 "Sanjay Bhatia, VC & MD, CIDCO")
The City and Industrial Development Corporation (Cidco) has received the civil aviation ministry's nod for request for proposal (RFP) for the Navi Mumbai airport. It, however, is yet to get the crucial security clearance for four qualified bidders from the home ministry. Cidco vice-chairman and managing director Sanjay Bhatia tells Sanjay Jog and Aneesh Phadnis that the first phase would be up and running by December 2019. Excerpts:
Potential bidders have raised doubts over the cost of pre-development works for the Navi Mumbai airport. What is your take?
Pre-development works will be executed by Cidco and the cost will be treated as interest-free loan to be paid after 10 years. So, there is no immediate burden on the developers. Bids for pre-development works are under consideration and technical scrutiny is on. We are likely to open financial bids on January 20. So the potential bidders will know whether these works will cost Rs 3,100 crore or less. The bidders will have a clear idea of cost when they will submit bids in five months. Let them take these costs into consideration at the time of bidding. I do not think there is a risk.
The Navi Mumbai airport project work might stick to its time lines, but connectivity projects including the trans harbour sea link, too, need to keep pace. Is that not a concern?
We’re targeting 2019-end for the first flight to take off from the airport. All the connectivity projects have commenced and will be complete by 2017-18. The airport project does not depend on the Mumbai Trans Harbour Link (MTHL), because there is enough population in Navi Mumbai. Plus, there will be passenger movement from Pune or Thane. The travel time between Nariman Point and Navi Mumbai has already reduced to an hour. The trans harbour sea link will be a bonus for the airport. Already, Japanese International Cooperation Agency has given approval for its loan to the MTHL project. The environment ministry has also given its clearance. The construction of the airport and trans-harbour sea link projects will proceed simultaneously.
Will the first-phase capacity of 10 million be inadequate considering traffic growth projections?
Yes, that is inadequate. Therefore, we have put a trigger in the request for proposal (RFP) that as soon as particular percentage (of traffic growth) is crossed for three months, the developers will have to start work on phase two of the project to increase capacity to 25 million passengers. Actually, the developers would have to start planning for phase-two before the first phase of 10 million is ready in 2019.
Can the developers build a larger airport to handle more than 10 million passengers in the first phase?
Yes. That is possible.
Passengers might continue to prefer the Mumbai airport and there is a fear that the Navi Mumbai airport might lose traffic to Mumbai. What is your comment?
Is there such a fear? The Mumbai airport has a design capacity of 38 million and now it is being said the airport would be able to handle 45 million passengers. Already, it is close to handling 38 million passengers. The percentage growth in the past three years is 13 per cent. By 2019, air traffic in Mumbai is expected to grow to 55-60 million passengers.
Mumbai will have a capacity for 45 million passengers and we are building an airport, which will handle 10 million passengers. In my opinion, there is no issue of loss of traffic.
What is the status of land acquisition for the airport project?
We require 1,160 hectares of land for the airport. Two-hundred and ninety-one hectares were not in our possession. This is private land. The residents of all the 10 villages spread over these 291 hectares have given their consent for land acquisition and we have already taken possession of 130 hectares. We expect to receive possession of the remaining land in the next three or four months.
There is a real estate development component in Mumbai and Delhi airport projects, but there is no such plan in the Navi Mumbai airport. Bidders see that as a negative. What is your view?
The Navi Mumbai airport project will be viable on its own. An airport project should be viable because of passenger traffic and not because of extra commercial land. The Navi Mumbai airport will follow the hybrid till model for revenue (under which charges are calculated by taking all aeronautical and 30 per cent of non-aeronautical revenue into account). The Airports Economic Regulatory Authority allows cost-plus model for developers. Even now, the Delhi airport is running because of aeronautical and non-aeronautical revenue from inside the airport and not from land rentals.
Potential bidders have raised doubts over the cost of pre-development works for the Navi Mumbai airport. What is your take?
Pre-development works will be executed by Cidco and the cost will be treated as interest-free loan to be paid after 10 years. So, there is no immediate burden on the developers. Bids for pre-development works are under consideration and technical scrutiny is on. We are likely to open financial bids on January 20. So the potential bidders will know whether these works will cost Rs 3,100 crore or less. The bidders will have a clear idea of cost when they will submit bids in five months. Let them take these costs into consideration at the time of bidding. I do not think there is a risk.
The Navi Mumbai airport project work might stick to its time lines, but connectivity projects including the trans harbour sea link, too, need to keep pace. Is that not a concern?
We’re targeting 2019-end for the first flight to take off from the airport. All the connectivity projects have commenced and will be complete by 2017-18. The airport project does not depend on the Mumbai Trans Harbour Link (MTHL), because there is enough population in Navi Mumbai. Plus, there will be passenger movement from Pune or Thane. The travel time between Nariman Point and Navi Mumbai has already reduced to an hour. The trans harbour sea link will be a bonus for the airport. Already, Japanese International Cooperation Agency has given approval for its loan to the MTHL project. The environment ministry has also given its clearance. The construction of the airport and trans-harbour sea link projects will proceed simultaneously.
Will the first-phase capacity of 10 million be inadequate considering traffic growth projections?
Yes, that is inadequate. Therefore, we have put a trigger in the request for proposal (RFP) that as soon as particular percentage (of traffic growth) is crossed for three months, the developers will have to start work on phase two of the project to increase capacity to 25 million passengers. Actually, the developers would have to start planning for phase-two before the first phase of 10 million is ready in 2019.
Can the developers build a larger airport to handle more than 10 million passengers in the first phase?
Yes. That is possible.
Passengers might continue to prefer the Mumbai airport and there is a fear that the Navi Mumbai airport might lose traffic to Mumbai. What is your comment?
Is there such a fear? The Mumbai airport has a design capacity of 38 million and now it is being said the airport would be able to handle 45 million passengers. Already, it is close to handling 38 million passengers. The percentage growth in the past three years is 13 per cent. By 2019, air traffic in Mumbai is expected to grow to 55-60 million passengers.
Mumbai will have a capacity for 45 million passengers and we are building an airport, which will handle 10 million passengers. In my opinion, there is no issue of loss of traffic.
What is the status of land acquisition for the airport project?
We require 1,160 hectares of land for the airport. Two-hundred and ninety-one hectares were not in our possession. This is private land. The residents of all the 10 villages spread over these 291 hectares have given their consent for land acquisition and we have already taken possession of 130 hectares. We expect to receive possession of the remaining land in the next three or four months.
There is a real estate development component in Mumbai and Delhi airport projects, but there is no such plan in the Navi Mumbai airport. Bidders see that as a negative. What is your view?
The Navi Mumbai airport project will be viable on its own. An airport project should be viable because of passenger traffic and not because of extra commercial land. The Navi Mumbai airport will follow the hybrid till model for revenue (under which charges are calculated by taking all aeronautical and 30 per cent of non-aeronautical revenue into account). The Airports Economic Regulatory Authority allows cost-plus model for developers. Even now, the Delhi airport is running because of aeronautical and non-aeronautical revenue from inside the airport and not from land rentals.
