NHAI eyes only big bidders, say experts

DECCAN CHRONICLE.
Published Jan 10, 2018, 12:37 am IST
Updated Jan 10, 2018, 12:37 am IST
According to Amar Ambani, only few standalone engineering procurement construction players may bid considering the size of the project.
Few road contractors have expressed interest and 7-8 players are likely to bid for this bundle of nine projects,” said Amar Ambani, head of research at IIFL.
 Few road contractors have expressed interest and 7-8 players are likely to bid for this bundle of nine projects,” said Amar Ambani, head of research at IIFL.

Mumbai: The stringent eligibility criteria prescribed by the National Highway Authority of India (NHAI) for its highway monetisation programme according to experts would restrict competition and attract bids only from large and serious players.

In order to increase external funding for the cash-starved highway projects, NHAI has recently invited bids for nine operational highways valued at Rs 6,300 crore.

 

“Considering the high upfront amount involved and strict bidding criteria, the bidding is likely to elicit interest only from serious and large developers. Given the technical and financial prerequisites, competition would be likely restricted.

Few road contractors have expressed interest and 7-8 players are likely to bid for this bundle of nine projects,” said Amar Ambani, head of research at IIFL.

Under the new toll-operate-transfer (TOT) model, infrastructure players are provided with the right to collect toll for a specific time period against an upfront lump sum payment.  

Among the eligibility criteria for bidders include a minimum net worth or assets under management (AuM) of Rs 2,500 crore as at the end of FY17 and an upfront bid security amount of Rs 62 crore.

According to Mr Ambani, only few standalone engineering procurement construction players may bid considering the size of the project.

“As per some of the developers, the issue with the project is the tenure which stands at 30 years in this case. The bank funding is available only for a maximum tenure of 20-25 years, which creates a big divide. This issue may have to be resolved either by reducing the tenure or arranging long term funding,” he added.

In October 2017, the government approved Rs 7 lakh crore worth of highway projects including the Bharatmala programme under which over 80,000 km of highways would be built over the next five years. It would be financed through market borrowings, private investments and central road fund.





ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT