GMR may bid for Navi Mumbai Airport

Changes in project conditions have been made

GMR Group may submit a bid for the Navi Mumbai airport following changes in airport project conditions.

The changes in the project conditions have been made after GMR Group and Tata Realty raised concerns about onerous bid conditions and the submission  for airport project was twice extended after it attracted only a single bidder – GVK group-led Mumbai International Airport Limited.

According to industry sources GMR Group is  now considering bid submission following the changes in the concession agreement though the company is yet to take a final call.  A  Tata Realty spokesperson said the company would not be bidding for the project.  The final date for bid submission is February 13.

“CIDCO has agreed to make these changes in the bid terms regarding project execution and risk mitigation measures which the bidders are looking at,” said a source aware of the development.

The Rs 16,000 crore airport project will be carried out through public-private partnership. Project implementing authority CIDCO will bear the cost of pre development works and the amount will be treated as a loan to the project developer.

One of the changes in concession agreement is extension to the repayment period of soft loan from 11 years to 15 years and the other is to cap the soft loan to around Rs 3,500 crore and not the actual cost.

According to original condition, out of the total amount of Rs 3,420 crore spent on pre-development works Rs 430 crore will be treated as CIDCO’s equity contribution and the remaining as soft loan to be repaid in five equal installments from the 11th year.

Detailed queries sent to GMR group were not responded to at the time of going to press. Business Standard could not ascertain if the Hiranandani group which is also shortlisted for the bids is participating in the process.

In their letter to Maharashtra Chief Minister Devendra Fadnavis, the GMR Group had pointed out that repayment of the soft loan from the 11th year would result in a burden of paying Rs 600 crore from the sixth year, impacting the debt repayment capability of the bidder.

Besides that CIDCO had also agreed not to penalise the developer in case of any delay in the project. “This was very important as the successful bidder would have been penalised in case of any land development delay leading to a delay in execution of the project,” the person said.

Last month the three shortlisted bidders, the GMR group, the Tatas and the Hiranandani-Zurich Airport consortium, pulled out of the project citing unresolved issues and onerous bid conditions. This had thrown the process into jeopardy as it was left with a single bidder, the GVK Group led-Mumbai International Airport Limited (MIAL), as the sole qualified bidder.