Govt extends Navi Mumbai airport bids by 15 days

Three bidders had decided not to participate citing project challenges and onerous bid conditions

The City and Industrial and Development Corporation (CIDCO) has extended the deadline for submission of Navi Mumbai airport project bids by a fortnight after it attracted only one bidder – GVK group. GVK will also have an opportunity to revise its offer if it so wishes.

The financial bids for the much-delayed Rs 16,000-crore project were to be submitted by 3 pm on Monday. Three qualified bidders -- GMR group, Tata Realty and Hiranandani Group-Zurich Airport consortium -- indicated they would not participate in the bids. They cited project challenges and onerous bid conditions for their decision.

The GVK group-led Mumbai International Airport Limited (MIAL) had submitted its financial offer, but the bid was not opened, as the government decided to give extra time to other companies for reconsidering their decision. 

In their submission to the government last month, GMR group had pointed out their key concerns, such as challenges in pre-development work, delay in land acquisition and rehabilitation and absence of stage two environmental clearance. 

GMR and Tata Realty have also expressed concerns regarding conflict of interest in awarding the pre-development work.

In a letter addressed to the state government last month, GMR Airport Limited President Sidharath Kapur had written that there was a conflict of interest situation as the agencies appointed for two pre-development works' packages were associates of MIAL. 

The GMR group, which has interests spanning from energy and infrastructure, runs Delhi and Hyderabad airports. Last August, it had won the bid for a second airport in Goa and has participated in over a dozen airport bids around the world. 

The group has a total debt of over Rs 47,000 crore and is divesting stakes in its road and energy projects to pare it down. The group's finances have also been impacted due to stress in their road and energy businesses.

In his letter, Kapur also highlighted the issue of capping of CIDCO's equity contribution at Rs 430 crore, irrespective of the project cost saying it will complicate financing of the project and impact long-term viability. The company had also raised doubts regarding the terms for repayment of the soft loan for pre-development work. The funds spent by CIDCO on pre-development work will be deemed as soft loan as per bid conditions.

Speaking on the issue, a government official said bidders have asserted that the completion of the project by December 2019 is an "unrealistic" deadline. 

All the issues which the bidders have raised were discussed with them before finalisation of the concession agreement, the official added. 

Now, the state government's project monitoring and implementation committee will have to take a call on whether to amend the bid conditions which would mean a further delay in the project.