The Hindu Business Line : Bharti-Changi pulls out of airport project

THE Government's ambitious programme for modernisation and restructuring of Delhi and Mumbai airports has run into a rough patch. On Monday, one of the bidders, the Bharti Group expressed its inability to participate in the project because its consortium partner, Changi airport of Singapore, said it was not confident about meeting some of the conditions set in the tender.

With the Bharti-Changi consortium pulling out, seven companies, including Reliance, GMR, GVK and L&T, are still in the fray. The seven shortlisted bidders have two more days to submit their bids, but there is a possibility that some more consortia may also pull out on the same grounds that Changi airport has done.

Although no reasons have been given for the sudden volte-face by Changi, the Singapore company was said to be unhappy about the $80-million penalty which would have to be borne by the foreign partner alone, in case the consortium winning the bid to modernise and restructure the two airports was unable to meet the Government laid down standards. This clause is said to have upset several of the bidders, though no one has said so openly as yet.

In Mumbai, sources close to another bidding consortium, Piramal-Hochtief said that while certain issues had been raised by foreign airport operator, it would be "premature to say whether the consortium was in or out of the project." A decision was expected by Tuesday, the sources said. Hochtief, which manages airports in Germany, is said to have raised issues connected with performance bonds for the joint venture company, the airport operator as also equity guarantee bonds.

Government sources were, however, confident that the modernisation of the two airports would not be jeopardised since dropping out by some of the bidders in such projects was not an unusual phenomenon.

Bharti had initially teamed up only with Changi. However, later the Delhi-based DLF Universal Ltd was included in the consortium. The decision of Changi, in effect, puts an end to the consortium bid, as the Government has stipulated that the successful bidder must have an airport operator in the consortium. With the last date for firming up partners already having passed, the consortium was left with no choice but to withdraw from the race.

"Bharti is dismayed at this development, as it was very enthusiastic about participating in this opportunity to create a world-class airport in Delhi. It had chosen Changi as its partner based on the reputation of Changi airport being the best in its class anywhere in the world. However, its efforts have been frustrated with Changi's unwillingness to commit to the key terms of the tender conditions," the company said in a statement.

The statement added that Bharti and DLF feel that while the conditions laid down in the tender were challenging, they could be met with commitment from all partners. "Bharti and DLF are confident about building a world-class airport at Delhi, complying with all the terms of the tender. However, they cannot proceed without the commitment of Changi, as it is an essential qualification criteria to have an airport operator participate in the bidding process," the statement adds.

This is the second time in the last decade that Changi airport has withdrawn from an airport project in India after showing considerable interest. Earlier, in the mid-90s, Changi had shown an interest in participating in the development of the greenfield airport project in Bangalore and had also tied up with the Tatas. However, at that time too, Changi decided to pull out of the project.

The entities participating in the modernisation process include Piramal Holdings Ltd, GMR Infrastructure Ltd, GVK Industries, DS Construction Ltd, Starlite Infrastructure Ltd, Pan India Paryatan Ltd and Reliance Airport Developers Pvt Ltd.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Home textiles - the next big opportunity

JP Morgan in talks to buy stake in Andhra Cements

Ranbaxy guns for Pfizer's $12-b cholesterol drug — Generic cos watch blockbuster battle closely

Negative growth in electricity, mining pulls down IIP in July

Bharti-Changi pulls out of airport project

Sensex climb continues, touches 8,138

Bandwidth rates in India among highest — TRAI justifies price regulation