Govt considering EPC model to revive unused airports

To encourage private-sector participation in airport development, the government is considering the engineering procurement and construction (EPC) route to revive unused airports, sources said.

Under the EPC model, the Airports Authority of India (AAI) will select a project management consultancy through tender to develop airports. "We might involve private parties for every function of developing the airport - from conceptualising, tender and designing," said a civil aviation ministry official.

One reason for involving the private sector in construction of the airports is that the government does not want the airports to become dormant assets.

"Hence, factors such as strategic location and viability studies need to be taken seriously. Here, private players can bring in a lot of expertise," said the official cited above.

The EPC model ensures early and smooth completion of projects because the government bears the entire financial burden unlike in public-private projects, where the money - partly or entirely - has to be brought in by the concessionaire.

While presenting the Budget for 2016-17, Finance Minister Arun Jaitley had said the government was drawing up an action plan for revival of around 160 airports.

There are, however, concerns that these projects might not attract interest from bigger private players unless the contract to build multiple airports are given together. "It is not building from the scratch. The cost of reviving a single airports will be Rs 50-60 crore. So the tenders should be for multiple airports to encourage bigger players," said an executive of a company, which has worked with the AAI in the past.

Civil Aviation Secretary R N Choubey said the plan was to develop 50 airports in the first three years.

Last year, the government had decided to drop the plan of involving private players in the development, maintenance and operating airports at Kolkata and Chennai.

ACTION PLAN

• Govt to involve private players via EPC model to revive airports
   
• Action plan for revival of 160 unserved and underserved airports and airstrips was announced in the Budget
   
• 50 airports will be developed in the first phase in the first three years
   
• Experts say the projects might not gain interest from bigger private players unless the contract to build multiple airports are given together

EPC is engineering, procurement, and construction