MUMBAI: Three of the four companies shortlisted to build the much-delayed Rs 16,000 crore Navi Mumbai airport have pulled out, citing long-unresolved issues such an incomplete resettlement of families from the area, zero pre-development work and issues with the bid document.
The stipulated 42-month time to complete the project is too short, given the conditions, the bidders said.
GMR Infrastructure, Tata Realty & Infrastructure and the Hiranandani Group have opted out and won’t put in financial bids, leaving GVK Power & Infrastructure-led Mumbai International Airport, the operator of Mumbai airport, as the only qualified bidder.
The last date for submission of the bid document has been extended by two months to January 9. Senior executives in all three bidders confirmed the development. A GVK spokesperson declined to comment.
In a letter to Maharashtra chief minister Devendra Fadnavis on December 9, Sidharath Kapur, GMR’s finance chief for its airport business, listed eight issues with the airport project. The letter was also addressed to Bhushan Gagrani, managing director at CIDCO, the city-planning arm of the Maharashtra government and the nodal body for the airport project.
A spokesperson at City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) said the agency has received letters from various bidders and will have to examine them. He didn’t elaborate.
GMR said in the letter that pre-development work, which includes levelling the ground and clearing green patches, hasn’t even started. Half of the contracts for this work haven’t been awarded yet, it said.
One of the contracts was awarded to a GVK joint venture, which GMR pointed out was a conflict of interest. There are other issues.
“More than 3,000 families – about 10,000 people – are still occupying the land,” said a senior executive at Tata Realty, which wrote to CIDCO on Tuesday, saying it’s not willing to participate in the bids.
“Our airport construction partner Zurich Airport has said it will not bid for the project,” said Darshan Hiranandani, managing director of the Hiranandani Group.
“The project cost has highly escalated in the past several years. Now, instead of the 26% equity participation, Zurich Airports wants 10% participation. We have written to CIDCO for the same but no approval has come yet. Our bid proposal is ready but under the current circumstances, we won’t be able to participate. There are many other issues. For instance, the guidance cost for some aspects of the project have been given keeping the Kochi airport in mind. It is impossible to stick to those cost guidelines for this project,” he added.
In the letter to Fadnavis and Gagrani, Kapur also pointed out that the project hasn’t yet got stage 2 clearance from the environment ministry. It also cited issues with the bid document.
CIDCO is not required to put any cash equity for subscribing to its 26% share in the airport special purpose vehicle. Its participation is capped at Rs 430 crore and its shareholding remains intact irrespective of increases in the project cost, the letter said.
This requirement “complicated the financing of the project and also impacts the long-term viability of the concessionaire (the company winning the project),” it said.
“In the absence of redressal of various onerous bid conditions and project risk mitigation measures, it will be difficult for us to consider participating in the bid process,” the letter said.