Financial closure norms, cap on number of bidders and net worth criteria are some of the areas the government is likely to tighten.
Highway construction companies looking at tapping opportunities in mega projects announced by the government may have to face stringing bidding norms to qualify.
Financial closure norms, cap on number of bidders and net worth criteria are some of the areas the government is likely to tighten.
Mega projects, announced by road transport and highways minister Kamal Nath, envisage connectivity spanning 400-600 km, requiring an investment over Rs 5,000 crore.
In a move aimed to ensure delivery from developers implementing mega projects, the government is likely to make it mandatory for developers to attain financial closure in at least two projects before bidding for the third one.
National Highways Authority of India (NHAI) introduced a similar clause for highways last month. As per the new regulation, a company cannot bid any further, if it is not able to achieve financial closure in three projects.
The ministry of road transport and highways is looking at a regulation requiring each individual member of a consortium, bidding for a project, to have net worth of minimum 12.5% of the total cost of the project. Also, for projects up to Rs 2,000 crore, the consortium will need to have net worth of 25% of the capital cost of the project.
For projects between Rs 2,000 crore and Rs 3,000 crore, net worth requirement will be of 50% of capital cost of the project. Finally, the company implementing projects beyond Rs 3,000 crore will need to have net worth equivalent to the project cost.
Experts feel that the options being looked at indicate that the government is eying the big players in the sector as well as international players. “The idea is to restrict the mega projects to some of the domestic infrastructure majors or international players, who will bring the required technical, as well as, financial capability to implement the project,” said Vishwas Udgirkar, partner (Infrastructure), PricewaterhouseCoopers.
Another provision the government is toying with is a regulation similar to the clause capping number of shortlisted bidders in case of highways, a clause that was eventually scrapped by the ministry of finance in 2008.
Sharing details on the development, a NHAI official said, “We are looking at short-listing a total of eight applicants for projects worth Rs 2,000 crore, before they get in the financial bidding round. For projects requiring investment over Rs 2,000 crore, a total of ten bidders will be shortlisted to participate in financial round.”
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