NHAI extended undue benefit to concessionaires via post-tender amendments: CAG

• The premium payable by the concessionaire was laid down in a legal contract drawn up after an open bidding process, in which premium offered was the one and only parameter in deciding upon the financial bids
• According to the CAG, the policy or scheme for rationalisation of premium was neither considered nor approved in the NHAI board meeting

New Delhi: The CAG (Comptroller and Auditor General) has pulled up state-owned NHAI (National Highways Authority of India) for extending "undue benefit to concessionaires by resorting to post-tender amendments." The CAG also said that the Ministry of Road Transport and Highways (MoRTH) failed to adhere to guidelines of the Cabinet Secretariat for circulation and approval of Cabinet notes. NHAI comes under the administrative control of the Union Ministry of Road Transport and Highways.

"NHAI extended undue benefit to concessionaires by resorting to post-tender amendments," the CAG said in a report tabled in Parliament on Thursday.

NHAI revised premium in legal contract after open bidding: CAG

"The premium payable by the concessionaire was laid down in a legal contract drawn up after an open bidding process, in which premium offered was the one and only parameter in deciding upon the financial bids (request for proposal)," the CAG said in the report.

National Highways are developed under different modes of execution including Build-Operate-Transfer (BOT) or toll, BOT (Annuity), and Engineering, Procurement & Construction (EPC).

In BOT (toll) projects, prospective bidders either quote Viability Gap Funding (VGF) payable to concessionaires or negative VGF/premium payable to NHAI by concessionaires.

"Any post-tender/contract amendment tantamounts to vitiating the entire tendering process, against the principle of sanctity of contracts and unfair with respect to other bidders," the government auditor added.

The CAG pointed out that the NHAI proposed a scheme of rationalisation of premium quoted by concessionaires in respect of highways projects. According to the auditor, the policy or scheme for rationalisation of premium was neither considered nor approved in the NHAI board meeting.

'Ensure prevailing provisions of concession agreements are followed'

The CAG suggested that NHAI may ensure prevailing provisions of concession agreements are followed before proposing any new scheme for granting concessions beyond contractual provisions.

It also recommended that NHAI should avoid post-tender/contract amendments.

"NHAI/MoRTH should abide by the extant rules, procedures and guidelines of government and present the full facts in its proposals, particularly in case of deviations," the CAG noted.

NHAI may consider introducing a mechanism to review the total project cost/debt to protect the interest of NHAI in the long term while keeping in reference the termination payments and debt servicing, it suggested.

The auditor also said that NHAI may ensure reasonable amount of bank guarantee to cover the risk of non-payment of deferred premium by the concessionaire to safeguard the government's interest.

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