Airport privatisation: Govt seeks more views

Process may hold up airport privatisation program

Minister for Civil Aviation Ashok Gajapati Raju has directed fresh consultations with state and central government organisations, airport and airline operators, passenger associations and travel operators before finalising the model concession agreement (MCA) for the construction and operations of airports in the country on a public-private partnership (PPP) basis. In a letter dated September 11, the minister’s office said, “With regard to the Concessionaire Agreement concerning PPP, for construction/operation of airports in the country, which may be entered in the future, the HMCA desires that a broad based consultation should be held with the following – relevant states and central government organisations/agencies, airport developers/operators, airline operators, representatives of passengers’ associations, representatives of travel operators.”

The minister desires that the consultation should be held prior to entering into PPP agreements and the views of the stakeholders should be given due consideration before finalisation of the agreement, the letter notes. A senior official in the ministry who did not wish to be identified said, “The aim of holding the consultation process is to ensure transparency. We want the terms and conditions to be clear and minimalise grievances of all stakeholders.”

The decision to initiate a fresh consultation process may briefly hold up the government’s programme to award management contracts at six identified airports in Chennai, Kolkata, Lucknow, Guwahati, Ahmedabad and Jaipur. The ministry had already determined the broad contours of the model concession agreement for awarding management contracts to private operators and an inter-ministerial group (IMG) was scheduled to meet on September 4 to finalise it. The meeting was postponed as a new secretary, V Somasundaran, assumed office a day before the scheduled meeting.

A senior ministry official had said last week, “We have been able to resolve most differences we had with the Planning Commission regarding the MCA for airport privatisation.” These management contracts were decided to be awarded to private operators at pre-determined rates, and not on a cost-plus basis, to protect passengers from high user charges after award of projects. The ministry has set for itself a realistic target of four airports in view of possible obstacles. For instance, there is a court case pending in relation with award of management contract for the Chennai airport to a private operator.
The MCA as well as the targets for award of management contracts may be re-worked with fresh consultation processes now considered for initiation.

The process to award management contracts for these six airports had been initiated last year by the previous government but the plan had to be put on the back burner following a difference of opinion between the Union civil aviation ministry, then led by Ajit Singh, and the Planning Commission, over the terms of the project-award agreement.

Several private and foreign infrastructure companies, such as IL&FS Transportation Networks, Essar Projects India, Cochin International, Essel Infraprojects, GVK, Fraport, Saudi Arabia, GMR Airports, Sahara Group and Turkey's Celebi Habacilik Holding AS, had evinced interest in these projects.