The Hindu Business Line : Conflict of interest: Highways Ministry trying for out-of-court settlement

New Delhi, Oct. 22 The Road Transport and Highways Ministry has initiated talks for an out-of-court settlement with GVK and Navinya Buildcon on the conflict of interest issue that is plaguing the highway development programme.

Reliable sources from both the Government and industry have confirmed this to Business Line. But, as the talks are at informal levels and no agreement has been reached yet, people involved in the process are not willing to be quoted.

GVK moved the Delhi High Court, and Tata Realty and Infrastructure Ltd subsidiary Navinya Buildcon the Supreme Court after being disqualified by the National Highways Authority of India (NHAI) under the conflict of interest clause for certain projects.

The Road Transport Minister, Mr Kamal Nath, had expressed his unhappiness over the impasse.

The NHAI has been shifting the financial bid due dates of projects for about three weeks now.

It is waiting for implementation of the recommendation of the Committee headed by Mr B.K. Chaturvedi, Member, Planning Commission.

The Committee has called for relaxing the clause to 25 per cent levels instead of the current five per cent levels.

In the negotiation with highway developers, the affected parties want a retrospective implementation of the clause, which the Ministry is finding difficult to implement.

“If we implement the clause on a retrospective basis, those who have been awarded the projects may move court,” Mr Nath said recently.

He had earlier said that the Ministry will take a legal view on whether some of the Chaturvedi Committee recommendations can be implemented with retrospective effect.

The conflict of interest clause prohibits competing bidders from having common shareholding of over five per cent at request for proposal levels.

This leaves a lot to interpretation.

For instance, in the Kishangarh-Ajmer-Beawar project, the NHAI forfeited the Rs 14-crore bid security of Navinya-Atlantia consortium because Abertis (a foreign partner of another shortlisted bidder) had 6.68 per cent stake in Atlantia.

This was despite the fact that IDFC-IJM-Abertis did not submit its financial bid in the RFP stage for the project.

In this project, as emerged later, Navinya had the best bid offer for the project.

But the NHAI awarded the bid to the Soma-Isolux consortium after Navinya was disqualified.

In the Kishangarh-Udaipur project, three short-listed consortia of bidders IL&FS Transportation, GVK-Leighton and Oriental Structure Engineers-Gayatri-Continental Engineers have been disqualified under the same clause.

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Conflict of interest: Highways Ministry trying for out-of-court settlement