federation in January this year. Subsequently, 60 highways projects were put on the block for bidding by National Highways Authority of India (NHAI) in September this year. However, the finance ministry later scrapped the clause from the future highways projects, keeping it intact on the 60 projects.
?The government has the right to implement, amend any rules and regulations on the policy matter, which may be implemented from time to time. Since it is a government policy decision to exempt the deletion of clause 3.5.2 (cap on number of bidders for financial bidding) in model concession agreement in 60 projects, the Court feels they should not interfere in policy decisions,? said the division bench comprising Justice Manmohan and Mukul Mudgal.
?The Court has rejected all the objections to the clause capping number of bidders during financial bidding at five for these 60 projects. The Court feels that the government is free to adopt trial and error method on policy decisions,? said Manoj Kumar, senior partner, Hammurabi & Solomon.
This means that the cap will be applicable on the 44 projects under the National Highways Development Programme, Phase III, and nine projects under phase V. The bidding in phase III has been divided in two lots. Lot I comprises of 23 projects and the remaining are in the second lot. For all the projects in Lot I, the evaluation process is over and they are to be bidded out by end of this month. NHAI, as per its schedule, should have by now awarded seven of the 23 projects. However, none of them have been awarded yet.
The court is yet to decide on two more issues. The ministry of road transport and highways, imposed an additional condition in August that a company could not participate in the bidding for a particular project if the company, standalone or as a part of a consortium, during a period of two months preceding the bid due date, has been qualified in financial bidding for eight projects. A company cannot bid for a project even if it has been awarded four projects. This norm too has been challenged and the decision is awaited. Also, the Hyderabad-Vijaywada project is sub-judice on account of the alleged lack of transparency in the bidding process.
Owing to the ministry?s clause, however, a number of participants withdrew from more than half of the 23 projects under Lot 1 of phase III. Also, there are no takers for two stretches namely Vijaywada-Machilipatnam and Kundapur-Surathkal. All the six bidders who applied for each of the projects withdrew quoting the clause.