Paper No.

670

the key to unlock the value for money achievement
in the PPP projects and contribute to stakeholder’s
satisfaction. Realization of these benefits in PPPs
is highly contingent on the proper selection of PQ
criteria and the design of the corresponding limits.
The responsibility of PQ design for PPP mode vests
in the hands of governments/granting authorities.
Potter and Sanvido11 have noted that public sector
should be careful in crafting the pre qualification
criteria and limits and the corresponding selection
process to ensure a stable and transparent evaluation
procedure. Generally, the governments tend to seek
bidders with proven track records in the similar
projects but the participation of bidders with right
set of experience and track records depends on:
(i) size and attractiveness of the market to be
served, and (ii) sector and number of established
firms currently operating in the market (world
market in case of international competitive bidding
and national market in case of national competitive
bidding). In view of this, prior to setting the
pre qualification limits, the governments often
undertake a preliminary road show to promote the
project and based on which the degree of investors’
interest is assessed. Kerf et al.2 have stated that
such practice will enable the governments in
setting the pre qualification limits appropriately
so that sufficient number of bidders participate
in the bidding process. On the other hand, as the
Table 1 Prequalification Criteria in Private Infrastructure Transactions
efforts and costs involved in bid preparation and
bid evaluation are enormous, it is a practice to set
a limit on the number of pre qualified, short listed
bidders12. Estache & Iimi4 have emphasised that
the selection criteria for pre qualification normally
serve to ensure objective assessment of the private
party interested in bidding for the project. Its main
purpose is not only to include the bidder who would
be capable of executing the project in a worth
manner but also to help in short listing and limiting
the number of bidders to a manageable size. In
view of this, European Union has established an
over arching procurement process with separate
procedures for handling different sizes of bidders,
such as (1) open procedure – no pre qualification
and no limit on number of the bidders (2) restricted
procedure – number of bidders may be limited to 5;
(3) negotiated procedures – number of bidders may
be limited to 3; (4) competitive dialogue – number
of bidders may be limited to 35. This highlights
the fact that the design of the procurement process
inherently plays a key role in limiting the number
of bidders that will be allowed to participate in
the bidding process. These four EU procedures
of selection vary in the detail of information
required during the tendering process6. Thus, the
procurement procedures have to be designed in
terms of the informational aspects beforehand so
that the desired number of qualified bidders is
allowed to participate in the bidding process.

Sector Technical Criteria Financial criteria Countries

Electricity Customers and energy sales per worker, Minimum total value of assets and net Peru,
total consumers and energy sales work Argentina
Natural Gas Documentation of technical and Documentation of financial capacity Mexico
administrative capacity
Transport Demonstrated legal, technical, and Demonstrated financial capacity Mexico
administrative capacity
Capacity of bidders to design, build, Capacity of bidders to finance road Hungary
maintain, and operate toll road without state aid.
Water Minimum population of largest city and Minimum requirements for total Argentina
aggregate population served by bidder annual billing and net share capital;
consortium shareholding distribution
regime
Consortia must include water operator with Minimum net worth and maximum Bolivia
minimum experience and extent of service debt to equity ratio of operator
Source: adopted from (Kerf et al., 1998, pg 74)2

Journal of the indian Roads Congress, July - September, 2017 93