MMRDA may reimburse bidders for infra projects

The Mumbai Metropolitan Region Development Authority may soon reimburse companies that bid for infrastructure projects in the city.

The Mumbai Metropolitan Region Development Authority (MMRDA) may soon reimburse companies that bid for infrastructure projects in the city.

HT Image

The state planning body, which has been facing difficulty in finding bidders for capital-intensive projects for the past few years, has decided to reimburse the top two companies that have lost out on securing the bid for these projects.

"We want the best companies to bid for our projects. We have decided to reimburse bidders the entire amount they spent on the bidding process,” said metropolitan commissioner Rahul Asthana.

MMRDA’s move comes after the planning body realised that the high degree of financial risk involved in bidding is keeping competent bidders away from its big-ticket projects.

The cost of bidding includes the money spent on preparing and submitting tenders and technical plans of how the company plans to build these projects.

For this, the bidding companies have to hire top architects and planners, the cost of which can be around Rs4-5.5 crore. If the company does not win the bid, the entire sum of money spent on the project is lost.

"The enormous cost we have to bear for bidding for MMRDA’s projects is a huge setback. A serious bid for an infrastructure project in Mumbai can easily cost Rs4-5 crore," said a senior official of a leading infrastructure firm in the city.

"Under the present market conditions, not many companies are willing to do this," he added.

In February 2009, all companies bidding for the Rs8,500-crore Charkop-Bandra-Mankhurd Metro line backed out from submitting their financial bids.

The bids were only submitted after MMRDA changed a few rules.

In 2008, MMRDA faced problems when no bidder showed up to take part in the bidding process of the Rs12,000-crore Mumbai Trans Harbour Link.