GMR cites ‘execution challenges’, may exit Navi Mumbai airport project

Two of four bidders have written to CIDCO saying pre-development, site preparation and rehabilitation work is incomplete, point to high risk of investment

January 04, 2017 12:42 am | Updated 12:42 am IST

MUMBAI: The Navi Mumbai Airport project has run into trouble, days before the January 9 deadline for submission of financial bids, with at least two bidders — GMR Airport Ltd and MIA Infrastructure — among the four short-listed companies expressing concerns over likely delays in project execution.

The companies have written to the City and Industrial Development Corporation (CIDCO), the project’s implementing authority, saying pre-development work, site preparation and rehabilitation of project-affected people (PAP) is yet to be completed. In separate letters, they have urged CIDCO to extend the deadline for submission of financial bids and sort out the problems before deciding on a fresh deadline.

The four companies — GVK Mumbai International Airport Pvt Ltd (MIAL), GMR Airport Ltd, MIA Infrastructure (a joint venture of Tata Realty and Vinci Concessions of France) and Zurich Airport-Hiranandani Construction consortium — need to submit financial bids as per the deadline.

However, GMR has announced its intention to pull out of the bidding process. “We are not bidding on account of project implementation and execution challenges as well as erroneous timelines and bid conditions,” a GMR Airports Ltd. spokesperson said.

Officials familiar with the developments said, “We have expressed our concerns. We will not go ahead and submit the bids unless all issues are sorted out. The PAP are still at the site, so how can one build the airport? Pre-development work has not started, CIDCO is not ready with the project, land acquisition is incomplete. How can we risk our capital and credibility?”

This is the third time that an extension has been sought on submission of financial bids, and CIDCO seems to be in no mood to oblige this time. Last time, the date was extended from November 7, 2016 to January 9, 2017. “I am not aware about the letters, but we are going ahead as per schedule. There is no question of extending the January 9 deadline unless the government wants to do so,” a CIDCO spokesperson told The Hindu . In this case, this decision would be taken based on a valid reason by the Project Management & Implementation Committee (PMIC) headed by Chief Secretary Swadheen Kshatriya.

The spokesperson said all clearances are in place and PAPs are being gradually rehabilitated. “All people inside the project area will be rehabilitated, and the process is on. We have already started pre-development work, which has been taken up in four parts. For two phases, work tenders have been awarded and the contractors have started work. The other two phases will be taken up shortly.”

CIDCO vice chairman and managing director Bhushan Gagrani did not respond to calls and text messages.

Officials of short-listed companies alleged that Stage-II approval for environmental clearance is yet to come, and only a handful of the 3,500 PAP families have been moved. “These are issues to be sorted out. Rehabilitation is not so easy in India. Once the project is awarded, it would be our responsibility to do every thing including getting the clearances. In case of delays, we would be liable to pay penalty. No one wants to risk capital in such projects,” an official with a short-listed company said, requesting anonymity.

GVK MIAL, which part-owns and operates Mumbai Airport, has first right of refusal for the Navi Mumbai Airport project, and is believed to be aggressively bidding for the project. Its competitors claimed that the project may be awarded to a single bidder, which would lead to loss of revenue to CIDCO. A GVK MIAL spokesperson declined to comment, saying, “As a corporate policy, we do not respond or comment on any speculation in the media.”

The Maharashtra government has asked CIDCO to start the first phase of the new airport, which is expected to handle 10 million passengers per year, by December 2019.

The project, which is to come up on 1,200 hectare of land at a cost of Rs. 16,700 crore, has been at the planning stage for over 15 years. It involves the flattening of a 300-metre-high hill, and the earth will be used for reclamation. The Ulwe river will also have to be diverted.

Once completed, the airport is expected to handle up to 100 million passengers per year. It will supplement Mumbai airport, which is already saturated at 45 million passengers per year. The company which bags the project contract will run it for 40 years.

In a report last week, civil aviation think tank Centre for Asia Pacific Aviation (CAPA) expressed doubts on the timely execution of the Navi Mumbai airport and said financial bids could be delayed again. “Greenfield airports such as Navi Mumbai have been subject to inordinate delays. In fact, the Navi Mumbai tender could potentially be subject to more delays, and commissioning of the airport could take five to seven years.”

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