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Zee gives new twist to airports revamp row

January 21, 2006 11:44 IST

In a last-ditch attempt to rejoin the race to bag contracts for modernising the airports at Delhi and Mumbai, the Subhash Chandra-led Zee/Essel group is trying to give a new twist to the controversial bidding process by urging Prime Minister Manmohan Singh to have a 'relook' at the entire process and 'revisit' it 'from the expression of interest (EOI) stage' by citing a legal opinion of a former Chief Justice of India.

Pan Paryatan, which is part of the Zee/Essel group, has tied up with TAV, Turkey's airport operator, to bid for the modernisation contracts. The Pan Paryatan-TAV consortium had been placed in the last position by private consultants appointed by the ministry of civil aviation to evaluate the technical bids that had been submitted.

The consortium approached former Chief Justice of the Supreme Court of India R C Lahoti for a detailed opinion on the bidding process.

In his opinion dated January 14, Lahoti stated: "The entire tendering process stands vitiated. Two courses are open. First, the process may have to be done afresh from the stage of EOI, excluding the present financial and legal consultants and substituting them by independent and impartial consultants. Or else, the entire process has to be initiated afresh."

The Pan Parayatan-TAV bids for both the Delhi and Mumbai airports had been described by the consultants -- ABN Amro, Amarchand Mangaldas & Suresh A Shroff and Airplan of Australia) -- as being of 'poor quality' with the 'offer suffering from the combination of an airport operator with limited experience focused on operating terminals rather than airports and an Indian party without direct relevant commercial experience and expertise.'

The consultants had claimed that the bidder had also failed to provide 'quality documents' for the transition plan, stakeholder management strategy and the business plan, and the bidder's reliance on consultants for management functions 'is quite unsatisfactory.'

Pan Paryatan's development capability and commitment were also assessed as 'low' by the consultants and its initial development plan for the Mumbai airport was termed as a 'high risk strategy with high cost and with no supporting technical assessments.'

For the Delhi airport, Pan Paryatan-TAV scored 39.2 per cent for 'management capability, commitment and value add' and 40.3 per cent for 'development capability, commitment and value add'. The scores for Mumbai under the same heads were 37.1 per cent and 28.3 per cent respectively. The cut-off percentage was 80.

Besides the prime minister, copies of the letter dated January 17 written by Nilesh Mistry, authorised signatory of the Essel TAV consortium, together with Justice Lahoti's opinion, were sent to United Progressive Alliance chairperson Sonia Gandhi, chairman of the Empowered Group of Ministers (eGOM), Defence Minister Pranab Mukherjee, other members of the eGOM such as Finance Minister P Chidambaram, Law & Justice Minister H R Bhardwaj, Commerce & Industry Minister Kamal Nath, Vice Chairman, Planning Commission, Montek Singh Ahluwalia, Minister of State holding independent charge of Civil Aviation Praful Patel, besides Cabinet Secretary B K Chaturvedi and the Delhi Metro Rail Corporation Managing Director, E Sreedharan, who heads the Group of Eminent Technical Experts (GETE).


to the letter and Lahoti's opinion, copies of which are with these correspondents, the former Chief Justice observed that eligibility conditions for the bids 'clearly spell out that technical evaluation cannot be carried out with total objectivity and some element of subjectivity in making evaluation would necessarily come into play.'

He was of the opinion that the consultants would have some element of subjectivity. "One mark below 80 may disqualify and one mark above 80 would qualify," noted Lahoti.

With regard to the role of the financial consultant ABN Amro and the legal consultant Amarchand Mangaldas, both of which were allegedly close to the two bidders shortlisted -- Reliance-ASA and GMR-Fraport -- Lahoti added that it was not necessary that "the persons whose presence has a vitiating effect should have a financial interest."

". . . it is enough if his involvement or participation in the process creates a 'reasonable suspicion' about fairness in the mind of the person aggrieved. This is the test for rule against bias," he added.

The former Chief Justice of India noted: "Fairness has to be apparent and real -- both. The gravity of the situation stands worst confounded if the consultants have tried to conceal the facts referable to bias in favour of any of the contestants."

In an apparent reference to allegations about the so-called 'conflict of interest' between ABN Amro and Amarchand Mangaldas with the Reliance-ASA and GMR-Fraport consortia, Lahoti remarked: ". . . it would have been advisable if they would have disclosed their interest which should have been brought to the notice of all the contestants. Failing this, the contestants are justified in objecting to the fairness and consequently the legal efficacy of the entire process."

Lahoti clearly stated that his opinion "is meant for the personal use of the querists (Essel-TAV) and is not intended to be filed in any legal proceedings or any court of law."

Of the eight consortia that had been pre-qualified for bidding, six had submitted their technical and financial bids for Delhi airport and five for Mumbai.

The government had first formed a Government Review Committee to consider the evaluation of the consultants whose report was, in turn, scrutinised by an Inter-Ministerial Group (IMG) of seven officials, five of whom had serious reservations about the evaluation by the consultants.

The eGOM considered the IMG's report and then referred it to a Committee of Secretaries headed by the Cabinet Secretary who subsequently referred the technical evaluation process to the Sreedharan-led GETE, which submitted two reports to the CoS on January 7 and January 17.

While the initial technical evaluation by the consultants had qualified only the GMR-Fraport and the Reliance-ASA consortia, the Sreedharan committee stated that only the first bidder (GMR-Fraport) was technically qualified after downgrading the second bidder (Reliance-ASA) to below the 80 per cent level.

Meanwhile, Civil Aviation Minister Praful Patel, who reportedly threatened to resign during a meeting of the eGOM if the modernisation contracts for the two airports were not finalised by the end of January, has claimed there would be no rebidding.

Still, the Zee/Essel group, like the other bidders not shortlisted (including D S Construction, Macquarie and GVK), are keeping their fingers crossed. A final decision is expected on January 24 when the eGOM is scheduled to meet.

Paranjoy Guha Thakurta and Ranabir Majumdar in New Delhi