Ministry asks states to ease bid performance and security for power project bids


The Ministry of Power ordered state governments and Union Territory (UT) governments to relax performance guarantee and down payment requirements for energy project bids. He also called on states and UTs to refrain from requiring additional security deposits for abnormally low bids.

The ministry sent a directive to reduce the performance guarantee from the existing 5-10% to 3% of the contract value for all existing contracts. The guidance is in line with the ministry notification issued in November 2020.

After receiving requests from developers to reduce the amount of security deposits in public procurement, the Ministry of Finance decided to reduce the performance guarantee.

However, the relaxation would not apply to disputed contracts for which legal proceedings have already started or have ended. According to the notification, all offers and contracts concluded before December 31, 2021 would also come with the reduced performance guarantee.

The reduction in the performance guarantee will continue for the duration of the contract, and there would be no increase even after December 31, 2021.

The government had received requests for reduced performance safety in the wake of the Covid-19 pandemic, which resulted in an acute financial crisis affecting the on-time delivery of projects.

The finance ministry also said micro, small and medium-sized enterprises (MSMEs) should be exempt from the bid bond or deposit deposit. As an alternative, MSME bidders must sign the “Bid Guarantee Statement” agreeing that if they withdraw or modify their bids during the validity period, they will be suspended for the period specified in the bidding documents. .

The ministry also ordered not to have additional security deposit and bank guarantee clauses in case of abnormally low bids.

The relaxation would apply to the acquisition of goods, works, advice and non-advisory services.

Mercom previously reported that developers believed the costs of participating in large-scale solar tenders had reduced their ability to bid on other projects. These costs, added to delays and prolonged tenders, had tied up millions in the form of bank guarantees.

Mercom’s high-end event, the Mercom India Solar Summit, to be held virtually on April 8-9, features an exclusive session on “Tenders and Auctions – From Pipeline to PPAs, How We Get There”. You can click here to register for the event.

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