PPP norms revisited: only serious bidders welcome

The existing norms governing the pre-qualification of bidders for infrastructure projects that are proposed to be built under the public–private partnership (PPP) model have been widely debated. They are generally criticized by prospective bidders as hindering private initiative in infrastructure projects. In an attempt to address some of the concerns of bidders regarding the pre-qualification norms for PPP projects – most particularly, the Request for Qualification (RFQ) norms – the Ministry of Finance in a notification dated 18 May revised and revamped the RFQ guidelines, removing many of the bottlenecks that have long plagued the award of infrastructure projects.

RFQ is the first stage in the bidder selection process in relation to an infrastructure project. It is conducted in order to arrive at a short list of prequalified applicants, which are then asked to submit bids for the proposed project. Through this process the government identifies credible and serious bidders which possess the appropriate financial and technical qualifications to undertake the proposed project.

The old order and the new look

The earlier bidding norms placed several impediments in the way of private players wishing to participate in infrastructure projects. The RFQ guidelines did not permit any one member of a bidding consortium to hold a more than 1% interest (directly or indirectly) in any member of the other bidding consortiums. Intended to forestall conflicts of interest, this restriction was much criticized as it severely limited the number of eligible bidders for a particular infrastructure project. As a result, many projects could not attract the minimum number of bids required by the tender process and were therefore stalled indefinitely. Moreover, many bidders were often not even aware of the interest or common shareholding of a group company in another bidder.

Dinesh Pardasani is a counsel in the Delhi office of Trilegal, where Varun Nair is an associate. Trilegal is a full service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.. The firm has over 100 lawyers, some of whom have experience with law firms in the United States, the United Kingdom and Japan.