Govt may restrict pvt developers from bidding for third airport

Govt may restrict pvt developers from bidding for third airport
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First Published: Mon, Mar 24 2008. 01 16 AM IST

Updated: Mon, Mar 24 2008. 01 16 AM IST
Claiming it wants to avoid creating new monopolies in the booming airport construction and modernization business, the civil aviation ministry is planning to restrict private developers to a maximum of two non-metro airports.
Contracts for modernization of two dozen non-metro airports across India will be opened for bidders over the next two years. It is estimated that India needs some Rs1,600 crore private investment at 35 non-metro airports, many of which have seen traffic swelling over the past three years as more low-fare airlines and international carriers enter the market.
GVK Power and Infrastructure Ltd, Reliance Anil Dhirubhai Ambani Group’s Reliance Energy Ltd, GMR Infrastructure Ltd, Tata Realty and Infrastructure Ltd, L&T Infrastructure Ltd, Unitech Ltd, Omaxe Ltd and Ansal Properties and Infrastructure Ltd are among those vying for business at the non-metro airports. Many of these, with little experience in airport-related development, have partnered with international airport operators such as Changi Airports International or Fraport AG to bid.
NON-METRO FOCUS (Graphic)
In the next three months, the selection process will require the ministry to shortlist five companies, which will then be asked to submit a financial bid before the final selection. However, since the selection criteria follows a set pattern and parameters, it is likely that the same developers, if they apply, will be shortlisted among the top five each time the government seeks a proposal for the remaining22 airports.
The ministry is planning to restrict operators from bidding for other airports if they have already won contracts for two airports, according to a senior government official familiar with the process who did not wish to be identified. A developer may be allowed to bid for more airports only after meeting project deadlines on the first two projects as stipulated by the government.
“What it basically means is that a few shall not get too much of work,” said the same official. “If someone has 10 airports to develop, work will suffer. It may also not be completed in a time-bound manner. And, we don’t want that.”
The official declined to elaborate while clarifying the new rules would not apply to metro airports, where business houses such as Bangalore-headquartered GMR Group, have already won contracts for New Delhi and Hyderabad.
Not everyone thinks it is a robust idea. “You can get out of the loop by forming a different company. Just two airports without reasoning seems hasty,” says Robey Lal, a private consultant, who was formerly a member of operations at the Airport Authority of India, or AAI.
The AAI, both a regulator for airports and an entity through which the government owns stakes in airfields in the country, is modernizing 35 non-metro airports spending more than Rs5,500 crore, but the ministry wants the development of terminals, cargo complexes, airport hotels, parking bays, and malls—collectively called city-side development—at 24 of these airports to be done with private players through what are dubbed as public-private partnership, or PPP, models.
Two city-side development contracts have already been put for up for bids at Udaipur’s Maharana Pratap Airport and Amritsar International Airport, which together have about 60 acres of land parcel to be developed.
Nearly two dozen infrastructure and construction companies are seeking to develop these two airports, compared with just five such bids thatwere received in 2005 for New Delhi’s Indira Gandhi International Airport, which was won by GMR Infrastructure-led consortium.
Besides Amritsar, Udaipur, Tiruchirappalli and Visakhapatnam, the other airports that will be developed using the PPP model include Ahmedabad, Jaipur, Lucknow, Bhopal, Guwahati, Madurai Ranchi, Thiruvananthapuram, Mangalore, Aurangabad, Indore, Khajuraho, Dimapur, Bhubaneswar, Agartala, Varanasi, Dehradun, Raipur, Rajkot and Vadodara.
When asked how the ministry’s latest plan would impact plans, a senior Tata Realty and Infrastructure executive said his firm was “sort of losing (interest)” after waiting for four months for Amritsar and Udaipur airport contracts. “Last minute, they changed plans to privatize Kolkata and Chennai airports. I am not sure what the plan is. We need to see signs that they are serious,” said the same executive, requestinganonymity.
The ministry revisited its Udaipur privatization plan after it found that the airport had five times the land available for commercial development from what was initially estimated. The selection of financial consultants to evaluate the bids too is still being finalized.
At Kolkata and Chennai, the AAI decided to undertake expansion and modernization plans on its own.
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First Published: Mon, Mar 24 2008. 01 16 AM IST