New Delhi: The private managers of the airports at New Delhi and Mumbai, who are spending more than Rs5,000 crore to upgrade the two airports to meet a March 2010 deadline, are set to be penalized for delays in the execution of modernization projects, the civil aviation ministry said.
The ongoing delays, ranging between a few weeks for Delhi and up to six months for the Mumbai airport, raise the prospect that the two projects could miss the deadline of the much anticipated Commonwealth Games, scheduled for October 2010, according to one independent analyst.
The airports in the two metros, which handle more than half of India’s air-passenger traffic, which was about 32 million passengers in 2006, were given on a 30-year lease to private consortia.
Delhi International Airport Ltd (DIAL), the consortium in charge of airport modernization in the capital, is led by Hyderabad business house GMR Group. Meanwhile, the GVK Group, also led from Hyderabad, was awarded the Mumbai International Airport Ltd (Mial) contract.
Under an “operations, management and development agreement” with the Airports Authority of India (AAI), the regulator that looks after airport development in the country, by the end of fiscal 2010, both operators are to execute about 32 mandatory “subprojects” each, including upgradation of passenger facilities, modern runways, new terminal buildings and other infrastructure. But work at both the airports is running behind schedule.
“They need to comply with the time or make up for the lost time,” civil aviation secretary Ashok Chawla said. “And they have to pay the penalty as prescribed in the agreement. There can’t be any getting away from that.” Chawla said fines?haven’t?yet?been?finalized.
Civil aviation minister Praful Patel told reporters last fortnight that the Mumbai airport looked at least six months behind schedule. But Chawla said he could not confirm if the Delhi airport would, for sure, miss the Commonwealth Games deadline. India is spending more than Rs3,300 crore to prepare for the games.
Chawla, who is also heads a committee overseeing the progress of the Delhi and Mumbai projects, said, he has called for a meeting next month to review the progress in capital exependiture in the last year and to study the delays and associated issues.
The ministry asked AAI, which has been monitoring the technical parameters of the project, to submit its findings on the progress made under various milestones in the agreement with DIAL—a consortium of GMR Infrastructure Ltd, Fraport AG, Eraman Malaysia and India Development Fund—and Mial, led by GVK Power & Infrastructure Ltd, Airports Co. South Africa and Bidvest Group.
Under the agreement with AAI, the two private airport operators have to pay 0.5% of the relevant project cost for each week of delay for large subprojects. There are other fines for not meeting targets on other ongoing work handed over by AAI in 2006.
“It’s not that we are not aware of what’s going on,” said Mial spokesperson Manish Kalghatgi. “But there are several issues involved where we can’t take a unilateral call.” The expansion of the Mumbai airport has been delayed in part, he said, because of encroachment onto airport land by slumdwellers and the unavailability of land around it.
For instance, Kalghatgi said, Mial had to give up plans of constructing a parallel runway because the two runways need to be separated by more than a kilometre under airport construction rules. But this is possible only if the densely populated land around the airport is taken over, he said. “I don’t think there should be any penalties. We will meet the guidelines of the agreement and speed up the work,” he said, without specifying how Mial plans to meet the deadline. DIAL spokesman Arun Arora wasn’t available for comment.
Kapil Kaul, a New Delhi-based analyst with the Centre for Asia Pacific Aviation, said both the projects are likely to be delayed by at least 10-12 months. The government needs a monitoring committee to look into the implementation of the project on a day-to-day basis or “else, the Delhi airport might not be ready even after the Commonwealth Games take off,” he predicted. “The new terminal planned at the Delhi airport is highly unlikely to achieve its target.”
Shares of GVK Power & Infrastructure closed unchanged on Friday at Rs400.25 a share, while those of GMR Infrastructure rose to Rs496.40 a share, on BSE.