Tatas opt out of race for privatisation of Chennai airport

Bidding norms bar airlines or group entities from owning more than 10% in SPV selected to manage airports

Tata Realty and Infrastructure Ltd (TRIL)’s plan to participate in the airport privatisation projects in the country has hit a roadblock.

The company has decided to opt out of the race for Chennai airport privatisation programme, as the bidding norms do not allow airlines or its group entities to own more than 10 per cent in the special purpose vehicle selected to manage the airports.

In response to a query, a TRIL spokesperson said: “Given the conditions in the RFQ (request for qualification) documents for the bidding process of Chennai airport, TRIL is not eligible to bid for the Chennai airport.”

Tatas and Singapore Airlines have formed a 51:49 venture to start a full-service airline in India and had secured a clearance from the FIPB.

The Airports Authority of India had in September floated a request for qualification for privatisation of six airports — Chennai, Kolkata, Guwahati, Ahmedabad, Lucknow and Jaipur. A meeting with prospective bidders was held and 11 companies —  including Infrastructure Leasing and Finance Services, Essar Infrastructure, Tata Projects, Tata Realty and Infrastructure, GMR Group and Anil Ambani’s Reliance Group — evinced interest in bidding for the privatisation projects of the Chennai and Lucknow airports.

The companies suggested a host of changes in the bid document. Tata Realty had suggested a modification to the rules, which says the special purpose vehicle (SPV) to be formed would not include any equity ownership of a scheduled airline, cargo airline or its group associates exceeding 10 per cent of the total equity of such a SPV. While some amendments were incorporated in the document, the date for submission of the application for pre-qualification was repeatedly extended. According to the original schedule, the airport projects were to be awarded by January-end.

The company had bought RFQ documents for Chennai airport.

According to the qualification documents issued recently by the ministry of civil aviation, private players awarded the contracts for operations, management and development in the second phase would have to make estimated investments of Rs 500 crore to Rs 1,200 crore for development and upgrade works at each of these airports.

In 2007, Tata Realty had entered into a joint venture with Singapore’s Changi Airport to develop and manage Indian airports. The two groups had planned to take up modernisation projects at Chennai, Kolkata and other airports. But the projects are still to take off.