The National Highways Authority of India (NHAI) has imposed a ceiling on the number of applicants eligible to bid for engineering, procurement and construction (EPC) projects, a move that has irked small highway developers to the extent that they have moved the Competition Commission of India.
In two projects being bid out, the authority stipulated that not more than seven bidders would be shortlisted even if more firms are qualified for the project. This is seen to create a precedent.
As per the changes introduced through two EPC projects put out for bidding in September, a bidder should have completed work totaling five times of the total cost of the project bid for. In comparison, a standard build-operate and transfer (BOT) project requires the bidder to have completed work equivalent in value of the current project. The threshold capacity of a bidder has to be R3,460 crore for the R692-crore project of two-laning of highway from Tanda to Rae Bareilly in Uttar Pradesh. In the R525-crore Rae Bareilly-Banda stretch, the threshold is kept at R2,625 crore.
NHAI has also raised the net worth eligibility by seeking bids only from those bidders who have a net worth of at least 50% of the project cost. A standard BOT project demands a net worth of 25% of project cost. In case of joint ventures or consortia, the authority would consider the technical and financial capacity of only the lead member.
?These conditions deprive most of the applicants even after meeting the qualification criteria prescribed in the bidding documents for theses projects and may lead to lack of transparency in the bidding process,? a senior official in a highway development firm said, requesting anonymity.
?The decision of shortlisting only seven bidders is in gross violation of competition rules as no equality is ensured in the bidding process,? National Highways Builders Federation (NHBF) director general M Murali said. ?The stakeholders should have been consulted before making the changes,? he said.
A senior official of NHAI said: ?The changes are as per new method of awarding EPC contracts. In the new system, we would award an EPC contract as a whole, taking the lump sum cost of the project as base. Earlier, we used to award the contract based on cost of each item. Hence we need strong participants with a high net worth?.
NHBF has written to the Competition Commission of India (CCI) chairman, demanding a halt at the bidding process of the EPC projects, cited above, till stakeholders view is incorporated. Technical bids for the two projects are to be submitted by October 11.
This is not the first time that CCI has come into the picture of the highway sector. In a conference on national highways, organised by Planning Commission last month, CCI director Renuka Jain Gupta had asked road transport and highways ministry and the Plan panel to institute a mechanism of ‘internal competition audit’ to ascertain whether the highway projects are awarded in a transparent and competition-friendly way.
?Authorities should also look at why only big firms are getting the projects,? a senior official in CCI said when asked for comments.