Earlier this year, for the first time, National Highways Authority of India (NHAI) imposed a ban on Maharashtra-based Patel Engineering for reneging on an awarded contract. While NHAI wanted to send out a strong message to the builders.
Concerned over a number of new companies getting into building and operation of toll projects and making “over-enthusiastic” bids, NHAI plans further tightening of bidding norms, as well as strengthening of monitoring process.
“According to our own estimates, some of the bids are highly optimistic. It appears big players are putting very low rates. There is a doubt in our mind whether these bids are sustainable. We are mulling if there is anything that can be done to see any kind of speculative bids are avoided,” G Suresh, chief general manager of NHAI told Business Standard.
However, he did not share details on this, as NHAI is still discussing the matters with the Ministry of Road, Transport & Highways.
“Patel Engineering has been blacklisted and in an unprecedented move a ban of one year has been imposed. We will continue to use such strict methods in such cases in future. Nevertheless, it is always better to put some constraints in filtering process. We are discussing these issues currently, both internally and with the ministry also,” he added.
Patel Engineering had won the contract for designing, building, financing and operating the 11-km stretch six-lane highway between Dankuni and Kharagpur on NH-6 in West Bengal. However, the company abandoned the Rs 1,400-crore project on the grounds of financial constraints.
Apart from forfeiting the Rs 16 crore security deposited by the firm at the time of bidding, NHAI imposed the ban too.
“We have already put a lot of checks in the system of pre-qualifying for the bid. That means there should be higher levels of technical and financial capability, then only they would be permitted to participate in the bidding process. Still, some of the bids appear over-enthusiastic. We are closely watching the situation,” Suresh said.
Last year, NHAI tightened the net worth criteria based on total project cost for bidding for highways.
“Earlier, it was 25 per cent of the net worth. April 2010 onwards, we have made three slabs. Upto Rs 2,000 crore you need 25 per cent net worth, between Rs 2,000-3,000 crore it is 50 per cent. Beyond that, it is 100 per cent of the net worth,” he said.
There is also plan to strengthen the monitoring system. “We are seeing that whether the progress of on-going projects are properly maintained. There are already specific wings in the headquarters to monitor projects.We may choose to strengthen this monitoring system, which can be one of the option. May be we will have to do this on a more regular basis,” he said.
