Bharti pulls out of airport race

Mittal takes Changi's cue over penalty clause.

The government's programme to modernise and privatise the Mumbai and Delhi airports suffered a severe setback today with a high-profile bidder "" the consortium of Bharti Enterprises, Singapore's Changi Airports and construction major DLF Ltd"" pulling out of the bidding process.

To add to the government's woes, a Mumbai-based bidder, too, is believed to have communicated its inability to be a part of the bidding, while another bidder is expected to follow suit by Wednesday, the deadline for submitting the financial and technical bids.

The decision by the Bharti-Changi-DLF combine comes amid mounting pressure on the government from the Left parties to jettison the programme.

The consortium, according to a Bharti statement, has dropped out because the Singaporean company has conveyed that it is not confident of meeting the conditions set in the tender.

The condition in question here is believed to be the one that puts the onus on the airport partner to meet certain performance conditions. The conditions say that if operational and functional requirements relating to handling of passengers and aircraft are not met, only the foreign airport operator in a winning consortium will attract penalties, to the tune $80 million.

"Changi Airport of Singapore has conveyed that it is not confident about meeting the conditions set in the tender. Bharti and DLF both feel that while the conditions laid down in the tender are challenging, they can be met with commitment from all partners," said Rajan Mittal, joint managing director, Bharti Enterprises.

About the possibility of the consortium looking for another airport operator to replace Changi, Mittal said, "It is too late for us to look for another partner."

Sources close to the development said the announcement came after a series of parleys among Bharti, DLF and Changi over the past few days. But Changi remained unconvinced.

The consortium had to pull out as every bidding consortium needs to have an airport operator in it to be eligible.

"Both Bharti and DLF are confident about building a world-class airport in Delhi, complying with all the terms of the tender. However, they cannot proceed without the commitment of Changi, as it is an essential qualification criterion to have an airport operator participate in the bidding process....It (Bharti) 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," said a Bharti statement.

Civil aviation ministry officials said other foreign partners in the bidding consortia, too, were not happy with the conditions set in the tender document.

But a top official of the ministry said the government was confident of going ahead with the privatisation programme. He also ruled out any redrafting of the tender document.

Bharti's exit leaves seven consortia in the fray, one each led by Reliance, Essel, Larsen and Toubro, the GMR group, the GVK group, Macquire Bank and DS Construction.

When the government first launched the privatisation project, there were nine companies in the fray. Subsequently, the consortia led by Videocon and DLF backed out. DLF later joined the Bharti consortium.