Construction of highways gets big push! Modi govt relaxes BOT/HAM norms to attract more participation

In a move that will attract more participation in the construction of highways, the government has relaxed technical and financial qualifications for bidders of national highway projects under hybrid annuity mode (HAM) and builds, operate, transfer (BOT) mode.

Under the modified rules, a bidder will be qualified to bid for a HAM project if it has a minimum net worth of 15% of the estimated project cost (EPC) at the close of the preceding financial year. Earlier, it was 25%.

Also, for both HAM and BOT projects, “the capital cost of the project should be more than 5% of the amount specified as the estimated project cost,” the ministry of road transport and highways said in a notification. This was “more than 10%” earlier.

It has also said that no prior experience of the bidder is required for constructing tunnels up to 200 meters and bridges up to 60 meters length.

The ministry has also widened construction experience in segments such as stadium, hospitals, hotel, smart city, warehouse/silos, oil & gas and real estate development work as part of the technical qualification for both HAM and BOT projects.

Earlier, this was confined to areas like civil construction of power sector, commercial set ups, airports, industrial estates, logistic parks, pipelines, irrigation and water supply as part of pre-requisite technical expertise.

“The widening of the scope for technical bids and relaxation in financial capacity will certainly enhance competition in the highways sector,” said Rajeshwar Burla, vice president, Icra Ratings.