Govt invites bids for airport upgrade

The government has said that joint venture companies bidding for Delhi and Mumbai airports must have an authorised capital of at least Rs 250 crore with an initial capital subscription of Rs 200 crore.

This is one of the conditions put by the government in the final transaction documents for the modernisation and restructuring of Delhi and Mumbai airports released to bidders today. The award of bids is expected to be completed by the year-end.

"Bidders are expected to give technical and financial bids within two weeks with effect from August 31, 2005," says Ajay Prasad, secretary, ministry of civil aviation.

The government has also fixed the minimum capital investment required in the first five years at Rs 2,800 crore for Delhi airport and at Rs 2,600 crore for Mumbai airport.

After they win the bids, airport operators are required to meet certain minimum operational standards failing which the government will cancel the lease to the joint venture companies.

In case any company wants to change its partner, the first preference will be given to companies that have participated in the bidding process. It should also get the approval of the Airports Authority of India (AAI) and the government.

The bids will be awarded for an initial term of 30 years and can be extended by another 30 years. After the expiry or termination of the lease period, AAI will take over all the assets for operating the airports and will also have the option to take over all or any of the commercial or ancillary assets.

The documents also provide for a three-month transition period during which the airport management will be transferred from AAI to JVCs.

Current AAI employees posted at the airports would be retained for a minimum of three years on terms which are no less beneficial than the current arrangement, the documents says.

Airport operators will also have the first right of refusals to be a part of any new airports being developed within 150 kilometres of the present airport. If the company is not the successful bidder and its bid is within the range of 10 per cent of the most competitive bid received, the private consortium will be allowed to match first ranked bid in terms of the selection criteria for the second airport.

On the other hand, the liabilities of the government has been kept at Rs 50 crore. The principles of tariff fixation have been enclosed in a schedule to the agreement. Besides, the proposed Airports Economic Regulator will have a role in providing the required policy guidelines regarding fixing the various tarrifs at the airports.

The government is also planing to set up a second airport in Mumbai and a master plan for this is being developed at present.

However, the government is of the view that the present Delhi airport has the capacity to accommodate as much as 80 million passengers compared to the present 12.5 million and the city does not really require an additional airport.