Date:01/02/2006 URL: http://www.thehindubusinessline.com/2006/02/01/stories/2006020102430100.htm

Back Bids opened for airport modernisation — GMR combine gets Delhi; Mumbai for GVK

Our Bureau

New Delhi , Jan. 31

THE controversy-mired airport modernisation programme took off today with the empowered Group of Ministers (eGoM) deciding to allot Delhi airport to the Hyderabad-based GMR group which has tied up with Fraport (Frankfurt airport) and Malaysia airports. The task of modernising the Mumbai airport has been awarded to another South-based company, the GVK group, which has tied up with South Africa airports.

"The empowered Group of Ministers has accorded its approval for the GMR combine to develop Delhi airport, while GVK has bagged the project for developing Mumbai airport. The eGoM decision will now be communicated to the Cabinet. This could be as early as tomorrow," the Minister for Civil Aviation, Mr Praful Patel, told newspersons after the meeting.

Those who lost the race included the Anil Ambani-led Reliance group, which had tied up with Airport Mexico, the D.S group that had bid along with Munich airport, and Macquire (Australia), which had tied up Paris airport. The Essel-Turkish combine had been left out of consideration because it was last in both technical and financial bids.

The Government short-listed the consortia led by the two companies after considering the revenue-sharing pattern of four bidders for each of the two airports. The GMR consortium was awarded the contract for developing the Delhi airport after they decided to match the revenue sharing that had been proposed by the Anil Ambani-led Reliance Group.

"The Reliance Group had proposed a revenue share of 45.99 per cent while the GMR group had proposed 43.64 per cent. However, they agreed to match the revenue share model proposed by Reliance, and, hence they have been awarded the right to develop Delhi airport," Mr Patel said. The GMR group was given the choice of picking the airport of its liking as it was the only bidder that secured more than the cut-off of 80 per cent as had been stipulated in the Request for Proposal (RFP), the Minister said.

In the case of Mumbai airport, while the GVK group had proposed a revenue share of 38.70 per cent, the GMR group had offered 33.03 per cent, followed by the D.S. Group (28.12 per cent) and the Reliance Group (21.33 per cent).

Questioned on any revenue loss for the Airports Authority of India when the two metro airports — that generate more than half of its income — move away from it, the Minister said the modernisation programme would not lead to any financial loss for AAI.

"AAI will become a bigger a company than what it is today. The financial position of AAI will be very close to what it is now. This has been well covered by the financial bids that have been received. The country will get new airports and the Government will have to spend nothing to develop the two major metro airports. This will also help AAI concentrate on the development of other airports around the country," Mr Patel said. Besides, the AAI will also receive dividend revenues from the 26 per cent share it holds in the new joint venture companies.

The Minister also took the opportunity to allay fears of the workers about job security, saying both the bidders have indicated that they would absorb some of the employees. "While 60 per cent of the employees are to be absorbed, AAI will also require about 10-15 per cent to run its operations. In addition, about 5-8 per cent will also retire in the next few years. Therefore, the employees have nothing to fear," Mr Patel said.