Mumbai: International airport operators have sought regulatory certainty and the ability to own as much as 26% in Indian airports as conditions for investing in such projects.
“We know that with a minority shareholding, we cannot push things forward. India is a great market, but it should have a master plan for airports with lot more stability and better framework,” said Kai Zobel, vice-president (global investments and management) at Germany’s Fraport AG. “We need a clear picture about the policy and clear government support.”
Fraport owns 10% in Delhi International Airport Ltd and is currently in negotiations with its promoter GMR Group to sell its stake.
“We are currently in discussions with GMR Group for selling the stake. We have not fixed any price levels. But definitely we will be bidding for future projects,” Zobel said.
Christian Sigg, vice-president (international business development) at Flughafen Zurich AG, which runs Zurich Airport, said his company would not mind bringing in more funds as long as there is policy certainty and clear regulations.
“We can invest more money if we are comfortable about the project,” Sigg said. Zurich Airport holds 5% in Bangalore International Airport Ltd, now controlled by GVK group. Earlier, Zurich Airport sold a 12% stake in Bangalore International Airport to GVK Group.
He said Flughafen Zurich would be looking at the proposed airport projects in Navi Mumbai and Goa.
The US-based airport operator ADC and HAS Airports Worldwide have also said that they would be interested in these two airport projects.
Jorge S. Roberts, director (project development) at ADC and HAS, said India should have a clear cut regulatory framework for airport projects. ADC and HAS have tied up with Essel Infraprojects Ltd of Mumbai to bid for Indian projects.
Sumeet Dhawan, senior vice-president (corporate affairs and special projects) at Essel Infraprojects, said his company would be keen to participate in the bidding of Navi Mumbai and Goa projects.
“We will decide about the stake position when the bids are out for these projects,” Dhawan said.
International airport operators have become apprehensive about regulations after the ministry of civil aviation asked airport companies of Mumbai, Delhi, Chennai and Kolkata to abolish airport development fee (ADF) starting 1 January.
ADF is the levy imposed on passengers by airport operators to fund the construction of airport infrastructure. ADF was originally approved by the airport tariff regulator— Airport Economic Regulatory Authority (Aera).
Also, Aera was not formed when the bidding for Mumbai and Delhi airports took place in 2005. The government auditor had criticised the ADF levy.
Amitabh Malhotra, managing director of investment banking firm Rothschild India, said the confidence of Indian industries has been shaken because of macro issues.
Malhotra said foreign airport operators would stay out of India because of the lack of stability in the Indian regulatory framework. He said there are several country-specific issues where foreign investors were not treated well.
Malhotra was instrumental in getting foreign airport operators to India when modernization of Mumbai and Delhi airports happened in 2005.
“Forget about Aera, there are several differences between Airports Authority of India and ministry of civil aviation,” Malhotra said.
Manikkan Sangameswaran, president (infrastructure) at ICICI Venture Funds Management Co. Ltd, said foreign airports operators were not in a position to pick up majority stakes when airports were modernized in 2005.
Sangameswaran had then advised government and airport companies.
Sangameswaran said the confidence of airport operators were affected to an extent, but the bidding documents have contained the risk of a future airport tariff regulator.
However, V.P. Agrawal, chairman of Airports Authority of India, said that these foreign airport operators brought in money but not expertise as promised.