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NHSRCL’s new tendering norms may weaken competition

The introduction of fresh clauses in the tendering process for the C2 package of the Mumbai-Ahmedabad high speed train project does not seem to be going down well with the major infra players who are placing the bids for the prestigious project, sources in the know of things said.

The introduction of fresh clauses in the tendering process for the C2 package of the Mumbai-Ahmedabad high speed train project does not seem to be going down well with the major infra players who are placing the bids for the prestigious project, sources in the know of things said.

The National High-Speed Rail Corporation Limited (NHSRCL) has been leasing out work for constructing fast-track railway projects. These are specialised works and supposedly have huge value.

According to an industry insider, the NHSRCL has laid out some fresh clauses for the bidders to follow for C2 package.

The infrastructure players fear the new norms may weaken the competition in bidding. According to a source, this apprehension is causing worry among interested infra companies.

A source on Friday said that various industry insiders termed the new clauses “arbitrary” and something which would lead to a significant rise in the overall cost of the project in a longer period.

They also pointed out the deliverability aspects of the project, since many large companies find themselves in a fix following the new clauses.

These clauses were not there while bidding for the C1 package.

One of the clauses says that the bidders “should have neither obtained any debt restructuring nor should have applied for any debt in the last three years to the date of bid submission”.

This has now become one of the major issues that is concerning the industry as most of these high value infra projects and companies do substantially operate on loans and debts and hence, this new clause is making a host of contractors uneasy, various industry sources indicated.

This clause was not there during the tendering process of C1 package, which essentially allowed the party that had obtained any debt restructuring in the previous three years to the bid for the same.

In such cases, the bidding party is required to open a dedicated “Trust and Retention account” (T&R account) and submit the list of vendors, suppliers, sub-contractors and other consultants who the bank will make direct payments on the cue of the Contractor, preventing the contractor from diverting the funds for some other work.

This has been taken off in the new norms released.

As of now, the C1 Package Tender Process is complete and a Joint Venture bidder has already been declared the lowest bidder for quoting a competitive price.

The difference between the lowest and the second lowest bid is around Rs 600 crore, as per reports.

Now, with the new clauses which make “Trust and Retention” accounts non applicable, even the existing contractors who have won separate packages of the project find themselves in a position where they do not qualify for the tendering process.

Thus, the bidders who have already obtained or are in the process of getting debt restructuring shall not be eligible to participate in the bid, bringing down the competition in the whole process.

As per experts, this amendment outrightly eliminates many technically sound companies from participating in the bid, especially when very few qualified companies exist in the Indian market to compete for these high-value tenders.

They say elimination of healthy competition would also result in incurring losses to NHSRCL and might likely become a burden for the government in execution of the project.

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