November 11, 2020: The government has proposed to relax financial as well as technical eligibility criteria for highway projects to encourage increased participation of developers amid COVID-19 pandemic.
To overcome delays in highways construction, Ministry of Road Transport and Highways (MoRTH) has already issued some relaxations under AatmaNirbhar Scheme to contractors for the ongoing as well as yet-to-start projects, besides providing some relaxation to bidders in performance security.
Changes in bidding documents in respect of financial and technical capacity for HAM (hybrid annuity model) and BOT projects (build, operate, transfer) projects and general relaxation for tunnel and bridge projects have been deliberated in the Ministry.
“As a result of deliberation, changes in the bidding documents of HAM and BOT projects relating to financial and technical capacity and provisions relating to tunnel and bridge projects, as approved by the competent authority, are forwarded herewith for taking further necessary action,” MoRTH has said in a communication to NHAI Chairman and NHIDCL MD apart from other officials of the Ministry.
Expressing concern over COVID-19 pandemic resultant situation, the Ministry in another document has said that its impact is still on and it has been observed that most of the projects are delayed.
“Financial and technical capacity of the bidders are also affected due to COVID-19 and some bidders are unable to meet the eligibility criteria. Keeping in view the present uncertain conditions, it has been decided to relax the financial as well as technical eligibility criteria to encourage increased participation of the bidders,” the document said.
It said the proposed move will encourage the Make in India policy of attracting local firms in the field of highways construction.
The move holds significance as there are about 730 developers for EPC (engineering procurement and construction) projects of which only 21 are capable of executing projects worth over Rs 2,000 crore as per the qualification criteria at present, as per the document.
As per the criteria, 72 developers can handle projects in the range of Rs 1,000 crore to Rs 2,000 crore, while 75 contractors are such who can handle projects in the range of Rs 500 crore to Rs 1,000 crore.
Majority of the developers fall under the category of contractors who can handle projects in the range of Rs 100 crore to Rs 500 crore.
In order to ensure larger participation of bidders in projects, the Ministry has proposed to change the existing norm requiring average annual turnover of 20 per cent of estimated project cost (EPC) to 15 per cent of EPC.
The proposed amendments do not alter the criteria of net worth of bidders at 5 per cent of EPC saying “To take up any project, financial capability of the bidder should be sound”.
The proposal also includes relaxation in technical capability besides allowing such bidders also which have executed irrigation, water supply, stadiums, hospitals, hotels, smart cities, warehouses, oil and gas projects besides real estate, the document said.
Source: Economic Times
