Government toughens bidding norms for shipping projects

New Delhi, July 13

Bidders for infrastructure projects in the shipping sector need to have a minimum net worth that is twice the project cost, the government said Monday.

"Since BOT (build, operate and transfer) projects require the concessionaire to make the investment required for the project, it was suggested that threshold be increased to twice the project cost," Shipping Minister G.K. Vasan told the Lok Sabha.

The recommendation was given by the newly-constituted empowered committee on infrastructure to pre-qualify entities with greater experience and financial capacity so that project financing and implementation are not compromised, he said.

Other recommendations include restricting the number of pre-qualified bidders to six, which could be further increased to seven in case of projects costing less than Rs.500 crore or for repetitive projects.

Also, in a consortium, the members in addition to holding 26 percent equity in the special purpose vehicle (SPV) must hold equity share capital equal to at least five percent of the total project cost for a period of two years after commissioning of the project.

Vasan said the changes have been proposed in the model Request for Qualification (RFQ) document so that only serious and stable bidders are in the fray.

The revised RFQ also has a penalty clause to prevent delays.

Last updated on Jul 13^th, 2009 at 18:33 pm IST--IANS

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