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No takers for Karnataka Roads PPP - what happened?
Written By silkboard - 1 October, 2009
Infrastructure PPP Road Works KRDCL Roads Citizen Reports Karnataka Transportation Infrastructure
Newspapers had reported last week, but a public notice from KRDCL today provides the confirmation. Looks like there were no takers for GoK's ambitious state-wide road building program via PPP. Back in March, we were informed that there was "good response to this Mega PPP". Quoting Business-Standard, March 2009:
- 30 companies ... have shown interest in the pre-bid meeting held on Saturday
- The Karnataka highway project also has goodies ... not offered by the NHAI. “... award of land pockets to the developer to set up roadside amenities ... a source of ancillary revenue to the company,”...
The reality we learn today is that nobody may have come forward for 10K + 10K Km worth or Roads that were put up. So, what happened? Reports quoted some officials saying that market conditions are not good for infrastructure projects. Well, compared to late 2008 (when this PPP was conceived and unveiled), macroeconomic conditions seem to have only gotten better.
Goals of this Mega PPP Road building plan are good - quality connectivity throughout the state. Tier-2 cities, spreading Bangalore's prosperity around the state - all this needs good connectivity, so we should watch, track and support projects like this. I have been watching KRDCL as well as IDD (Infrastructure Development Department) websites once in a while to check after this project. No real information yet on how this will be re-tuned and relaunched.
All the roads in question are detailed in this sheet - look for 51 packages towards the end of this sheet: http://idd.kar.nic.in/Infraprojects.xls
And go to KRDCL site (http://krdcl.co.in/html/Tenders.html) to find this note:
The Bids for 51 Packages notified during January 2009 for Development of State Highways & Major District Roads on Public Private Partnership are hereby Canceled.
COMMENTS
RKCHARI - 1 October, 2009 - 10:38
Hi Suhas,
Have you seen the tenders floated seeking PPP from International Bidders for road reconstruction? They specify "A" , "B" and "C" grade contractors as being elicible! Which self respecting foreign company would want to demean itself by registering with the authorities on those conditions?
Moreover, tenders have only been called for traditional asphalting of roads. No invitation to providers of ecologically sustainable roads using newer technologies et al!
I suggest we should seriously take up the issue of throwing open all tenders to ALL bidders irrespective of whether they have "x" turnover in the last three years or irrespective of their technology being 'different'. Only then will we get worldwide participation.
And I seriously think Government should institutionalise corruption. Why not be like Gen. Suharto in Indonesia? He openly told every foreign supplier, please include 10% as official commission for the President's family. But he ensured the suppliers of goods and services supplied and provided the very best of material. In India, since quantum demanded could be anything from 0.5% to 25% of contract value, the foreign companies are simply flumuxed and are unable to quote the correct price. Then there is this corus about foreign goods and services being too expensive!
How can honest foreign companies do business with Government departments in India? Anybody with genuine, workable idea, please let me know. I will ensure an award is given to that person in recognision of the yeomen service he has provided to all foreign companies operating in India!!!
Why so much stress on "foreign"?
swamy - 1 October, 2009 - 10:59
Corruption gyaana and all that is ok, what is this foreign and india company item?
RKCHARI - 3 October, 2009 - 06:27
Hi Pranav,
Agree, my comments do smack of general frustration dealing with Government Departments in connection with our primary offer to attend to SWDs.
We are of course aware that only an Indian registered Company can participate in a government tender. We do have such a Company with requisite pedigree which does the implementation of our foreign Principal's solutions. In fact they collect the order and pass it on to our foreign Principals to provide solution and products - almost like sub-contracting work.
SWD's remodelling in intimately connected with ecological road building and maintenance, that is why we were interested in the first place. But when we saw the conditions of participating, we baulked and decided to give up on that score.
No I jhave personally not seen the KRDCL myself, but I believe our boys in our office had examined it and pointed out the problems in our weekly meetings. I will try and have a look myself, now that you mention it and find answers to your queries.
Regards,
Chari
silkboard - 1 October, 2009 - 11:17
Okay, so you are leading this towards corruption talk, I thought structure of this PPP (land based) and state's reputation with PPP is where this could have gone.
But anyway. Some questions on this stat: "since quantum demanded could be anything from 0.5% to 25% of contract value"
- Hearsay, or from experience? I have heard the 20% figure, but from 3rd parties, not from bidders directly
- How much is this quantum abroad? I have 'heard' around 7-10%. Don't tell me its zero, just can't be, not possible
The solution will perhaps play out like this:
- Transparency and better behavior from bidding businesses themselves. How will we all know this 20-25% numbers unless one of you speaks out and expose this? I know, its a risk - can ruin our business's government vertical, but only you can bell the cat.
- More volume, as in more projects. If there are lot more projects happening, the percentage "cuts" will reduce. Make small money on more transactions (it will add up big) as opposed to making big money on few transactions - hope I convey the point.
Anyway.
rs - 1 October, 2009 - 15:54
Given what happened to NICE - ten years and still not over - and endless litigation and fighting and corruption on all sides - why would anyone want to subject themselves to this ?
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