Contractors line up for govt-funded projects

October 29, 2012

NEW DELHI: Highway contractors, who have been facing financial crunch, have lined up for road projects to be built with 100% government funding. In the past two weeks, at least 50-60 companies for each such project on engineering-procurement-construction (EPC) mode have applied for pre-qualification to bid for these works.

Initially, National Highways Authority of India (NHAI) has identified eight such projects in Rajasthan and the second set of such works in Uttar Pradesh would be out soon. “All types of road construction companies including the big ones like L&T, GMR and Gammon have applied for pre-qualification. We expect good response when financial bidding starts,” a senior NHAI official said. All the eight projects in Rajasthan are in the range of Rs 200 crore to Rs 500 crore. Officials said projects have been designed in a manner where contractors won’t get more than 10% profit in executing these works.

Industry insiders said that response for such projects is much more since companies don’t need to raise loans from banks.The risk of EPC projects is with the government. “You will get back the entire amount. All responsibilities of clearances are with government. There is no need to invest from your pocket whereas in the build-operate-transfer (BOT) projects, getting loan has become difficult,” a private contractor said.

Source: http://timesofindia.indiatimes.com