Airports privatisation gets another knock

L&T-led consortium, too, pulls out of bidding process.

The government's plans to privatise and modernise the Mumbai and Delhi airports received another blow today with the Larsen & Toubro-led three-member consortium pulling out of the bidding process for the Mumbai airport. This comes a day after the Bharti-Changi consortium withdrew from bidding for the Delhi airport.

The consortium comprising Hochtief AirPort GmbH, Piramal Holdings and L&T Infrastructure Development Projects withdrew from bidding citing unfavourable financial conditions of the revised transaction documents issued by the Airports Authority of India (AAI). The last date for submitting the bids is September 14.

According to industry sources, the consortium comprising Sterlite Infrastructure, Macquaire Bank with Aeroport de Paris remains undecided on submitting its bid for the airport modernisation programme. Sterlite officials could not be reached for comments.

But the government put up a brave front saying it would go ahead with the privatisation scheme for the two airports. A civil aviation ministry official said tomorrow being the last date for bidding, the government would find it difficult to scrap the process.

Sources also said that the government would not redraft the bidding documents now to suit the requirements of bidders. "The documents were finalised in consultation with the bidders. There is no point in them raising objections now," said a civil aviation ministry official. Despite the twin setbacks, the government can take heart from the stand taken by the consortium led by Subhash Chandra's Essel Group, which has said it is serious about participating in the privatisation project and will go ahead with the bidding.

It has also said that the airport partner in the venture, Turkish Airports, is confident of meeting the bidding criteria.

According to sources, the withdrawal by the L&T-led consortium is mainly because of the stringent financial conditions that has made the foreign collaborator, Hochtief AirPort, unhappy.

"Since the foreign partner decided not to go ahead with the project, the entire consortium was left with no option but to pull out of the race," the sources said, adding that the two other partners""L&T Infrastructure and Piramal Holdings"" would seek an extension for submitting separate bids.

The revised bid document insists on a performance bond of Rs 300 crore from an airport operator (here, the German firm) and Rs 500 crore as performance guarantee from a joint venture consortium. This would be met through refill bonds and would "create unlimited liability in the books of an operator," the sources pointed out.

The consortium of Bharti Enterprises, Singapore's Changi Airports and construction major DLF Ltd have dropped the idea of submitting the technical and financial bids as the Singaporean company is not confident of meeting the conditions set in the tender regarding penalties.