The Hindu Business Line : Competition in public-pvt projects: Finance Ministry mulls two options

New Delhi, July 7 The Finance Ministry is considering two key options to solve the wrangle on competition being limited to five players at the financial bidding stage for public private partnership (PPP) projects in infrastructure sectors such as roads, ports and railways.

One option is to adopt the threshold qualification parameters and allow all players who fulfil the criteria to bid.

“Meanwhile, the bar for threshold limit can be decided on a sector to sector basis,” said sources in the know.

This is on the lines of the earlier practice (wherein the technical qualification norms were set based on turnover and experience, and bids were invited from all players that met the specified norms) which was subsequently replaced earlier this year by the new norms. The second option under consideration is a flat increase in the number of players allowed to bid financially for a project to say eight or ten from the current level of five.

New model request

The issue arose when a new model request for qualification (RFQ) for PPP projects firmed up by an inter-ministerial group headed by the Department of Expenditure stated that only the top five or six qualified applicants can be invited for participation in the (financial) bid stage for PPP projects.

This had led to several Indian companies fearing that they would lose out at the bidding stage to larger and multinational players though they qualified the threshold parameters set for the project.

They had written to their respective Ministries alleging that the norm was anti-competitive.

Following this, the respective Ministries had approached the Finance Ministry to review the new model.

The Finance Ministry has been in discussion with various Ministries for reviewing the new model qualifying bid document. “Public policy should encourage participation from more and more players rather than restricting competition,” said the source.

Call to PM

The National Highways Builders Federation, a lobby body with membership from companies that include Larsen & Toubro, Reliance Energy (ADAG) or Reliance Infrastructure, GMR, GVK and Unitech, had even taken up the matter with the Prime Minister.

In its representation, it had said: The Planning Commission guidelines implemented by National Highways Authority of India restrict pre-qualification of qualified applicants to only around five top firms.

“Considering (the) present infant status of PPP in India, major international players are the sole beneficiaries, throwing out Indian entrepreneurs who have provided extremely competitive PPP projects,” it had stated.