Efforts by the GMR Group, which operates the Rajiv Gandhi International Airport at Hyderabad, to reduce the airport’s power bills and garner additional revenue by securing an electricity distribution licence for part of the sprawling airport have hit a road-block.

Last week, the Andhra Pradesh Electricity Regulatory Commission nixed an application made by the airport operator for grant of an electricity distribution licence under the Electricity Act, 2003.

This comes after objections raised by the Central Power Distribution Company of Andhra Pradesh (APCPDCL).

The Commission has, among other things, noted that if granted a licence, the airport operator “may not generate competition, but merely result in creation of a monopoly”.

APCPDCL had objected to the grant of licence on the ground that the applicant did not have a minimum three-year track record in the distribution business.

Besides, it had argued that as the applicant, a private company, would cater to high-end consumers in the airport complex, “it would be detrimental to the business of APCPDCL”.

The airport operator has been exploring a slew of options to reduce operational costs, especially after the Airports Economic Regulatory Authority scrapped the user development fee (UDF) at the airport from April 1, after considering various aspects of the airport operations, including investments made by the operator, land allocation, traffic trends and earnings.

UDF scrapped UDF is a charge levied by airports on passengers to help the operator recover part of its investment.

Before April, the operator collected a UDF of ₹430 (plus tax) from domestic passengers and ₹1,700 (plus tax) from international passengers departing from the airport.

With the scrapping of this fee, the operator had been looking at ways to reduce its operational expenses, especially its power bills.

The operator had sought a distribution licence for 2,500 acres of the 5,500 acres the airport covers.

In the proposed distribution area, a number of aviation-related companies, including MROs (maintenance, repair and overhaul), hospitality, cargo and logistics firms and other service providers are located.

It wanted to source power through a competitive bidding process from generating and trading companies through long-term power purchase agreements, besides through power exchange.

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