Delays could cost firms highway contracts
Companies de laying the execution of highway projects may soon bed is qualified from bidding for the next round of contracts. The government is mulling over apropos alto de bar concessionaires from future tenders if their previous contracts missed the completion deadlines. According to the proposal, the government is not in favour of completely black listing such firms despite receiving the necessary regulatory clearances. “If there is no delay in land acquisition or receiving other regulatory clearances, and the progress on the project is sluggish due to delays on the part of the concessionaire, then the government can debar that company from submitting bids for other projects,” a road ministry official told
Companies delaying the execution of highway projects may soon be disqualified from bidding for the next round of contracts. The government is mulling over a proposal to debar concessionaires from future tenders if their previous contracts missed the completion deadlines.
According to the proposal, the government is not in favour of completely blacklisting such companies despite receiving the necessary regulatory clearances. “If there is no delay in land acquisition or receiving other regulatory clearances, and the progress on the project is sluggish due to delays on the part of the concessionaire, then the government can debar that company from submitting bids for other projects,” a road ministry official told Business Standard.
The debarment would be temporary and subject to conditions. For instance, if one highway construction company is executing 10 projects of which seven are delayed, then it can be allowed to bid for a new project only if work gets completed in at least four of the seven delayed contracts, the official said.
Though there is a provision for blacklisting companies, such a step is not taken frequently. Last month, the National Highways Authority of India (NHAI) issued a list of 20 highway contracts, including those with L&T Infrastructure, HCC, Essel Infra, MBL Infra, and Soma Enterprises that could be terminated over delays in implementation. The termination, however, has not happened after the initial show-cause notice.
The NHAI had terminated a contract with Transstroy, which was signed in April 2012, for four-laning the Obedullaganj-Betul section on NH-69 in Madhya Pradesh, due to extremely slow pace of work. Some experts feel that complete blacklisting of a company would hamper the growth in the infrastructure sector, which was better off than the most in terms of non-performing assets. They say the government should ensure that the companies are not highly leveraged at the time of the tender and are fit to bid for the projects. “The bid capacity of the concessionaire should be established beforehand. If the total worth of the company is ~200 crore, it cannot execute projects worth ~10,000 crore,” Adil Zaidi, partner, economic development, and infrastructure advisory, EY, said.