National highway developers are set to cause another stir this year over tougher norms spelt out by the government in the new Request for Qualification (RFQ) issued in July. This may create a stumbling block for the UPA,which made little progress in the awarding of road projects in its previous stint at the Centre. The new system has doubled the financial exposure in terms of projects executed by a developer in the past five years to Rs 200 crore,which means that the bigger companies will get a higher experience score when bidding parameters are evaluated,says the National Highways Builders Federation (NHBF) that represents companies such as L&T,Reliance Infrastructure,and Gammon. The federation has written to finance minister Pranab Mukherjee to reinstate the previous norms by way of which firms would qualify to bid if their financial exposure in the past five years stood at Rs 100 crore. The bidder must also have executed a project of the same size that he is bidding for in the past five years. With the condition of Rs 200 crore coming into force,it is clear that that very few players that have executed projects worth this much will make it to qualification stage for every project. These conditions will reduce the number of suitors for a project from 15-20,which is required for competitive bid,to about six, said NHBF director general M Murali. Developers allege that the new condition will also prevent the government from getting competitive bids at lower price quotations. In a letter to Mukherjee and Planning Commission deputy chairman Montek Singh Ahluwalia,developers have said: By making the pre-qualification criteria more stringent the government is restricting the competition by denying the competent,experienced and serious bidders from participating in the bidding process for the forthcoming highway projects under PPP (public private partnership) model. The letter also cites the case of the six-laning of Udaipur-Ahmedebad section of NH-8,where with the new norms coming into place the number of bidders that can qualify in the first round will be reduced from 18-22 to between four and six. The new conditions have also made it necessary that the bidder must have a net worth of at least 25 per cent of total project cost,which would not allow many potential bidders from qualifying. In this case alone,a company would require a net worth of Rs 437 crore against Rs 381.75 crore as per the previous norms at 15 per cent.
