 "Concession fee at Navi Mumbai airport will not burden passengers: CIDCO")
CIDCO is the planning authority for the airport and will hold 26 per cent stake in the project. It will levy a minimum annual concession fee ranging from Rs 5 crore to Rs 1,250 crore on the selected developer. The fee will be levied over period of 60 years with an five per cent escalation annually. This will be a pass through component and developer will be able to recover it from passengers in form of a user fee.
“Based on the traffic projections the concession fee will not significantly add to user fees payable by passengers,” the official said. CIDCO estimates that in initial years it will lead to an additional levy of Rs 5-8 per passenger and double the amount in case levied only on departing passengers. This levy on passengers could be charged separately or included in user development fee which will be determined by Airport Economic Regulatory Authority.
In addition to concession fee, bidders will have to share a portion of revenue with CIDCO. CIDCO will invite bids or request for proposal for the project within a fortnight after receiving formal approval from civil aviation ministry. The first phase of the airport is expected to commence operations by end 2019.
Drawing lessons from Comptroller and Auditor General's observations on Delhi and Mumbai airport privatisation CIDCO has laid down clear guidelines with respect to revenue share mechanism.
Revenue form airport joint venture projects and deposits collected from lease of land will be subject to revenue share with CIDCO. The share of deposit paid to CIDCO will be reimbursed by the agency upon completion of lease terms and returned to lessee.
This has not been the case with Delhi airport and Mumbai airports which which have floated joint venture companies to manage ancillary services at airports. CAG had observed that the joint ventures had resulted in a revenue decline for AAI as income earned by the JV companies was not subject to revenue share arrangement.
Also deposits earned from lease of airport land in Mumbai and Delhi is not shared with AAI and is treated as a capital receipt.
“Bidders know upfront about the terms and so there is a far greater transparency. Bidders will make their own financial projections and calculate rate of return and accordingly quote revenue share percentage at bidding,” an aviation analyst remarked.
