Pvt players may get Chennai, Kolkata airports for 7-10 years

Shishir Sinha New Delhi | Updated on March 12, 2018 Published on August 11, 2013

‘Operate, Maintain and Transfer’ different from Delhi, Mumbai model

Kolkata, Chennai and four other airports may be given to private players on an ‘Operate, Maintain and Transfer (OMT)’ basis for a period of 7-10 years.

A senior Government official told that the concession period could even be slightly longer if the private party is making fresh investment.

“This will be done to recover the cost,” the officials explained and added that a final decision on giving the airports on OMT model is expected soon. There will be revenue sharing mechanism just like in Delhi and Mumbai airports.

Delhi and Mumbai airports were handed over to private parties for a period of 30 years which could be further extended by another 30 years. The Airports Authority of India gets a revenue share of 45.99 per cent in case of Delhi and 38.7 per cent for Mumbai on the gross revenue earned at these two airports.

OMT is a different concept where private parties are generally not required to make investment for construction or modernisation. This PPP model is different from that followed in Delhi, Mumbai, Hyderabad or Bangalore, Nagpur or Kochi. In these airports private parties or the Airports Authority of India (AAI) had invested money to modernise or build a new airport.

Chennai Airport was modernised by the AAI at a cost of Rs 2,015 crore, while Rs 2,325 crore was spent on Kolkata. The Task Force on Financing Plan for development of airports constituted under the Planning Commission recommended the PPP mode for operation and management of Chennai and Kolkata Airports.

AAI suggested that management, maintenance and operation of these two airports be undertaken by formation of joint ventures with world class airport operators, with AAI being the lead partner.

Now, an Inter Ministerial Group has been constituted to evolve, recommend and monitor the implementation of the appropriate model for achieving the desired objectives of operation and management of these airports with private participation. The Prime Minister, in a meeting on June 28, decided that airport operations and maintenance through PPP contracts will be introduced in AAI airports. Airports being considered are Chennai, Kolkata, Lucknow, Guwahati, Jaipur and Ahmedabad. Later on July 19, the Principal Secretary to the Prime Minister chaired a meeting to finalised deadlines with time lines for the intermediate steps for key infrastructure projects. Accordingly, it was decided that Ministry of Civil Aviation will work towards awarding OMT contracts for 4-5 airports by March 31, 2014.

Commenting on the latest development, Amber Dubey, Partner and Head (Aerospace & Defence) KPMG, said, “Delhi-Mumbai concession periods are long since they involve significant capital expenditure. The operation and management contracts can be 5-10 years, with an option for further renewal, subject to meeting performance norms. Anything less than five years may not encourage the operator to bring in long-term systemic changes.”


Published on August 11, 2013
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