Delhi mulls public private partnerships despite airport union protests

2012 04 30


INDIA's Ministry of Civil Aviation ministry is considering reviving public-private partnerships (PPP) to modernise 35 non-metropolitan airports and a few larger ones in major cities, after scrapping the idea in the face of airport union resistance.

"We are exploring the PPP mode for developing airports," said Civil Aviation Minister Ajit Singh, reported Live Mint-Wall St Journal.

The state-owned Airports Authority of India (AAI) modernised Chennai and Kolkata airport with cost overruns and missed deadlines rather than face down union opposition to privatisation.

"AAI has no money to modernise all airports of the country. It has invested substantially in two airports-Chennai and Kolkata. PPP is the most acceptable mode," said a senior aviation ministry official.

After eight years, the bidding process for modernisation of the Mumbai and Delhi airports started in May 2004 and bids were finally awarded in January 2006, signalling a landmark deal in Indian civil aviation history.

Delhi International Airport Pvt Ltd (DIAL), a consortium headed by the GMR Group, won the mandate to manage and develop the Indira Gandhi International Airport for 30 years, which can be extended by another 30 years.

Mumbai International Airport Pvt Ltd, a GVK group-led consortium, won the bid to manage and operate the Chhatrapati Shivaji International Airport, on the same terms.

Many of India's large industrial groups, including Anil Ambani's Reliance Group, Bharti Airtel Ltd, Sterlite Industries (India) Ltd, Essel Group and DSC Ltd had participated in the bidding. Companies such as IVRCL Infrastructures and Projects Ltd, Zoom Developers Pvt Ltd, Gammon Infrastructure Projects Ltd, L&T Infrastructure Ltd, Soma Enterprise Ltd and Unitech Ltd, apart from the groups that bid for the Mumbai and Delhi airports, took part in the government's plans to modernise 35 non-metro airports.

In August 2008, the government approved AAI's modernisation and expansion programme for the airport at Chennai at an estimated cost of INR18.08 billion (US$34.4 million) and for Kolkata airport at INR19.4 billion. Chennai airport was expected to be completed within 26 months of the award and Kolkata in 30 months. Both airports have missed their deadline.

"The terminal building of Chennai airport has been completed and it should be ready by the end of May. The civil works at Kolkata airport are finished and it will ready by July," said AAI official GK Chaukiyal.

Apart from the delay in completion, there has been a cost overrun as well. AAI is investing INR20.1 billion to build a facility that can handle 23 million passengers a year at Chennai and 25 million passengers at Kolkata INR23.2 billion. That translates into an overrun of 11.4 per cent at Chennai and 19.7 per cent for Kolkata.

"It missed the deadline for both the airports. AAI-led modernisation is not going to change the way airports are being operated. It's not their cup of tea," said a second unidentified civil aviation ministry official.

Source Shipping Gazette - Daily Shipping News
 

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