Projects worth Rs 50,000 cr hit a roadblock called RFQ

As many as 35 public private partnership infrastructure projects worth around Rs 50,000 crore are stuck ever since the government...

As many as 35 public private partnership infrastructure projects worth around Rs 50,000 crore are stuck ever since the government issued new pre-bid documents in December last year.

The bone of contention is the new model request for qualification RFQ norm that seeks to restrict competition at the bid stage to only five-six companies8212;an aspect that is now being reviewed by the Finance Ministry. As a result of the contentious new guidelines, projects across sectors such as roads, ports, railways and civil aviation have been stalled8212;with none of the RFQs issued in the last six months translating into a project award yet.

The worst hit is the roads sector, where 26 RFQs issued since January for projects worth around Rs 27,000 crore have yet to make any progress. These include some big-ticket projects like six-laning of the 180-km Delhi-Agra highway and the 251-km Kishangarh-Udaipur highway.

The Indian Railway8217;s ambitious proposal to modernise the New Delhi railway station at a cost of Rs 10,000 crore is also moving at a snail8217;s pace, with the ministry unable to come out with a project-specific RFQ based on the model RFQ acceptable to bidders.

Plans to set to up two new coach factories in Uttar Pradesh and Bihar have also seen no forward movement. The Railway Ministry has already written to the Finance Ministry expressing difficulties in implementing the new model pre-bid norms.

The model RFQ was issued by the Finance Ministry after detailed discussions with various ministries and approved by the Committee on Infrastructure CoI headed by Prime Minister Manmohan Singh.

It specifies that only five-six pre-qualified applicants will be allowed to participate in the financial bid stage of a project. The candidates will be short-listed on the basis of a 8216;point system8217; where only the top players with maximum experience in various fields such as ports, roads, power and airports will be allowed to submit final bids for a project.

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Earlier, for such PPP projects, the technical qualification norms were based on turnover and experience and there was no ceiling on the number of players to be 8216;pre-qualified8217;. Infrastructure companies have alleged that the new RFQ norms would ensure that only a few top international players get selected to bid for every project.

8220;Forget small companies, even big companies including GVK, GMR or L038;T would have to enter into a joint venture with a foreign player to be eligible to bid for projects,8221; said a senior executive with a leading infrastructure company.

The National Highways Builders Federation has even dragged National Highways Authority of India NHAI to court on the matter, claiming that the new RFQ would 8216;create an artificial class within a class of bidders8217;. Taking note of the concerns expressed by various stakeholders, the Finance Ministry said it was now considering revising the RFQ guidelines. 8220;We have received representations from various stakeholders on the need to do away with a limit on the number of pre-qualifying applicants. We are aware that this may lead to cartelisation, with a few players grabbing most projects. So we are reviewing the matter,8221; said Arvind Mayaram, joint secretary infrastructure, Finance Ministry.

However, officials from the Planning Commission rubbish such concerns, saying that the move to pre-qualify candidates is an international best practice. 8220;The move to limit number of bidders to just five-six is to ensure that only serious players take part. Preparing a financial bid is an expensive process and many companies may not be willing to undertake this activity unless there is a good probability for them to get contracts,8221; said Gajendra Haldea, advisor to the Planning Commission Deputy Chairman.