NHAI raises net worth criteria for large projects

The National Highways Authority of India (NHAI), in its board meeting today, decided to raise the net worth criteria of the concessionaire to restrict the bidding to only big players in the national and international stage for its large projects.

Net worth (also known as net liabilities) is the total assets minus the total outside liabilities of an individual or a company. The earlier net worth clause was flat 25 per cent for projects of all sizes and values.

According to the revised norms, the net worth criteria has three slabs. In the first slab are projects worth up to Rs 2,000 crore with a net worth criteria of 25 per cent of the total project cost (TPC).

Projects worth between Rs 2,000 crore and Rs 3,000 crore will attract a total net worth criteria of Rs 500 crore plus 50 per cent of the cost above Rs 2,000 crore. For example, if a project is worth Rs 2,600 crore, the concessionaire’s net worth has to be Rs 800 crore.

For projects with a TPC of above Rs 3,000 crore, the concessionaire should have a net worth of Rs 1,000 crore, plus 100 per cent of the cost above Rs 3,000 crore. To elaborate further, if a concessionaire bids for a project worth Rs 3,600 crore, he/she must have a net worth of Rs 1,600 crore.

Industry sources said that the increase in the net worth criteria, will discourage competition in bigger projects, with the sole intention of attracting international players for the larger projects.

However, NHAI refuted the allegations by saying that this would help restrict companies who are not serious and reasoned that 15 out of the 64 Indian contractors are eligible for the projects.