Along this last week some of the clauses of the new Model Concession agreement (MCA) under study came to light. I consider them to be very positive for private firms as they are are being restudied in order to make projects more profiteable but also because private corporations need to feel safe when they bid for infrastructure projects, there is alot of money at stake. Here you can see them in detail:Highway developers face profit caps (September 28th)Under the existing system, National Highways Authority of India (NHAI) has to invite bids first on a build-operate-transfer (BOT) toll basis. Only failing to attract investors for a road project under toll model, NHAI awards annuity-based projects.So here is where the news may affect. Companies implementing highway development projects on annuity basis may not be allowed more than 18% profit on their investments as per a proposal under consideration of the ministry of shipping, road transport and highways. For developers in difficult areas, such as north-east, this ceiling will be 21%. Presently, the rate of return quoted by private players ranges between 10 and 25%.Currently return on investment (RoI) for an annuity-based road project is a biddable item where government pays project cost plus agreed RoI to the developer for construction of a highway stretch. Payments are made to the developer in several instalments.Reducing bidding security encashment to 5% of the total bank guarantee receivedDevelopers failing to qualify for a road project while placing price bids-request for proposal (RFP) stage-may not have to forgo their entire bank guarantee.In a bid to make the bidding process flexible and investor-friendly, the road transport and highways ministry is planning to reduce bidding security encashment to 5% of the total bank guarantee received for a project. At present, the entire bid security amount is forfeited in case the bid is declared non-responsive.A bid is considered `non-responsive' by the National Highways Authority of India (NHAI) even if a bidder fails to submit the auditor's certificate. Other reasons of a bid considered invalid are failing to give a memorandum of understanding (MoU) between bidding parties and inadequate documentation (documents not in proper format or minor omission in letter drafting9.Other recommendations made by a Comission formed by an empowered group of ministers:The threshold limit in the conflict of interest clause in the model concession agreement (MCA) for highway projects has been increased from 5 per cent to 25 per cent, which was recommended by the B K Chaturvedi Committee, set up to find ways to expedite various road projects in the country. This will allow any two special purpose vehicles (SPVs) with a common partner having up to 25 per cent stake for bidding for the same project.Earlier, any two SPVs in which any developer had more than 5 per cent shareholding each were barred from bidding for the same project. It was increased to 5 per cent in July this year from the earlier 1 per cent.Introduction of an 'exit clause':The exit clause allows the lead partner in an SPV to exit by selling its stake after the construction of the project is over. Earlier, it was mandated to stay till the completion of the concession period (ranging from 20 to 30 years).The 'termination clause' allows NHAI to take back tolling rights from a concessionaire anytime before the concession period is over, if the concessionaire has recovered its investment on the project.No forfeiting of security money deposited by the bidders if they are not present at the time of bid opening.