Airport tender takes new, bizarre twists

AS MUCH as the cabinet by now probably wishes the privatization of Slovakia's two biggest airports would just go away, the troubled sale continues to make embarrassing headlines with bizarre twists.

AS MUCH as the cabinet by now probably wishes the privatization of Slovakia's two biggest airports would just go away, the troubled sale continues to make embarrassing headlines with bizarre twists.

A second-round "showdown" between the two top-ranked bidders in the first round of the sale - called after a preferred bidder had already been declared - and a mysterious equipment malfunction in parliament during a vote to halt the sale have given new life to the controversy.

Many voices are now crying foul in the sale of a 66-percent stake in the Bratislava and Košice airports, but none louder than the TwoOne consortium, which had earlier been named by the tender commission as the proposed winner of the stakes, but which will now have to submit a supplementary bid in competition with the tender runner-up, the Abertis consortium.

The decision by Transport Minister Pavol Prokopovič to hold the second round came after bitter complaints by one bidder that its offer had not been fairly evaluated, and controversy over the fact that one tender advisor had evaluated TwoOne's business plan for the Bratislava airport as the weakest of those submitted.

The second round also means that two of Slovakia's most powerful capital groups, Penta and J&T, will go head-to-head for the airport stakes as members of the competing consortia.

Penta is bidding within the TwoOne consortium together with Vienna Airport and Austria's Raiffeisen Zentralbank, while J&T is united with Abertis Infraestructuras and the British TBI.

Under the rules of the second round, whichever consortium offered a higher supplementary price for the airport stakes by January 27 - regardless of their previous bids or investment intentions - would win. Neither the privatization commission nor the tender advisor had a say in the second round.

As justification for calling the run-off, Prokopovič cited the fact that the difference between the previous bids by TwoOne and Abertis was only 2.5 points, which meant the contest was too close to call.

TwoOne's bid for Bratislava airport was awarded 77.75 out of 100 points, while Abertis scored 75.25 points.

Under the tender scoring system, different weightings were given to the amount of money offered and what the bidders said they planned to do with the airports. Thus, while TwoOne offered Sk6 billion (€159 million) for the Bratislava airport and Abertis only Sk3.3 billion (€79.5 million), the latter's investment and business plans for the facility were judged far better than those of TwoOne.

The Transport Ministry promised that the second round results would remove all doubt over the tender.

"The offers will be evaluated objectively, which should disperse any doubts regarding the legitimacy of the process," read a ministry press release.

Notwithstanding Prokopovič's explanation that the first round tender results had been inconclusive, the staging of a second round was also due to a dispute among the parties of the ruling coalition over awarding the tender to TwoOne.

The presence of nearby Vienna Airport in the winning consortium had aroused fears it would stifle development at Bratislava airport to prevent unwanted competition.

Under Slovak privatization rules, the cabinet has the last word on tender commission recommendations.

While Prokopovič had said earlier that a second round was an option, it is the first time it has been called in a privatization tender in Slovakia since 1998.

TwoOne was clearly unhappy at having to bid again after having apparently won the first round.

In a memo sent to The Slovak Spectator, the consortium said that the terms of the second round were highly controversial and gave Abertis the advantage.

"These conditions do not meet EU tender standards. We believe the total purchase price should be the selection criterion. TwoOne will explore legal steps, and though it will participate in the second round, it will continue to protest [the conditions]," said Michael Fazekas, the leader of the TwoOne consortium.

The consortium worried that under the terms of the second round TwoOne might lose even if it offered the highest total price for the airports.

The difference between the two first-round bids was Sk2.7 billion (€72 million). TwoOne argued that even if the Abertis consortium offered only Sk1 more in the second round than TwoOne, it would win, meaning the Slovak state budget would have to forego the Sk2.7 billion extra it would have received if the first round results had stood.

Nor is TwoOne the only unhappy bidder. Independent Slovak Airport Partners (ISAP), made up of Germany's Cologne-Bonn Airport, the Galaxy Infrastructure Fund, the Canadian SNC-Lavalin International, and Austrian Airport Consulting Vienna, came third in the official rankings, but claimed it had actually offered a far higher price for the assets. ISAP said the tender commission had not acknowledged its full offer, and demanded an independent investigation.

ISAP also lashed out at the government for not inviting ISAP to bid in the second round.

"Ghost" MP votes in parliament

As if the tender turmoil were not enough, the Slovak parliament experienced a bizarre failure in its voting apparatus on January 24.

The legislature was voting on a motion brought by 30 opposition MPs to have the airport tender halted.

Boris Zala, an MP for the opposition Smer party who is currently in Australia, according to the results of a parliamentary ballot recorded by the apparatus, voted against the opposition proposal, even though he was on the other side of the globe.

Although the bill would have been rejected even if Zala's "vote" had not been mistakenly recorded, Smer boss Robert Fico demanded that parliament repeat the vote, and called it an "international scandal".

Parliamentary spokesman Michal Dyttert said it had been a technical error, and ruled out human intervention.

The device had mistakenly registered Ján Bielik, an MP for the ruling coalition Christian Democrats, under Zala's parliamentary ID number. Bielik ended up voting on parliamentary business under Zala's name all day.

Smer has promised repeatedly that if the party gains power following September 2006 general elections, it will overturn the results of the privatization.

"Whoever supports the privatization, supports foreign interests, and whoever rejects it, supports Slovakia's interests," Fico said.

Litany of trouble

TwoOne's pursuit of the Bratislava and Košice airports has been troubled from the beginning, with concern that Vienna's Schwechat Airport might throttle the development of Bratislava's MR Štefánik airport.

In late December, a tender advisor said that TwoOne had presented the weakest business plan for the Bratislava and Košice airports, but the consortium rejected the charge.

TwoOne said that developing Bratislava and Košice airports and making air transport accessible to the citizens of both regions was a priority for the consortium.

TwoOne was also an actor in earlier complaints regarding financial and ownership links between Austrian A-way, bidding in the tender with the French company Vinci, and Raiffeisen Holding, which controls Raiffeisen Zentralbank, a major party in the TwoOne consortium.

Slovak privatization law forbids the submission of bids by parties connected in any way.

Vinci Concessions withdrew from the running on November 13 last year after the media exposed the financial connection.

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