Top companies give NHAI bidding a miss

Inadequate funding and non-viability of some projects have forced several leading infrastructure development firms to stay out of bidding for over 13 highway projects worth over Rs 12,500 crore (Rs 125 billion).

As a result, no company turned up for the final stages of the bidding for these projects, floated by the National Highways Authority of India (NHAI), in the last two days.

The NHAI had invited requests-for-proposal (RFPs) for 20 highway projects. Of these, only seven could receive financial bids from eligible highway developers, sources said.

These projects were planned under various phases of the National Highway Development Programme, or the NHDP, to be implemented through public private partnership (PPP).

Major companies that did not take part in the final stages of bidding include Maytas Infra, Gammon Infrastructure, GMR Infra, Punj Lloyd, Nagarjuna Construction Company and Soma Enterprises, industry sources said.

Senior NHAI officials, however, said the response to seven of the 20 projects was good. "Even during times of such severe economic recession where liquidity has virtually dried up, we are seeing positive response from highway developers for a few highway projects that are looking commercially viable," said a senior NHAI official.

But private players offer a different view. "Currently, most highway projects are not financially viable because of faulty traffic projections and estimated project costs. Unless the NHAI restructures these projects, we won't participate," said a senior executive of an infrastructure company which did not take part in the financial bidding after being qualified in the technical stage.

The government recently took steps to attract private developers by raising the total project cost of highway projects by as much as 20 per cent. The move was aimed at helping developers get more government funds. But contractors said the revision in the project cost by 20 per cent was not sufficient in a majority of the cases since the actual cost was 25-60 per cent than the estimated cost.

The NHAI had recently awarded three highway projects worth Rs 2,150 crore (Rs 21.50 billion) on a revenue-share basis. These include the 60-km Pimpalgaon-Nashik-Gonde project costing Rs 752 crore (Rs 7.52 billion), the 97-km MP/Maharashtra-Dhule project worth Rs 675 crore (Rs 6.75 billion) and the 58-km Kishangarh-Ajmer-Beawar project costing Rs 724 crore (Rs 7.24 billion).