Credit line Certificate

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Credit line Certificate

Post by tinV on Thu Jul 26, 2012 2:25 pm

is the winning bidder allowed to make a full drawdown of its CLC (alternative for NFCC) even though the project is still on its 1st year of implementation? Contract is for 3 years?

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Re: Credit line Certificate

Post by regina avelino on Thu Jul 26, 2012 3:08 pm

I don't think that there is any prohibition against winning bidder being allowed by banks to make full drawdowns of its LC however, i believe this is a sign of lack of liquidity on the part of the winning bidder to finance the project. If this happened, the winning bidder may have fund shortage at the early stage of a 3 year project/contract. My opinion on the matter.

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Re: Credit line Certificate

Post by tinV on Thu Jul 26, 2012 6:45 pm

Thank you for the info. So if winning bidder is allowed to make a full drawdown of its CLC, is it still in consonance with the requirement that CLC must be valid until the contract's intended completion date? Technically, if winning bidder makes a full draw-down during the first year, then credit line has been exhausted.
Can the Procuring entity require that another CLC be submitted in lieu of the first CLC?

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Re: Credit line Certificate

Post by regina avelino on Fri Jul 27, 2012 10:36 am

CLC is a document which establishes a bidder’s financial capability based on the commitment by a universal/commercial bank to issue CLC of 10% of the ABC in favor of the bidder once contract is awarded. If the bidder who submitted a CLC as part of its financial eligibility is awarded the contract, the bank must fulfill its commitment by issuing the actual credit line to the bidder. Such credit line shall then be submitted by the bidder to the procuring entity as required under Section 37.2.3.e of RA 9184. There is no need for the procuring entity to require replacement of the exhausted CLC as this is an option granted to the bidder to use the CLC to finance the project. In my opinion, if the contractor/bidder has sufficient cash to finance the project, the contract may not be able to utilize the CLC or if they want to use it, it would be on the latter part of the project duration. Eventhough in my personal opinion that it's a sign of liquidity issue on the part of the contractor, what the procuring entity should monitor is the possibility of slippages which maybe a result of liquidity problem of the contractor. Or perhaps its been the practice of the contractor to use the LC to finance the project from other government agencies but still able to finish the projects without slippage.

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Re: Credit line Certificate

Post by adminoffice on Fri May 16, 2014 3:50 pm

Hi, I want to clarify certain issues about the credit line certificate. One of the procuring entity specifies during the pre-bid that  they will not accept a credit line certificate (CLC issued by Commercial or Universal Bank) during the bidding, only those suppliers who can provide an NFCC  will be counted. Is it a ground for disqualification for a certain bidder submitting a CLC instead of NFCC? The reason why we could not submit an NFCC since the amount is below the ABC. Thank you.

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Re: Credit line Certificate

Post by regina avelino on Thu May 22, 2014 12:44 pm

Credit Line Commitment/Certificate shall no longer be accepted as an alternative to the prospective bidder's computation of the NFCC. This is the latest provided under GPPB Resolutions 20-2013 dated July 30, 2013 amending sections 23.1(a)(vi), 23.5.1.4 and 23.5.2.6

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