B'bay HC ruling against MIAL may risk pvt interest in PPPs

A recent Bombay High Court ruling against the Mumbai International Airport said that while the airport was being run by a private operator, it had the same responsibilities as any government agency, hence has to follow the same rules. This has been stayed by the Supreme Court in favour of the private party. This judgment could in fact jeopardise private interest in all kinds of PPPs (Public Private Partnership).
Mumbai's spanking new Chhatrapati Shivaji Maharaj International airport, has been redeveloped by MIAL - a joint venture company owned 74% by a private sector consortium led by infrastructure company GVK and 26% by the government owned Airports Authority of India.
It all started when Flemingo, a company that runs duty free outlets, bid to set up the Airport's duty free shops. Flemingo lost and went to court to challenge the airport's bid process. Flemingo complained that since the International Airport is like a government body, it's obliged to act fairly, reasonably and justly. The Bombay High Court upheld this view and ruled that Mumbai International Airport, though operated by a private company, is an agency of the government, and therefore has the same responsibilities. Hence MIAL cannot accept or reject bid offers on its sole discretion without giving any reason.
Somasekharan Sunderesan said, "I think this judgment has very far reaching repercussions. Every private company, which is implementing a public infrastructure project is being treated as government."
Shuva Mandal said, "MIAL had the same powers as AAI when it came to eviction for land acquisition purposes, at the same time it had the same powers of AAI when it came to collecting fees, revenues generated from the airport."
The Supreme Court has stayed that view of the Bombay High Court and so the fate of this case is yet to be decided. But with it hangs in balance billion dollars public private partnerships in core sectors like power, telecom, roads and ports.
13/08/08 Naheed Patel/CNBC-TV18/Moneycontrol.com

To Read the News in full at Source, Click the Headline

Categories: Airports Aug 2008