"India's Mumbai airport revamp fails to take off"

Monday, February 7, 2005

City airport revamp fails to take off
The Economic Times of India


The Mumbai airport's modernisation seems to have hit an air pocket. The
Maharashtra government's U turn on the waiver of stamp duty, estimated at Rs
250 crore, has threatened the airport up-gradation.

The Cabinet meeting, that was to decide on the waiver, had to put off the
decision due to a strong opposition from some of the key ministers last
week. Surprisingly, all those who opposed the move belong to NCP, the party
to which civil aviation minister Prafful Patel belongs.

"These ministers feared the criticism the stamp duty waiver may attract,"
top sources told ET. According to sources, it started with Ajit Pawar, the
nephew of Sharad Pawar, who wanted the Maharashtra government to pick up
equity in the proposed SPV against the stamp duty waiver.

Later, other senior ministers such as Vijay Sinh Mohite Patil, Suresh Jain
and the finance minister Jayant Patil too opposed the duty concession.

Mr Patel had sought this waiver for the airport modernisation. Last month,
the state government, along with the Centre, had given its in-principle
approval for such a waiver. But the recent change in stand is likely to
create a major hurdle before the aviation ministry.

As per Section 3 of the Stamp Duty Act no stamp duty is payable to the state
government if the transaction is between the state and the Union government.
But, according to sources, these ministers simply refused to accept the
reality insisted that since it's a privatisation the state must receive the
duty.

"This move has raised a question mark over the entire modernisation process.
No one will accept an additional burden of Rs 250 crore," an official from
the aviation ministry told ET.

Now, the civil aviation ministry, sources indicate, has decided to seek
Sharad Pawar's assistance in pushing the plan. "Only (Mr) Pawar can direct
his partymen to give up the opposition," a senior functionary of the
government said. After this the proposal may be taken up again this
Wednesday, sources said.

The modernisation plan was expected to be in place by March '05. Major
international companies have already submitted their bids for the proposed
joint venture company for modernisation. Work on the two projects will start
by Q2 of '05 calendar year.

The plan involves the privatisation and upgradation of Delhi and Mumbai
airports. In the second phase, the Kolkata and Chennai airports will be
upgraded through public-private participation.


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