The Hindu Business Line : 'Polls will not affect airports modernisation'

THE forthcoming general elections will not delay the modernisation of Delhi and Mumbai airports, the Union Minister for Civil Aviation, Mr Rajiv Pratap Rudy, said here on Monday.

However, the approval for Indian Airlines and Air India to acquire new aircraft is likely to be considered only after the elections, Mr Rudy said.

The Minister was speaking to mediapersons on the sidelines of a conference on `Aviation operation, safety and environment' here.

Dwelling on the modernisation of airports, Mr Rudy indicated that bidders would be short-listed within two months of submitting the expressions of interest (EoI). The Government has set June 4 as the final date for submission of EoIs.

The Government has stipulated that each prospective bidder must have a net worth in excess of Rs 500 crore. Besides, in the event that the prospective bidder is a consortium, the combined net worth of only the `prime-members' shall be considered.

A `prime member' has been specified as the individual entity(ies) proposing to hold equity of 10 per cent or more in a joint venture company.

The Government has also laid down that each prospective bidder must be an airport operator or have at least one airport operator as a member in its consortium. In addition, equity ownership in the joint venture companies by scheduled airlines, cargo airlines and their group entities has been restricted to 5 per cent.

However, group entities of scheduled airlines and cargo airlines that are existing airport operators as on the date of issue of the EoI are exempted from the restriction.

The Government has approved the restructuring and modernisation of the Delhi and Mumbai airports through the formation of a joint venture between Airports Authority of India (AAI) and successful bidders separately for each airport. AAI and other public sector entities would together own 26 per cent equity in each joint venture company and the majority 74 per cent stake is to be contributed by the successful bidder.

The interested parties may lodge an EoI for both Mumbai and Delhi airport. However, if pre-qualified for both airports, the bidders may bid for both the airports on the basis that only one bid may be successful.

The Government has said that the successful bidder or the entities in its consortium will be subject to a suitable lock-in period.

The Government plans to follow a two-stage process before finalisation of the transaction. During stage I, which is to stretch from February to June this year, the process will comprise of notifying entities of commencement of the EoI stage, obtaining non-binding EoI from interested parties and short-listing prospective bidders for inclusion in the next stage of the bid process.

Similarly, stage II, which is to extend from June to August this year, would involve the preparation and lodging of full, legally binding bids by pre-qualified bidders short-listed from Stage I.

The document adds that the overall objective is to complete the transaction for both the airports by not later than September this year.

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