Sunil Jain: Getting favouritism to fly

RATIONAL EXPECTATIONS

By the time you read this piece, the government will probably have opened the financial bids for the privatisation of the Delhi and Mumbai airports, or will be in the process of doing so. While the process still has some serious flaws""instead of increasing competition, for instance, winners of the Delhi and Mumbai airports will have the first right on any new airport in the area""it will still be a lot better than the situation Civil Aviation Minister Praful Patel and others were trying to push through for several weeks, a situation in which one airport each was assured to two bidders, one of whose marks (that of the Anil Dhirubhai Ambani Enterprises consortium) were artificially pushed up by the consultants, which ensured it made the cut.

This way, at least one airport will get a top-class consortium (the GMR Group, which is building the Hyderabad airport, has Frankfurt Airport as its partner, and was the only bidder to meet the original technical qualifications), and, if newspaper reports are to be believed, GMR may be asked to match the highest bidder""so, we'll get a good consortium and at the best possible bid. As for the second airport, instead of it being a no-contest for the ADAE Group, there will be some element of competition.

The moral of the story, of course, is that if you're determined enough, as various members of the government are, you can get away with anything. After all, while the flaws in the marking for the ADAE consortium were pointed out two to three months ago by Gajendra Haldea of the Planning Commission, these were simply brushed aside, first by a group of secretaries led by Ajay Prasad of civil aviation, and then the same was sought to be done by ministers such as Praful Patel, P Chidambaram, and Pranab Mukherjee, and later by even the committee of secretaries headed by the cabinet secretary, B K Chaturvedi ""fortunately, the cabinet secretary didn't succumb and appointed a technical committee headed by Delhi Metro chief E Sreedharan to guide him.

Indeed, when Haldea's arguments on the extra-generous marking for the ADAE consortium were ratified by Sreedharan, whose track record in implementing large infrastructure projects is unblemished, and this was in turn endorsed by the Chaturvedi committee, one would have thought the government would have acted upon it, awarded one airport to the GMR consortium and then rebid the other, since GMR was the only bidder that qualified on the technical parameters. Instead, we've been seeing a determined group in the government making a dog's breakfast of the entire process by relaxing parts of the criterion (the minimum 80-mark cut-off) and coming up with new ones (getting GMR to match the highest bidder). In the process, they've also left themselves open to the possibility of getting caught up in a legal tangle since there is nothing to prevent one of the losers from going to court arguing that the whole process has been vitiated, from the time of the marking to now. Of course, one time-tested way out of the court tangle is to assure the various players their interests will be taken care of in subsequent airports that are to be privatised. One reason why no one went to court when the rules of the telecom game were changed overnight in 1999 was that everyone benefited, to some degree or the other.

But leave this aside for the moment, and assume the government will be able to hand out the airport concessions, even if not by the appointed date of January 31. There are a whole lot of questions that are simply too uncomfortable to leave unanswered. The Sreedharan report, for instance, unequivocally says: "[T]here are clear indications that a liberal attitude has been shown to bidder E (ADAE) which has enabled them to get marks just above 80%" and gives various examples of this""in one case, where an assessment was to be done of commercial operations, the ADAE group was given 75 per cent even though it did not meet the criterion specified for this. Given a series of such examples, surely someone needs to ask the consultants, ABN Amro/Airplan, for a detailed explanation as to why they shouldn't be blacklisted for such marking? You can't have it both ways, either ABN/Airplan is wrong or Sreedharan is wrong. The assertions in the latter's report are too categorical to be glossed over as a difference between two technical experts.

While the consultants presumably can get away since their report says "neither ABN AMRO/Airplan ... accept(s) any responsibility or liability, whatsover, in respect of any statements or omissions herein, or the accuracy, completeness or reliability of this Report" even if their employees/advisors have been "negligent or otherwise", the bureaucrats and ministers need to be asked the same thing""why did they refuse to examine the facts presented to them on the marking being biased and repeatedly insist the consultants' recommendations be acted upon? Indeed, some of the bureaucrats were common to the inter-ministerial group and the committee of secretaries, which had diametrically opposite views on the matter! Until officers and politicians are held accountable, in whatever form, for their views, you can expect a repeat of what we're just gone through. It is this lack of transparency, and not rebidding for the airports, that gives reforms a bad name.

suniljain@business-standard.com