The entry level to bid for mega road projects has been fixed at a minimum Rs 1,000 crore with this net worth calculated only of firms that hold 26 per cent or more in the consortium. Amendments to the model Request For Qualification (RFQ),approved by Road Transport & Highways Minister Kamal Nath last Friday,introduce three more slabs to assess financial capacity of bidders with the highest slab that of mega roads with total project cost (TPC) at Rs 3,000 or more. (See chart) For projects with a TPC value of Rs 3,000 crore or more,a combined minimum net worth requirement of Rs 1,000 crore plus 100 per cent of the amount by which the TPC value exceeds Rs 3,000 crore, says the amendment to clause 2.2.2 (B) aimed at restricting bidding among serious contenders with the financial muscle to execute projects. However,bidders who tap the capital market for equity needs would now be allowed to add the cash flow to their net worth even though the raised money would reflect in their financial statements in the next financial year. In order to stop big corporate from lending name to qualify small firms that dither in executing projects,only those members who contribute a minimum 26 percent equity would be counted in evaluating financial and technical experience of the consortium. The financial strength would be the weighted average of equity share and the net worth. So if Company X holds 60 percent equity and has net worth of Rs 1000 crore while Company Y holds 40 percent and Rs 500 crore of net worth,the consortium would have weighted financial score of Rs 800 crore (60% X 1000 + 40% X 500). Moreover,each member irrespective of the equity that it picks up would have to demonstrate a minimum net worth of 12.5 per cent of the TPC in the previous financial year to be eligible to be a part of the consortium. MORTH has identified nine mega highway projects,each requiring an investment of Rs 4,000 crore. The bidding for mega roads of length varying between 390 km and 700 km would start end of this month,sources said. To ensure that mega bidders do not spread themselves thin by hogging more and more projects,the RFQ prevents them from competing if the bidder,its member or any associate,either by itself or as a member of a consortium has been declared as the selected bidder for undertaking two such projects and the bidder is yet to achieve financial closure. There would a curb on non-performers with a ban on submitting an application for any project either individually or as a member of a consortium if it has been declared as non-performer or blacklisted by the National Highways Authority of India as on the date of application. However,MORTH has decided to keep in abeyance the NHAIs proposal shortlist only 8-10 serious players in projects as it was prone to cause litigation. The NHAI had recommended short listing eight players for big projects over Rs 3,000 crore and 10 for projects costing less than Rs 3,000 crore.
