Industry remains divided over PPP bidding norms

Industry remains divided over PPP bidding norms
The Financial Express, June 22, 2009, Page 3

Ashutosh Kumar, New Delhi

A day after the Centre changed bidding norms for public private partnership (PPP) projects, industry is divided on the implications.

On Friday, the government redrew the norms for bidding, the chief one being the enhancement of the threshold technical capacity of a company to twice the estimated project cost to be eligible to participate in the bidding for a project.

Parvesh Minocha, MD, (transportation division), Feedback Ventures, an infrastructure consulting company told Fe, this will make more serious players including international players and large domestic companies interested in bidding for the projects. "Since only they will be able to fulfil the criteria, and this will bear results in the long run”.

Earlier, many of the smaller players used to make low bids that were impossible to match. In the process, several projects, especially in the road sector were left incomplete in the last one year. To deal with it, in 2008-09, the government had initially capped the number of shortlisted bidders who could participate in financial bidding of road projects to the top five or six bidders.

But as the economic crisis affected India, the finance ministry had to step in to exempt highways construction projects from the cap, thereby allowing all shortlisted bidders at the technical stage to put in financial bids.

Speaking on behalf of the smaller players, the director general of National Highways Builders Federation M Murali said, “A large number of companies will be alienated from the bidding process in the first phase itself. This will reduce the number of participants for a project. Smaller companies, which may have financial capability to implement the projects will also get alienated from the bidding process”.

The large operators in the Indian space who are likely to benefit from the move include companies like Larsen &Toubro, Reliance Infrastructure, Nagarjuna Constructions and gammon India, among others.