Fresh tenders mooted for New Delhi station upgrade

New Delhi, Oct 8 (IANS) The railway ministry has decided to drop a clause in the tender for the New Delhi railway station's modernisation project that bars companies from bidding if they have stakeholders who also own shares in rival bidder firms.

'As per the suggestion by the finance ministry, the railway ministry is going to scrap the current tender and is going to re-invite bids for this project,' a senior railway board official, requesting anonymity, told IANS.

The railway ministry had about a month ago invited bids for the modernisation of the New Delhi station on the lines of a design prepared by Hong Kong-based consultancy Terry Farrell.

An investment of Rs.60 billion (about $1.3 billion) has been earmarked for the project.

The project attracted many national and foreign firms such as Larsen and Toubro, DLF, Emaar-MGF, Reliance Infrastructure, Maytas Infra, Indiabulls Real Estate, GVK, Mitsui, Leighton, China Railways 18th Bureau Group and Deutsche Bahn.

However, the bidding process had been stalled because of the cross-ownership issue.

One of the clauses in the request for qualification (RFQ) for the project specified that bidders with common controlling shareholders or other ownership interest cannot compete as it could lead to 'conflict of interest'.

It also said the levels of direct or indirect shareholding by an individual or firm in one bidder company should not be over five percent of its paid-up capital and subscribed capital, and not more than one percent in another bidder.

'Because of this clause, most private bidders faced disqualification. We are targeting to complete the project before the Commonwealth Games in 2010. So the matter was referred to the finiance ministry for advice, and it suggested the scrapping of the tenders and re-inviting bids,' the official said.

'The finance ministry has suggested that if this clause stalls the project, it was more advisable to drop it and float the tender again,' he added.

But the delay has already deterred many investors.

'The bidding process is too time-consuming. Also, if it is inviting private bidders, it should have examined all the clauses carefully. The whole process needs to be more transparent so that everyone gets a fair share,' said a senior official from Larson and Toubro.

The Rs.60-billion project is significant because on it hinges the railways' plans to open up more than 20 other railway stations for modernisation through private sector participation.