Delhi/Mumbai Airports contracts awarded!

Its here. The day when the airport upgradation contracts have been awarded. For one, kudos to Praful Patel, the PMO for ensuring this process went through and not buckling under the threats by the Communist partners and the AAI employees union.

The New Delhi Airport has been bagged by the GMR- Fraport combine. GMR is the company working on the new Hyderabad International Airport as well. Fraport runs the Frankfurt International Airport, and is a heavyweight in the aviation infrastructure sector.

The Mumbai Airport has been won by the GVK-ACSA combine. GVK, like GMR, is based in Hyderabad and has interests in various infrastructural sectors. ACSA, or the Airports Company of South Africa, oversees all the major 9 airports of South Africa.

The process has not been without its problems, as is with any major liberalization program in the country. For one, the AAI employees fear for their jobs, despite having been assured time and time again that they will be absorbed in the new setup. But i feel the real reason, as do many others, is that they will finally have to work hard to earn their money, something which they havn't been accustomed to do. Basically this has been the crux of every trade union against privatization, their fear of actually having to work hard to earn their living.

Then there is the issue that AAI will lose most of its revenue, considering these airports provide it almost 40% of revenue. Again this seems a red herring. They are assured 46% revenue for Delhi and 38% (i think) for Mumbai airport, besides the 150 crores upfront for each airport.

There is another aspect that considering Mumbai and Delhi are AAI's cash cows, they spend little time bothering about other airports. Yet even in Delhi/Mumbai, their major profit comes from charging fees for parking, landing rights etc, because true to their govt. department mentality, they have spent little effort in generating income through hotels, business parks, etc, simply because they dont need to.

The good old Left has actually threatened the fall of the UPA government over the issue! The government has crossed its 'Lakshman Rekha,' say the hypocrites.

The Reliance combine has raised the most hue and cry over the bidding process, accusing the Government of changing criteria midway and changing various clauses, including the one that required the winner, GMR, to match Reliance's revenue sharing percentage of 46%. They say it wasnt a part of the deal, but media reports seem to suggest that it was, and the contestants should have been well aware of it. But GMR deserved the option considering it was the only company to have a qualified technical bid.

With Reliance and possibly Essel group threating to go to the courts, it could be possible that despite the contracts having been awarded today, the actual work on the ground may still be some time away.

Here is a report from the Hindu.

Bids for Privatization of airports finalized

While the GMR-Fraport consortium won the bid for the Delhi airport, the GVK-South African Airports combine bagged the Mumbai airport project, Minister of State for Civil Aviation Minister Praful Patel announced.

The investment for the Delhi airport is estimated to be around Rs. 2,800 crore and for Mumbai, it could be around Rs. 2,400 crore. The investment of Rs. 5,200 crore is likely to be for the first phase of modernisation, to be completed by 2010.

Earlier in the day, the financial bids of the four qualified bidders for each airport were opened in the Civil Aviation Ministry amid protests and demonstrations by employees of the Airports Authority of India (AAI). The Rajiv Gandhi Bhavan, housing the AAI and the Civil Aviation Ministry, was barricaded and virtually turned into a fortress by policemen and security personnel.

The Minister said GMR-Fraport would match the highest bid and give a revenue share of 45.99 per cent to the AAI. In the final evaluation process, GMR-Fraport had emerged the sole qualifying bidder subject to its matching the highest bid. It was given the option of matching the top bidder as it was the sole technically qualified bidder among the five aspirants for the Delhi airport and the six for the Mumbai airport.

For the Mumbai airport, the GVK-South African Airports' bid was 38.7 per cent, GMR's offer was 33.03 per cent, DS Constructions-Munich 28.12 per cent and Reliance-ASA 21.33 per cent.

In a statement, the Anil Ambani-controlled Reliance Airports Developers said there was no provision in the "Request for Proposal or tender conditions to give any bidder an option to match the highest bid, that too selectively for only one airport." It said such changes were "untenable and unconstitutional."

On the concerns of the AAI employees, Mr. Patel said both the consortia had given a written commitment to absorb 60 per cent of the AAI employees as against the minimum requirement of 40 per cent. For the first three years, all AAI employees would remain on deputation to the two joint venture companies.

On the issues raised by the Left parties, he said the Government had adopted a "middle path" and all aspects, concerns and interests of the country and the AAI employees had been considered. The AAI would be able to improve its financial health by the revenue share from the two airports.

On why the alternate plan submitted by the AAI Employees Forum was not considered, Mr. Patel said it was felt that the AAI should not spend all its resources only on the Delhi and Mumbai airports but should develop the 35 non-metro airports as the civil aviation sector was growing at a rapid pace.

The airports are likely to be handed over to the companies by March-end. Over the next six months, they will prepare master plans for modernising the airports.