Govt hopeful of privatising six airports before 2014 polls

Move to award mgt contracts to pvt sector hit roadblock with sale of bid documents for Chennai, Lucknow airports postponed by several weeks

The ministry of civil aviation is hopeful of completing the process of privatising six major airports, including those at Chennai and Kolkata, within a time-frame and ahead of the general elections, scheduled to be held next year.

The ministry's move to award management contracts of these airports to private sector entities suffered a setback with the sale of bid documents for Chennai and Lucknow airports being postponed by several weeks.

Civil aviation secretary K N Shrivastava said, "We are quite optimistic about doing it within the time- frame. There is some cushion period available which we are using now.” The ministry is in the process of incorporating changes in the bid documents by holding consultations with various stakeholders.

"We are going through the process of consulting all stakeholders, including Planning Commission. We have held pre- bid consultations with prospective bidders. Our effort is to see that Request for Proposal (RFP), Requests for Qualification (RFQ), the concession agreement and other documents are properly drafted so that no issues are raised later," he added.

The private parties, which have evinced interest in participating in the operation, management and transfer of these airports at Chennai, Kolkata, Ahmedabad, Jaipur, Lucknow and Guwahati, have raised several issues including those relating to workforce and returns to be given to AAI.

It is understood that the delay in finalising the bid documents has been caused by legal and technical problems that have surfaced in finalisation the concession agreements required to be signed between AAI and the selected private entities for these six airports

As many as a dozen private sector entities including IL&FS Transportation Networks, Essar Projects India, Cochin International Ltd, Essel Infraprojects Ltd, GVK, Fraport, , GMR Airports Ltd, Sahara Group and Turkish firm Celebi Habacilik Holding AS, had shown interest in participating in the Chennai airport project. Their representatives had also visited the airport for site inspection last week.

In early September, the AAI had launched the process of allowing private parties to pick up 100 per cent equity stake in operation and management of six airports through the public-private partnership (PPP) mode. The successful bidder will enter enter into partnership with the AAI for a 30-year period lease to operate, manage and develop facilities at these airports. The scope of the project includes the entire airport, including the airside and city side facilities.

The move has come under severe criticism from several quarters, including airlines and their global representative body, International Air Transport Association, primarily on the grounds that it would lead to massive hike in airport costs and charges. To address such concerns that privatization of the six brownfield airports may result in higher charges for passengers, the tariff to be levied post privatization would be determined prior to awarding the projects. Any price increase would be linked to the wholesale price index to ensure certainty regarding charges even after the private concessionaire takes over operations.