1. Eight firms buy into ministry’s airport privatisation story

Eight firms buy into ministry’s airport privatisation story

At least eight companies, including Adani Ports & SEZ as well as GMR and GVK Group firms, have approached the civil aviation ministry...

By: | New Delhi | Updated: February 12, 2015 1:23 AM

At least eight companies, including Adani Ports & SEZ as well as GMR and GVK Group firms, have approached the civil aviation ministry showing their interest in taking over Chennai, Kolkata, Ahmedabad and Jaipur airports, which are being privatised.

The firms have sought clarifications on issues related to privatisation of the airports that have recently seen substantial upgradation with government funds. The Airports Authority of India invested R5,300 crore in the aiports.

The cost of further development of these airports are yet to be estimated, but in case of the Chennai Airport, the private developer will have to infuse a sum of around R500 crore to establish a metro rail connectivity to the city. Once the airport operations are privatised, the number of airports in the country which are run by private firms will increase to eight. Currently, Delhi, Mumbai, Bangalore and Hyderabad airports, developed by private companies, are run by them — while GMR runs Delhi and Hyderabad airports, GVK is operating Mumbai and Bangalore ones.

Although the civil aviation ministry hasn’t announced the bidding schedule for the four other airports on the privatisation path, sources say the process could start in April.

The other five firms that have established contacts with the civil aviation ministry on issues related to the bidding process are Flemingo DutyFree Shop, Siemens Postal Parcel & Airport Logistics, International Business Development Flughafen Zurich AG Postfach, Bhadra International (India) and Egis India Consulting Engineers.

Top civil aviation ministry officials said more companies are expected to participate in the bidding process for privatisation of the four airports, a lucrative and a win-win deal as these airports have already been developed and modernised by the AAI.

A top civil aviation official said the process for bidding has been expedited and the matter is being overseen by the Prime Minister’s Office, as AAI and various departments within the civil aviation ministry are preparing the bidding documentation.

The Comptroller and Auditor General (CAG) had earlier observed that privatisation of Delhi and Mumbai airports resulted in erosion of public funds and extracting more money from air passengers.

“We do not want to go the the same way as the government formulated the PPP model for Delhi and Mumbai airports. The issue is being monitored at the highest level,” said a civil aviation ministry official, without elaborating on how the new bidding conditions would be different.

The civil aviation ministry may be inclined to let companies with experience in airport management to take up the four airports on offer. “But it will all depend on how these companies bid for these airports,” said an official requesting anonymity.

Last month, the AAI on its website had posted tenders inviting potential bidders to submit applications and called request for qualification (RFQ), to operate, manage and develop these four airports through public-private partnerships.

The move marks a turnaround for the Narendra Modi’s government, which in November 2014 decided against privatising Chennai and Kolkata airports, as it had spent R2,400 crore each to modernise them in 2013.

AAI unions are against further privitisation as they fear job losses. A large number of AAI employees on Wednesday staged protest near the office of civil aviation minister Pusapati Ashok Gajapathi Raju. Since past few days AAI employees have been holding protests during the interval period near the minister’s office inside the Rajeev Gandhi Bhawan.

Even airlines are worried that following privatisation, airport charges will be hiked, which will put an additional burden on their finances. The airport charges have gone up by 346% in Delhi airport, 269% in Chennai airport, 385% in Kolkata airport and 164% in Mumbai airport over the last three years.

On the tarmac
* Adani Ports & SEZ as well as GMR and GVK Group firms seek more information on privatisation of Chennai, Kolkata, Ahmedabad and Jaipur airports. Sources say the bidding process could start in April
* Flemingo DutyFree Shop, Siemens Postal Parcel & Airport Logistics, International Business Development Flughafen Zurich AG Postfach, Bhadra International (India) & Egis India Consulting Engineers also show interest in bidding process

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