Airport project hits air pocket, bidding put off

Govt finds holes in papers, wants redraft.

A day before tomorrow's deadline for submitting the bids for the privatisation of the Delhi and Mumbai airports, the empowered group of ministers (EGoM) found loopholes in the transaction document and asked for it to be redrafted.

"The transaction documents will be redrafted. Subsequent to the civil aviation ministry finalising the documents, these will be cleared by the law ministry," Civil Aviation Minister Praful Patel said.

Once finalised, the documents will be circulated among the bidders who will have a fortnight to submit bids. It will take another eight weeks to examine their technical and financial bids and shortlist the final bidders.

In the original schedule, the privatisation process was to be complete by August this year, a deadline that is sure to be breached.

Sources said the EGoM agreed that the privatisation "" the biggest infrastructure privatisation initiative by the United Progressive Alliance government "" in its current format could be counterproductive and lead to legal wrangles.

The objections came mainly from the finance ministry, the Planning Commission and the Attorney General. The Planning Commission raised issues regarding the role of property developers in the privatisation. In the current format, it said, the exercise could end up as merely a real estate development project.

It also objected to the Civil Aviation Ministry's emphasis on developing the city side of the airports.

The Finance Ministry said ways should be explored to raise the government's share of airports' revenue from the proposed 24 per cent.

The issue of giving the winning bidder the first right of refusal to participate in any airport project within the vicinity of the two airports also came under fire at the EGoM's meeting.

The EGoM also decided today that the airports will be handed over to the successful bidders in their current state and the clearing of land and evacuation of dwellers will have to be undertaken by the winner.

The bidders had urged the government to hand over the airports after clearing the airport.

What may have also prompted postponement of tomorrow's deadline is the fact that some bidding consortiums have not been finalised. The bidders had also sought clarifications on the bid documents. "The concerns raised by the bidders too will be addressed," Patel said.

According to the Civil Aviation Ministry's estimates, modernisation of the Delhi airport will cost Rs 8,720 crore and that of Mumbai's Rs 6, 400 crore.

The two airports are being modernised and restructured through the joint venture route, with Airports Authority of India (AAI) holding 26 per cent equity in the venture and the rest open to the private sector.

Seven consortiums led by Reliance, Bharti, Essel, L&T, GMR Group, GVK Group and Macquire Bank have been shortlisted for bidding for the two airports. From the original list of nine bidders, the consortiums led by Videocon and DLF have dropped out. DLF subsequently joined Bharti's consortium.

Party poopers

Planning Commission: The exercise will end up as a mere real estate development project

Finance ministry: Increase the government's share of the revenue

Attorney-General: Could lead to legal wrangles

Bidders: Clear the land before handover