NHAI tightens norms for bidding for EPC projects

By: | Published: January 25, 2019 3:03 AM

The National Highways Authority of India (NHAI) is tightening the norms for developers to bid for road projects under the engineering, procurement, and construction (EPC) mode in an effort to disqualify weak, non-performing and incapable developers from winning projects.

NHAI, NHAI EPC PROJECTSNHAI tightens norms for bidding for EPC projects

The National Highways Authority of India (NHAI) is tightening the norms for developers to bid for road projects under the engineering, procurement, and construction (EPC) mode in an effort to disqualify weak, non-performing and incapable developers from winning projects.

In the last bidding session for projects by NHAI, conducted on January 2, the highways authority imposed certain filters, such as missing at least two construction milestones in past projects, physical progress not commensurate with the funds released, and failure to maintain a highway in spite of two rectification notices, among others.

However, the National Highway Builders Federation (NHBF), the apex body of all contractors and builders of national and state highways and bridges, has written a letter to NHAI with which it will have a series of meetings in the coming days to point out the impracticality of some of these conditions.

Satish Parakh, MD, Ashoka Buildcon, says the approach needs to be modified to achieve the desired objective. “Whenever there is a milestone delay, it takes a lot of time just to decide the reasons for the same and if the reasons are not attributable to the developer, the developer should not be faulted by not being allowed to bid for a new project. We hope the issue can be resolved in two-three months as there will be more projects coming up for bidding and for which we would want to be a part of a healthy competition in the sector,” he told FE.

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Other developers pointed out the delays, most of the time, are for third-party reasons. While the projects are awarded either by NHAI or the road transport ministry, the progress of the work executed across various different states depends on the efficiency of the state machinery.

Harendra Singh, MD, HG Infra, told FE, “Many a time, the delays that result even goes into disputes and further into arbitration. Due to such kinds of delays, it is difficult to prove non-performance unless decisions are taken on time. It may take a few months to resolve this issue.”

According to Rajeshwar Burla, AVP and associate head, corporate ratings, Icra, the filters imposed by NHAI should be directed towards ensuring companies have sufficient qualified manpower and financial resources to execute a project.

He said: “You may remember NHAI had put up a list of developers, featuring even some prominent and reputed developers that it blacklisted about a year or so ago. Ultimately, NHAI had to revoke this list because clearly, the delays and non-performance were not attributable to the developers.

“Similarly, they may need to take a second look at the conditions they have imposed this time to filter the non-performing developers or else this will just increase the litigation”.

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