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October 22, 2014
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NMDC tender shocks big infra cos
METRO NEWS/HYDERABAD : A strange clause introduced by a private consultant engaged by public sector giant National Mineral Development Corporation (NMDC) for participating in tenders to execute its green field integrated steel plat at Nagarnar near Jagdalpur in Chhattisgarh has virtually eliminated top infrastructure companies from the race.
NMDC had engaged MECON, a Ranchi-based consultant in February 2011 for Engineering, Design and Consultancy services for the `15,525 crore Nagarnar steel plant. The consultant is expected to provide various services including procurement, basic and detailed engineering, designer’s supervision, inspection, assistance in commissioning and others.

While five major packages of the steel plant worth `6,500 crore had already been awarded, the NMDC called for tenders for two more packages last month: one for construction of earthen reservoir, raw water pump house, make-up and drinking water treatment plant and distribution; and the other package for construction of intake well, pump house and cross country pipeline.The tender value of the first package is `558 crore and that of second package is `414 crore. The last date for submission of bids for these two packages is November 19 and 18 respectively.

A tender clause for its Chhattisgarh steel plant to eliminate big players from bidding race
What is surprising is the tender clause incorporated by the consultant for the NMDC for both the packages. It says contractors bidding for these packages should have made profits for three consecutive financial years ending March 31, 2013. This has come as a rude shock to several big infrastructure companies, which have been facing huge debt burden as a fallout of rising interest costs and decreasing margins, thanks to sluggish economy that has taken a toll on growth.

While five major packages of the steel plant worth `6,500 cr had already been awarded, NMDC called for tenders for two more packages in Oct
“Leave alone making profits for the last three financial years, these top infrastructure companies including Gammon, Soma, Hindustan Construction Company (HCC) etc, have not able to get out of their debts. According to a latest report, since January, at least 10 Indian companies, mostly infrastructure giants like GMR, IVRCL, Adani group and Jaypee group have either sold or announced the sale of assets, in a bid to overcome debt burden of over `35,800 crore.In such a situation, the condition imposed by the NMDC for its Nagarnar plant is absolutely shocking,” a source from a prominent infrastructure group said.

According to sources, the NMDC has introduced the clause obviously to benefit a select group of infra companies. “Superficially, the clause appears to have been introduced only to get genuine companies with strong financials, it virtually eliminates big players as they have been incurring losses. As a result, only mid-size or average infrastructure companies who could be making profits for three consecutive years would be left in the race for the NMDC contract. Thus, the competition is restricted only to a few companies,” sources said.The Nagarnar plant is based on HiSmelt technology and the NMDC expects to commission the plant by September 2015, as against the six years required in conventional plants.
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