 |
|
||
| HOME | TOURISM | INFO TECH | NEWS | REAL ESTATE | ENVIRONMENT | HEALTH | CONTACT US - SANJAY @ 98 119 87371 |
Higher Net Worth Norms Likely For Road BuildersBy ugesh sarkar, Section News
The government is considering a proposal that raises net worth requirements of companies bidding for high- way projects in an attempt to match project bids with the ca- pacity of the bidder.
The new proposal involves a three-tier entry norm--de- pending on project size--for potential bidders, said a Na- tional Highways Authority of India (NHAI) official, who spoke on condition of ano- nymity. Bidders for projects below Rs2,000 crore would need to have a net worth of at least 25% of the cost of the project, with the cap progres- sively increasing to 50% for projects worth Rs2,000-3,000 crore and 100% for projects above Rs3,000 crore. The proposal, which came from the ministry of road transport and highways, was at a preliminary stage and yet to be made to the board of the authority, the official said.
As much as one-third of all future highway projects thatcome up for award may cost in excess of Rs3,000 crore to build, the NHAI official said, and added that the net worth criterion is just one of several changes being considered. A model document govern- ing initial bids--published by the Planning Commission and meant as a guide for minis- tries--suggests that companies should have a net worth of 25% of the cost of the project. Highway experts said the au- thority has long grappled with a way to assess capacity of highway bidders, as a few firms in India's still nascent public- private partnership road build- ing industry vie for an ever in- creasing number of projects. A road ministry official said the move was being considered in order to prevent the practice of "name-lending", whereby large companies give their names to smaller firms--often for a fee--so they can be eligi- ble to bid for projects. An executive with a consult- ing firm surmised that the pro- posed regulations may also be a way of ensuring that projects don't get delayed because of smaller companies bidding for large projects that are beyond their capacity. rahul.c@livemint.com Source: Live Mint By RAHUL CHANDRAN Higher net worth norms likely for road builders Click On "Full Story" For More...
To be sure, the government has in the past frequently al- tered bid conditions, including threshold criteria such as net worth requirements and the extent of prior experience companies need, to bid for projects.
One such change in 2007 led to a stand-off between government and highway contractors after some developers alleged that the new conditions in ef- fect created an entry barrier for smaller, newer entrants. This year, NHAI also intro- duced norms that prevented companies that had three or more pending financial clo- sures from further bidding. Fi- nancial closure refers to the ty- ing up of funds for the project. The current proposal gains importance considering the scale of the task the ministry of road transport and NHAI have undertaken. Union road trans- port minister Kamal Nath has set a 7,000km a year target for highways. Arvind Mahajan, an execu- tive director with audit and consulting firm KPMG, said the government should also look at ways of assessing the capacity of contractors.
"There will be some degree of concern because of these net worth requirements," said Mahajan. "I am not saying it's a bad thing. But there will be concerns because there will be a handful of people that meet some of the requirements."
Higher Net Worth Norms Likely For Road Builders | 0 comments (0 topical, 0 hidden)
|
|
|
All trademarks and copyrights on this page are owned by their respective companies. Comments are owned by the Poster. The Rest (c) GurgaonSCOOP.com and QBTPL. |
