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Kannur airport to adopt Cial model for development

Kannur airport to adopt Cial model for development
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First Published: Wed, Mar 10 2010. 09 21 PM IST

Fast track: Kannur International Airport director V. Thulasidas. Madhu Kapparath/Mint
Fast track: Kannur International Airport director V. Thulasidas. Madhu Kapparath/Mint
Updated: Wed, Mar 10 2010. 09 21 PM IST
Mumbai: Following the successful replication of the Cochin International Airport Ltd’s (Cial) holding structure by other airports, Kerala’s fourth international airport at Kannur will also see the state government’s holding in it capped at 49% and the balance stake parcelled among financial institutions, entrepreneurs and other entities.
Fast track: Kannur International Airport director V. Thulasidas. Madhu Kapparath/Mint
The Kerala government made a decision towards this in late February, said V. Thulasidas, special officer and director of Kannur International Airport Ltd (Kial), the company formed by the state government for the construction of the airport.
“Cochin airport’s model was (a) widely accepted model in the country and the state want(s) to cap pure government holding at 49%,” he said.
The Kerala government will form a consortium of public sector enterprises and other government-sponsored firms to pick stakes in the greenfield airport in north Kerala, said Thulasidas.
The state government will likely hold 24% and the public sector and government-sponsored firms 25%. The balance stake will go to private companies, high networth individuals and individuals.
No decision has been taken so far on a cap for shareholding by private investors. In Cial, the state government is the single largest shareholder with a 35% stake.
In a March report on the domestic civil aviation industry, global audit and consulting firm Ernst and Young had recommended a similar model. “The government could consider sharing the responsibility for development on non-operational airstrips and airports with state industrial development organizations, corporate and state governments,” it said.
Thulasidas, a former chairman and managing director of National Aviation Co. of India Ltd, which runs Air India, said the idea behind adopting the Cial model was to fast-track the commissioning of the construction and commercial operations, as it allows for faster selection of international partners.
“We are expecting to start airport construction by April-end and commercial operations by 2013,” he said.
The state government has already acquired 60% of the land required for the airport project. “We are expecting to complete land acquisition up to 85% by April-end. The remaining land is not critical for aeronautical operations, but for non-aeronautical functions,” Thulasidas said.
V.J. Kurien, chairman of the Spices Board of India, a trade body, and who was instrumental in forming Cial, said the Cochin airport model would be most suitable for Kial.
Thulasidas said the state government would initiate discussions with public sector enterprises, followed by talks with government sponsored firms.
Public sector enterprises that could be interested in picking up a stake in Kial include Cial, Kerala State Industrial Development Corp. Ltd, Kerala Industrial Infrastructure Development Corp. Ltd and Infrastructures Kerala Ltd, Thulasidas said.
The Kerala government had initially planned to opt for the greenfield airport models of Hyderabad and Bangalore, wherein the government forms a company and later adds joint venture partners through global bidding for 74% of the stake.
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First Published: Wed, Mar 10 2010. 09 21 PM IST