Change in Navi Mumbai airport bid norms gives partial relief to Tata group

The government has relaxed rules allowing airlines or its associates to hold 26% stake in a special purpose vehicle which will develop the Navi Mumbai airport. The move gives a partial relief to the Tata group whose realty and infrastructure arm is keen to bid for the airport.

But the issue is far from over as another amendment to the bid conditions bars such companies from holding a board position on the special purpose vehicle. Tata Realty and Infrastructure Ltd (TRIL) is likely to seek a clarification from the government on the issue. The clause was added so as to restrict company managing the airport to take a decision favouring particular airlines.

City Industrial and Development Corporation (CIDCO) issued the request for qualification for the airport in February. It was amended following a decision by project management committee comprising of state and central government officials in July with fresh conditions and submission date extended to September 2.

This included an amendment to the clause which said that the special purpose (SPV) vehicle shall not include an equity ownership of an airline or its associates exceeding ten% of total equity of the SPV. Now the clause has been relaxed and airlines or their associates can hold upto 26% in the SPV. However the government has issued a rider which bars them from holding board position in the SPV.

At present no domestic or foreign airline have expressed interest to participate in Navi Mumbai airport project.

TRIL is in discussions with Spanish company Ferrovial, an investor in London Heathrow and other airports, to jointly bid for the project. The SPV bidding for the airport can have upto four partners and TRIL has not finalised the ownership structure of its proposed consortium.

TRIL did not respond to an email query on the topic.

CIDCO expects the first phase of the proposed Rs 14,500-crore global airport at Navi Mumbai to be ready by December 2018. CIDCO vice chairman Sanjay Bhatia had earlier said the settlement of disputes with almost all villages for smooth land acquisition was CIDCO's priority. The agency is developing a 600-square-kilometre township for the airport, he added.

Airport developers and infrastructure companies including Zurich Airport, Ferrovial Aeropuertos, TRIL , Mumbai International Airport Limited, SREI Infrastructure Finance Limited, Samsung C&T, IL&FS, GMR Group, Shakat Aviation, Walnut Aviation, Essel Infraprojects, Solux Corsan India Engineering & Construction, Gensler (USA), Ernst & Young LLP, UK Trade & Investment, VINCI Concessions India, Pramitee Engineering & Surveys, and IRB Infrastructure Developers had attended the pre-bid meeting held in April.

According to the revised RFQ, Cidco will announce the pre-qualified applicants on October 30 and the concession agreement will be signed within 60 days of the letter of approval being issued. The concession will be for a minimum period of 30 years and the premium will constitute the sole criteria for bid- evaluation.