The Telangana government has reportedly decided to ensure that contracts for the over Rs 13,000-crore hybrid annuity model (HAM) road project are awarded at a maximum of 5% excess bid, following allegations of contractors forming a syndicate and quoting up to 23% excess bids. The project, aimed at developing roads across the state, has been delayed by almost a year.
Background of the HAM Road Project
When the Roads and Buildings Department invited tenders last year, few contractors came forward. After a meeting with contractors, tenders were floated again, attracting many companies including Megha Engineering, Raghava Constructions, KNR, and Bhrunda Infra. However, the bid amounts exceeded the estimated cost by up to 23%.
Contractors' Defense
Contractors denied any syndicate or irregularity, stating that the contract was not finalized. A contractors' association representative, DVN Reddy, explained that the high quotes were due to the requirement to take a loan for 60% of the project cost, which the government would repay over 15 years. He said, "We calculated the interest on the 60% loan and GST on it, which came to over 9% and 18%, respectively. The issue was explained to officials."
Government Response and Cabinet Approval
After evaluating HAM road projects in other states, the report was submitted to Chief Minister A Revanth Reddy. He reportedly instructed officials to address genuine contractor demands, such as paying GST during construction and excluding mandatory patrolling and ambulance vehicle clauses. Consequently, the project conditions were revised and presented to the cabinet on Saturday.
A government source said, "The cabinet gave in-principle approval to the HAM roads project with a rider that the bid amount should not exceed 5%, which is permissible as per rules. Now, the ball is in the contractors' court. If all goes well, the HAM roads project will be launched on June 2."
Contractors' Next Steps
Contractors have stated they will meet within a day or two to make a final decision on the revised terms.
