Cartelisation highway leads to Delhi

March 11, 2008

NEW DELHI: The National Highways Builders Federation, a body representing infrastructure companies, has filed a case in the high court against the ministries of finance and surface transport, and National Highways Authority of India (NHAI), stating the recently-announced selection process for infrastructure project bidders is promoting cartelisation within the industry. According to the federation, only bigger players such as GMR, GVK and Reliance Industrial Infrastructure will benefit from the new policies. Fearing cartelisation, smaller players, including Gammon India and Navyug, had lodged an official complaint with the federation. In December 2007, the government had announced a new selection process for infrastructure project bidders. According to the policy, only six bidders with the maximum experience would be eligible to participate in the financial bid stage. However, the policy does not specify the names of the six bidders. Earlier, NHAI had been developing infrastructure projects under another scheme in public-private partnership projects. So far, NHAI had issued a notice inviting tenders that was divided into two parts: technical bid and financial bid. In the technical bid stage, the credibility of the bidder was examined. Those eligible for this round could bid in the financial round. For this, the bidder would either give a grant to the government or give the minimum concession period — the shortest period under which it would return project to the government. “The policies are tilted towards the big players in the industry, whereby the top six companies will always be successful bidders with their kind of experience,” Hammurabi & Solomon senior partner Manoj Kumar told ET. Under the present policy, bidders that do not make it to the top six would automatically be pushed out of the race. “This is unfair and will lead to cartelisation,” sources said. Source: http://economictimes.indiatimes.com

Written by ITW Editor · Filed Under Uncategorized

Cial has non-metro, foreign airports on radar

November 21, 2007

It plans to participate in the modernization of the 35 airports in the country, apart from the overseas projects

New Delhi: Cochin International Airport Ltd (Cial), the company that built the new international airport at Kochi, India’s first to be built by a private sector firm, is looking to build airports in India and in other countries in an effort to tap growing demand for airline infrastructure in many parts of the world.

Cial plans to participate in the modernization programme of 35 non-metro airports in the country and also wants to build airports in Sri Lanka, Ghana, Angola and Papua New Guinea, according to S. Bharat, managing director, Cial.

Cial was promoted by the Kerala government, financial institutions, airport service providers, non-resident Keralites and a group of entrepreneurs.

The single largest shareholder in the company is the state government with 35% of the paid-up capital.

Bharat added that Cial is in talks with an international finance company and a technical partner to promote a new company that will handle these projects.

Cial’s overseas plans come at a time when international airport operators such as Singapore’s Changi Airport International (CAI), Airport Company South Africa Ltd, Fraport AG and other leading players from Mexico, Turkey, Paris and Germany are looking to partner with Indian companies to bid for airport projects in the country. Singapore’s CAI had floated a joint venture company with Tata Realty & Infrastructure Ltd, a subsidiary of the Tata group for the airport modernization projects in India.

If it wins any of the projects to build airports outside the country, Cial will be following in the footsteps of Bangalore-based GMR Infrastructure Ltd, the lead partner in the consortium that runs Delhi International Airport, which will be developing Sabiha Gokeen International Airport (SGIA) at Istanbul, Turkey. GMR’S partners in this project are Malaysia Airports Holdings Berhard and Limak Insaat Sanavi San Ve Tic A S Turkey.

Bharat confirmed Cial’s overseas aspirations.

“The government of Sri Lanka has invited us to study the possibilities of building an airport there. We have got offers from Ghana, Angola and Papua New Guinea. Cial’s team will shortly visit those countries,” he said.

Cial plans to take up overseas airport projects on a build-operate-transfer (BOT) or build-own-operate (BOO) basis. Under the BOT model, the developer constructs and manages a project for a specified time before handing it over to the government; in the BOO model, the developer continues to operate the project with a local partner.

“The funding of these airport projects would be done by a special purpose company formed under Cial,” Bharat said.

He declined to name the international partners citing confidentiality agreements.

“We are also looking at bidding for the ongoing airport projects within India as we can make airports at lower cost,” Bharat added. The Cochin airport was built at a cost of Rs315 crore including the cost of land.

A government committee on infrastructure, headed by Prime Minister Manmohan Singh, has estimated that India will need to spend more than Rs40,000 crore in developing airports between 2006-07 and 2013-14. Of this, an estimated Rs31,100 crore is expected to come from public-private partnerships.

The ministry of civil aviation has decided to modernize and upgrade 35 non-metro airports across India.

Besides, the government is also planning to build greenfield airports at Navi Mumbai (Maharashtra), Kannur (Kerala), Hassan and Gulbarga (Karnataka), Ludhiana (Punjab), Greater Noida (NCR), Paykong (Sikkim), Cheithu (Nagaland) and Chakan (near Pune, Maharashtra).

“At a time when current airport modernization programmes envisage spending at least Rs5,000 crore for a single project, Cial had built a world class product on a very modest budget. Cial can cash in on its expertise in the upcoming non-metro airport projects,” said a Mumbai-based aviation analyst, who does not want to be identified because he is not authorized to speak to the media.

Written by ITW Editor · Filed Under Investment and Finance, Media