Airport Privatization: Bidding Process forDelhi and Mumbai (A)
It was January 24, 2006. The Empowered Group of Ministers (EGoM) was meeting for thefourth time. They were to discuss the future of the Rs 54 billion Delhi and Mumbai airportmodernization projects. The matter had become even more controversial after the Group of Eminent Technical Experts (GETE), headed by the Delhi Metro Rail Corporation (DMRC)Chief, Mr E Sreedharan qualified only one bidder, GMR-Fraport, and downgradedReliance-ASA consortium on the evaluation criteria of ‘management capability.’The EGoM had to decide the way forward based on the technical evaluation score summary(Exhibit 1) of the bidders for the Delhi and Mumbai airports. As per the Request for Proposal (RFP), a minimum of 80% score was required on both the criteria of ‘managementcapability’ and ‘development capability’ to qualify for the next round, when the winner would be selected on the best financial bid. In case the same bidder won both the airports,they would have to give up one.The EGoM was headed by Mr Pranab Mukherjee, the Minister of Defence and included Mr Hans Raj Bhardwaj, the Minister of Law and Justice, Mr P Chidambaram, the Minister of Finance, Mr Kamal Nath, the Minister of Commerce and Industry and Mr Praful Patel, theMinister of State (independent charge) for Civil Aviation. Exhibit 2 gives the scope andmembers of the various committees involved in the bidding process.After the bids were submitted on September 14, 2005 and their technical evaluation by theEvaluation Committee (EC), the review by the Government Review Committee (GRC), andthe inability of the Inter Ministerial Group (IMG) to arrive at a decision, the EGoM first meton December 05, 2005 to discuss the IMG and GRC recommendations. They referred theissue back to the IMG, suggesting a review of the EC report, but with no dilution of the RFPcriteria and no fresh evaluation of bids. However, after going through the process, the IMGfailed to reach a unanimous decision.
Prepared by Rekha Jain, G Raghuram, and Rachna Gangwar.Research assistance by Meghna Mathur is acknowledged.Teaching material of the Indian Institute of Management, Ahmedabad is prepared as a basis for classdiscussion. Cases are not designed to present illustrations of either correct or incorrect handling of administrative problems.Copyright
2007 by the Indian Institute of Management, Ahmedabad.
Indian Institute of ManagementAhmedabadIIMA/PSG0102(A