Govt stiffens terms for large road projects

Move could eliminate most bidders, says industry.

An ambitious plan by the National Highways Authority of India (NHAI) to offer 126 road projects worth around Rs 1 lakh crore this year may face serious hurdles owing to a stiff clause introduced in the new Request for Qualification (RFQ) norms that will eliminate many bidders.

Revised guidelines that came into effect in July stipulate that a bidder must have experience of executing projects worth twice the estimated total project cost mentioned in the RFQ document in the last five years.

That means a developer bidding for a project worth Rs 500 crore should have a record of executing projects worth Rs 1,000 crore in the last five years. The earlier stipulation required a bidder to have executed projects equivalent to the estimated value of the project for which bids are being placed.

Seventy to 80 projects that the NHAI is bidding out are worth over Rs 1,500 crore, which means bidders need to have undertaken road projects of over Rs 3,000 crore in the last five years to be eligible for the bidding process.

Industry estimates say only about 40 construction companies in the country stand to qualify under these rules.

Since the RFQ also says no company can bid for more than three projects, the number of bidders for large road projects will fall further.

“It will be difficult for NHAI to find contractors to bid for projects of such magnitude. The number of developers who can qualify for such projects that the authority is to bid out this fiscal is very small,” said M Murali, director general, National Highways Builders Federation.

He added that the option of getting in foreign players would be tough because they would be worried about land acquisition disputes and possible legal wrangling as a result of the stiff penalties NHAI imposes on delays and slippages.

Union Transport Minister Kamal Nath has charted an ambitious target of constructing 20 km of roads every day. He had also announced in Parliament that the ministry will build more roads this year than built between 1999 to 2004 when the National Democratic Alliance was in power. Sceptics now say those targets will be missed owing to problems in the bidding process.