Bangalore airport promoters refute MP's charges

Bangalore airport promoters refute MP's charges
New Indian Express

BANGALORE: The promoters of a new international airport some 30 km from here have expressed strong reservations over a parliamentary panel's report that faults their act of awarding some civil contracts to themselves.

The public-private consortium set up to build the Rs.14-billion ($320 million) airport at Devenahalli justified the award of contracts to four of the five promoters as they had a long standing in the aviation business.

Besides the Karnataka government, the four private sector promoters are Siemens AG of Germany, Zurich Airport Authority, Mumbai-based Larson and Toubro and the state-run Airport Authority of India (AAI).

"The contracts were awarded in conformity to the terms and conditions laid down in the global bid for the airport project floated by the Karnataka government," said Albert Brunner, chief executive of Bangalore International Airport.

"One of the criteria in the tendering process was that the consortium promoters should have wide experience in the construction, maintenance and operation of infrastructure projects, including airports, as in this case," Brunner told IANS.

But in a report tabled earlier this week, the parliamentary panel on aviation chaired by Nilotpal Basu of the Communist Party of India-Marxist sought a probe into the award of contracts at the Bangalore airport.

"Since the equity holders are themselves the service providers, there is certainly a conflict of interest," the panel observed.

Contracts worth Rs 8.86 billion ($200 million) have been awarded to Larsen and Toubro that accounts for Rs 5.5 billion ($125 million) and Siemens, which has a share of Rs 3.26 billion ($75 million) for executing the project.

While the Zurich Airport Authority will maintain and operate the project, the AAI will provide air traffic management, including air traffic control and allied services.

"The board was aware of the conflict of interest in awarding the contracts to the bidders, which also happen to be the shareholders of the project," Brunner said, of the project that is to be completed in 30 months.

"That is why we involved the independent consultants and the expert committee to ensure transparency in finalising the deals and the contractors," he said, adding that the contracts were vetted by the consultants.

The consultants were: Dorsch Consult of Germany for Siemens, C.R. Narayana and Company of Chennai for Larsen and Toubro, MOGT McDonald of Britain for Zurich Airport Authority and Scott Wilson for the ICICI, the lead commercial bank.

Brunner said when the parliamentary standing committee sought clarifications in June 2005, the consortium had submitted all information, including the documents pertaining to the contracts and explained the process of firming up the deals.

"We are open to any inquiry and ready to clarify our position. We will reiterate our stand once again and convince the committee on the transparency that was ensured in arriving at the decisions taken in fair and objective manner."

He said while the parliamentary committee had made some observations in its interim report, the consortium has not been officially informed of its content as yet. But the consortium was willing to clarify its position again.

Of the Rs 3.27 billion equity in the project, the Central and the government of Karnataka hold a 13-percent stake each, Siemens has a 40-percent stake, while Larsen and Toubro and the Zurich Airport Authority have a 17-percent share each.

The debt portion of Rs 7.35 billion - which constitutes about 60 percent of the project cost - is being financed by ICICI Bank. In addition, Karnataka has also extended a long-term interest free loan of Rs 3.5 billion, officials said.

The airport's chief executive has ruled out any impact of the parliamentary panel's findings on the project work since the construction had commenced in June and added that the airport will start operations from early-2008.