Protection likely for airport firm

The government proposes to give the consortium that bags the Delhi and Mumbai airports modernisation contract the first right of refusal to be a partner in any green-field airport coming near the two cities.

This has been done to protect the business interests of companies in the private sector-led consortium that is to take up the task of upgradation.

This step has been proposed to ensure that the companies do not lose business in-terms of passenger traffic and aircraft traffic completely.

This move will be useful for the private sector companies as the government is contemplating to set up a green-field airport in Navi Mumbai. A proposal has also been mooted for an airport in Greater Noida.

It is pointed out that the investment required for modernising each airport will cost anywhere between Rs 5, 000 crore and Rs 10,000 crore.

"After such huge investments, we must take steps to protect the business interests of these companies," said a government official.

According to civil aviation ministry officials, the government will offer the concessions for the two airports for a limited period of time and not forever.

The time-frame for this concession will be agreed upon with the bidders at a later stage.

As per the initial consideration of the government, the airports contract will be awarded to the private sector-led consortium for a period of 30 to 50 years, which can be extended by another 20 to 40 years at the end of the initial period of agreement.

The government is currently in the process of finalising the bid document for the privatisation process and expects to finalise it by January end.

Once the documents are finalised, the bidders will be asked to submit both technical as well as financial bids.

Officials said that the government expected to short-list the joint venture partner by mid-2005. It is anticipated that the airports will be handed over to the joint venture partner by August-September 2005. The government kicked-off the airport privatisation process about 12 months back.

The government is also proposing a lock-in period of at least seven years for the Indian company in the consortium as well as the airport operating partner. If there is a foreign investor in the venture, it will also be subject to a similar lock-in.