6 bid for Delhi, Mumbai airports

Govt defends 'foreign penalty' clause.

In spite of two high-profile consortia dropping out over the last two days, the government accepted six technical and financial bids for the modernisation and privatisation of the Delhi and Mumbai airports as the deadline for submitting the bids expired today.

Five consortia "" GMR-Fraport, Reliance-ASA (a Mexican airport operator), DS Construction-Munich Airport, Sterlite-Macquire Bank-Airport de Paris, and Essel group (Zee)-TAV (of Turkey) "" bid for both Delhi and Mumbai airports. The GVK-South African Airport Operator combine bid only for Mumbai.

It could have so easily been just five bidders. Essel's bid almost got rejected as its executives reached just minutes after the 5 pm deadline expired.

"We were in time inside the building (the civil aviation ministry's headquarters) and were forcibly stopped by competitors who created a commotion intentionally by calling us unauthorised people," said Ashish Kaul, senior vice-president, corporate brand development, the Essel group.

Rival bidders are contemplating a formal complaint against the acceptance of the Essel bid.

The bids now go for evaluation. Technical aspects of the bids will be evaluated first and then the financial part. The winner is expected to be declared by the end of this calendar year.

"We are very happy with the response. It is a very competitive number. We will complete the selection within this year," said Civil Aviation Secretary Ajay Prasad.

Prasad ruled out any changes in the bid conditions, some of which had been cited as the reasons why the Bharti-Changi-DLF consortium on Monday and the L&T-Hochtief Airport combine yesterday pulled out of the race.

"There will be no redrafting of the document or extension of the deadline. The documents have been prepared in consultation with the companies. If six companies can accept it, why can't two more," he asked.

The government has been under pressure to jettison the privatisation programme, or at least redraft the conditions, more so after these companies dropped out. In fact, a section within the government is believed to be in favour of a change in the conditions.

The most controversial condition is the one that puts the onus on the airport operator partner "" there is one in every consortium "" to meet certain performance conditions.

Under the conditions, if operational and functional requirements relating to handling of passengers and aircraft are not met, the foreign airport operator in a winning consortium will attract penalties to the tune $80 million.

Prasad said the companies that had withdrawn from the bidding also had objections to the modernisation timetable. In the first phase of five years, the consortium that wins the bid is expected to spend Rs 2,800 crore for developing the Delhi airport and Rs 2,600 crore for developing the Mumbai airport.

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