"Indian cabinet clears airport privatisation"

Friday, September 12, 2003

Cabinet clears airport privatisation 
74% stakes in Mumbai, Delhi airports to be divested; AAI to control air
traffic 
Our Economy Bureau in New Delhi 
India - The Business Standard


The Union Cabinet today cleared the civil aviation ministry's proposal to
privatise the Mumbai and Delhi airports. 

This comes five years after Prime Minister Atal Bihari Vajpayee first talked
of the corporatisation and upgradation of metro airports. 

The privatisation proposal entails setting up a joint venture company and
divesting 74 per cent stake to the private player. 

The Airports Authority of India (AAI) will retain 26 per cent and continue
to hold charge of air traffic control and security. 

The civil aviation ministry has set April 2004 as the deadline for the
completion of the process. An empowered committee, comprising the ministers
of civil aviation, finance, law and disinvestment, has been set up to
finalise the financial parameters for evaluation of bids and the tariff
formula. 

The government will sign a concession agreement with the private partner for
30 years, which can be extended by another 30 years. 

Though the financial details would be worked out in the next few months, the
private player might be required to pay an annual concession fee to the AAI,
which would be the basis for evaluation of bids, civil aviation ministry
sources said. 

The sources said the private operator would have the right to conduct
ground-handling services at the two airports. 

The operator may provide the services on its own or enter into a joint
venture with a partner of its choice or the AAI, Indian Airlines and
Air-India. 

The employees of the existing airports will be sent on deputation for three
years to the joint venture companies formed, after which they can choose to
return to the AAI or remain with the new companies. The Mumbai and Delhi
airports together employ 9,000 people. 

The bidders will have to submit a concept design of the airports alongwith
their bid. The successful bidder will have to prepare a master plan of
development of the airports within a year. 

The government will engage a global technical adviser for the selection or
architectural design and to monitor the projects. 

This is the second time that the civil aviation ministry has sent a proposal
for the privatisation of the Delhi and Mumbai airports to the Cabinet. 

In January this year, a proposal was sent to the Cabinet where the AAI would
have held 5 per cent equity. 

The Cabinet had turned it down and had directed the ministry to rework the
proposal in conjunction with the finance ministry.


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dc/dcboard.php

*****************************************