"Indian airport bidders get 30 months"

Monday, July 4, 2004

Airport bidders get 30 months 
Lower user-charges if not completed in time, lock-in period at 7 years 
By Bipin Chandran
India - The Business Standard
 

New Delhi - The companies that win the bids to privatise and modernise the
Delhi and Mumbai airports may have to complete the project in 30 months. Or
else, they may be penalised with lower user charges, according to officials.

  
If the projects are completed on time, the companies will be allowed a 15
per cent hike in the current user charges applicable to various
airport-related functions in the first year. But the increase will be only
10 per cent if a company stretches the deadline.  
  
The minimum lock-in period for consortium partners executing the projects is
likely to remain seven years. After that, the consortium structure can
change with the Airports Authority of India's (AAI) permission.  
  
Besides, the government is also likely to give the AAI a larger say in the
running of the two airports. Key decisions will need to have AAI's consent,
which will have a 26 per cent stake in the venture.  
  
These conditions are expected to be part of the transaction documents being
revised by the government, say officials. They also point out that the
conditions are likely to be set to ensure that the government's role does
not get undermined.  
  
The document is slated to get finalised by July 15 and circulated by the end
of this month. The bids will have to be submitted within two weeks after the
documents are out and will be finalised in the following six-eight weeks.  
  
The winners are likely be allowed no more than 5 per cent of land for
commercial real estate development.  
  
Besides, they may have to share a part of their non-aeronautical revenues
with the government. The government is also mulling an increase in the
minimum revenue share component from the present 5 per cent.  
  
Last week, the government had decided to re-draft transaction documents
following objections raised by various sections of the ruling United
Progressive Alliance.  
  
It had also postponed the last date for submitting the bids, which delayed
the start of the airports privatisation process.


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