The Hindu Business Line : BIAL contracts transparent

PUTTING to rest the controversy regarding the award of Engineering Project Contracts (EPC) to Bangalore International Airport Ltd (BIAL), the Government has informed Parliament that awarding EPC to strategic investors holding equity in BIAL is not an unusual feature.

"Many of road and infrastructure projects for concession include such provision and many such projects have already been implemented. These include the Coimbatore bypass road project, the Narmada infrastructure project, the Kakinada port project and the Haldia berth project," the Ministry of Civil Aviation said in a statement tabled in Parliament earlier this month.

Further, it has been pointed out that there was no conflict of interest in terms of the strategic investors holding equity in the company to be the EPC contractor, as the process was undertaken through an "international competitive bidding" process.

The statement was tabled as part of the ``Action taken report on the recommendations/observations contained in the 90th report of the Standing Committee on Transport, Tourism and Culture on the development of Airport sector with special emphasis on new modern airports''. The EPC contracts relate to civil, engineering and electrical works to be taken up at the project.

Above board

Emphasising that the entire process was above board, the Government has pointed out that the decision to award the EPC contracts to the strategic joint-venture partners was taken at the bidding stage itself, discussed with the steering committee and the entire process approved by the state cabinet. "There was also a well built-in mechanism for independent audit, review and the arm's length principle were followed by BIAL based on clear obligations in the Share Holders Agreement," the statement has said in defence of the Government stand. BIAL is a joint venture of Siemens Project Ventures (40 per cent); L&T, Zurich Airport (17 per cent each); and public sector partners AAI and KSIIDC (13 per cent each).

Conflict of interest

The Parliamentary Standing Committee had pointed out that since the equity holders were themselves the service providers in BIAL, there was certainly a case for conflict of interest.

The Committee had expressed the view that there was "complete lack of transparency" in the award of EPC contracts at BIAL. Adding that the role of Government representatives on the BIAL board was not "above board", it called for an inquiry by an independent agency.

The Government, however, claimed that there was total transparency in the award of the EPC contracts and added that the role of its nominees on the steering committee and BIAL Board "has been above board as the whole process was through a transparent process."

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