PPP projects bidding to get clearer

New Delhi, May 25 | Updated: May 26 2007, 05:30am hrs
Aimed at ensuring competitive, efficient and economic delivery of infrastructure projects through the public-private partnership (PPP) route, government on Friday issued norms for pre-qualification of bidders for such projects for the first time. The norms are expected to guarantee transparency in the bidding process.

The selection process under the new norms will involve pre-qualification and shortlisting of applicants and submission of financial offers.

The guidelines released by Planning Commission deputy chairman Montek Singh Ahluwalia was necessitated by considerable divergence in principles and practices followed in selection of bidders in different projects in the infrastructure sector.

To finalise rules for pre-qualification and shortlisting of applicants, the committee of infrastructure constituted an inter-ministerial group headed by the secretary, department of expenditure. The group held extensive consultations with stakeholders and experts and submitted its recommendations. These were then accepted by the committee.

The guidelines for pre-qualification of bidders for PPP projects have since been issued by the finance ministry. As PPP project involves large capital investments for providing essential infrastructure services to users on long term basis, the capacity of project sponsors assume considerable significance.

Seeking Normalcy

The Centre issued norms for
pre-qualification of bidders for public-private partnership projects in core sector
The guidelines were necessitated by divergence in principles and practices followed in selection of bidders

The government also brought out a manual of specifications and standards to attract large investment and accelerate the roll out of PPP projects in two-laning of highways. Any breach would expose companies investing in the project to penalties, including termination of concessions.

The manual, released by minister for shipping, road transport & highways T R Baalu, standardises contractual documents and processes.

It will form an integral part of a Model Concession Agreement and be binding on the company getting concessions. Adoption of this manual will reduce project preparation time, safeguard user interests, control costs and provide greater predictability to concessionaires in financing, construction and operation of PPP projects.

The Plan Panel has published an MCA for state highways. These MCAs follow the Design, Build, Finance and Operate approach that requires the concessionaire to bear the responsibility for detailed design. However, the accountability for providing safe and reliable roads ultimately rests with the government.

On The PPP Highway

Manual rules...
All provisions will be enforceable
All contractual documents & processes standardised
Any breach will invite penalties on investing cos
Benefits...
Reduction in project preparation time
User interests will be safeguarded
Concessionaires in financing, construction more predictable
More Guidelines...

Planning Commission has also published a model concession agreement
for state highways