A consortium led by the Bangalore-based GMR group, which won the bid for the Mactan Cebu international airport project in the Philippines, faces a petition in that country's Supreme Court to scrap the deal.
Serge R Osmeña III, a prominent Philippine politician, said in his petition filed in court two days before last week's announcement that the GMR group violated bid conditions that barred companies with a conflict of interest from bidding. He has asked the court to stop the notice of award to GMR and its local consortium partner, Megawide.
The consortium bid $325 million to renovate, modernise and expand the Mactan Cebu airport and operate it for 25 years. It outbid seven global competitors, many of which had earlier raised questions about GMR.
The conflict of interest arises because Malaysia Airport Holdings Berhad, which separately bid for the Mactan Cebu project, is also a stakeholder in GMR's airports in Delhi and Hyderabad. Tan Bashir Ahmad, apart from being managing director of Malaysia Airport Holdings, is also on the boards of directors of the two GMR airport companies.
The petition said the other bidders were at a disadvantage because they were restricted from entering into similar arrangements. It also said the Senate Committee of Public Services had conducted two hearings on the issue and had concluded that the pre-qualification bids and awards committee did not compare the submissions of the bidders in order to determine the existence of a conflict of interest.
Osmeña's office said the senator would not comment on the issue, as he had already filed a petition in court. A GMR spokesperson said there was no conflict of interest at all. "The company that bid for the airport was GMR Infrastructure, in which Malaysia Airport Holdings has no stake or director representation. The government gave us the contract only after looking into this issue, after we became the highest bidder in December," he said.
The Philippine airport is crucial for GMR that has loaded itself with debt to fund its foreign expansion. The company was forced to exit the $500-million Male airport after a change of government in the island nation in November 2012. Malaysia Airport Holdings last December bought GMR's 40 per cent stake in an airport in Istanbul. GMR was also interested in the Barcelona and Madrid airports, but their auctions were cancelled.
The group had bid the highest for the Mactan Cebu project last December. But the award was held up by objections from rival bidders. A consortium of Filinvest-CAI, which came a close second, raised the issue of conflict of interest. The Philippine government finally selected GMR-Megawide last Saturday after scrutinising all the claims and counter-claims.
INS & OUTS
- 54%: GMR group's holding in the Delhi international airport
- 63%: GMR group's holding in the Hyderabad international airport
- 77%: The stake GMR held in the Male international airport, contract for which was terminated in November 2012 (the remaining stake was held by Malaysian Airport Holdings Berhad (MAHB)
- 40%: The stake GMR held in Istanbul's Sabiha Gökçen International Airport before selling it to MAHB in Dec 2013
