New Delhi station modernisation runs into fresh trouble

The Indian Railways have put stringent clauses in the reworked request for qualification (RFQ) document for the Rs 12,000-crore redevelopment and modernisation of the New Delhi railway station. This forced half of the companies which had earlier shown interest in the project to stay away from a pre-bid conference held last week.

Only 13 infrastructure companies attended the pre-bid conference at Rail Bhawan, compared with over 25 companies that had earlier submitted RFQs to the railways. Out of those 25, the railways had prepared a list of 13 companies which were technically qualified for the project. However, the RFQ was cancelled and a new set of documents was prepared.

The new RFQ document requires a payment of Rs 1 crore as earnest money by the applicant at the technical qualification stage. Once selected in the technical qualification stage, the bidders are required to deposit along with their bid a security of Rs 60 crore. The earlier RFQ did not have these terms.

Given the tight liquidity scenario, infrastructure developers argue that demanding earnest money of Rs 1 crore and a security deposit of Rs 60 crore would discourage many companies from participating in the bidding process. The companies which attended the pre-bid conference include Emmar-MGF, L&T, GVK, DLF, DS Construction, Maytas Infrastructure and DB Realty.

“We are not interested in this project any more,” said a senior executive of Era Infrastructure, adding that such stringent clauses would only stifle competition and impact the competitiveness of the bidding process. Era Infrastructure had earlier tied up with a French infrastructure company to bid for the project.

Similarly, FCC Construction, a Spanish infrastructure company which had earlier tied up with Texmaco, has now decided not to participate in the bidding process.

“Such stringent clauses would ensure that only serious players are in fray for the bidding process. However, given the current liquidity scenario, any relaxation in the bidding norms would definitely be a welcome step,” said a senior executive of KMC Construction Ltd, which has tied up with China Railways to participate in the project.

On their part, the railways maintain that the clauses have been introduced to ensure that only genuine and serious companies participate in the bidding process. “Since the modernisation of the New Delhi railway station is an ambitious project of the Indian Railways, we want to make sure that only companies with strong technical and financial strength are in the fray,” said a senior railway ministry official.

When the number of applicants is less, it would help the railways speed up the scrutiny of the bid documents and shortlist the eligible players for the final bidding stage, the official added.