Fresh trouble for GMR: Philippine project gets into trouble
The GMR group which grabbed the bid for the Mactan Cebu international airport project in the Philippines is facing problems as a petition has been filed against them in the country’s Supreme Court to scrap the deal.
Mr. Serge R Osmeña III, a Philippine politician, says that GMR group broke the bid rules that barred companies with a conflict of interest from bidding. He asked the court to stop the approval to GMR and its local consortium partner, Megawide.
The consortium bid $325 million to modify and modernize the Mactan Cebu airport and operate it for 25 years. It left behind 7 global competitors in the race and many questions were raised about GMR.
The conflict arose because Malaysia Airport Holdings Berhad which individually bid for the Mactan Cebu project is also a share holder in GMR’s airport and also on the boards of directors of the two GMR airport companies.
As per the petition, the other bidders were at a disadvantage because they were restricted from entering into same agreements. It is also concluded that the Senate Committee of Public Services had organized two hearings regarding this topic and mentioned that the pre-qualification bids and awards committee did not compare the submission of the bidders in order to tell the reason of conflicts.
He further says that the organization that bid for the Airport was GMR Infrastructure in which Malaysia Airport Holdings has no share. The government approved the contract only after going through this issue and after they became the highest bidder in December.
The Philippine airport is important for GMR that has loaded itself with debt to invest in its foreign expansion. The company had to exit the $500-million Male airport after the change in the ruling government in November2012. Malaysia Airport authority last December purchased GMR’s 40 percent share in an airport in Istanbul. The GMR group was also interested in the Barcelona and Madrid airports but their auction process were postponed.
The GMR group had bid the highest amount for the Mactan Cebu project in last December. But the approval was held up by objections from other bidders. A consortium of Filinvest-CAI, which appears second, raised the topic of conflict. The Philippine government finally approved GMR-Megawide after reviewing the claims and counter-claims.
Source: The Business Standard
Barcelona, Berhad, Filinvest-CAI, GMR Group, GMR Infrastructure, GMR’s airport, Mactan Cebu airport, Madrid, Malaysia Airport, Megawide, Philippine, Senate Committee of Public Services, Serge R Osmeña III, Supreme Court
