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Airports
have long been considered as an indicator of a country's
economic growth. There is a thumb rule followed in the
world where the modernization of the airport is considered
as an index of economic progress of a country. In India
however the airports have not been modernized nor upgraded
with the pace in the growth of the air traffic.
Need
The
AAI (Airport Authority of India) is flushed with funds,
which were sufficient to modernize the Mumbai and Delhi
airport, but despite this fact it could not carry out
the process since the year 2000. the process was stuck
due to internal difference among the government and
AAI. Both of them were unable to come to a conclusion
regarding the process of modernization. The current
airports of Delhi and Mumbai have been totally saturated
and are operating way above their passenger and airplane
handling capacity. This
has resulted in delays in airplanes take off and landing
in addition to the delays faced by the passengers of
getting their baggage from the airplane.
Since
the government was unable to resolve the deadlock within
AAI and government, it decided to pursue with privatization
of these airports, which till now have been the gateway
to India.
Process
The process
of privatization was initiated in May 2004, with September,
2004 set as a deadline. This deadline was later shifted
to September 2005 due to the differences among the members
of the government and the final decision was made in
January 2006. But the modernization and upgradation
work started in only in November 2006 after a legal
battle concerning the bidding process. The firmsbidding
for the contract had to meet the strict minimum requirements
laid down by the government of India. The technical
qualification was based upon management capability,
commitment and value add. In case if financial qualification
it was based upon the prospectus revenue sharing agreement
between the
private party and the government. To be eligible for
meeting the technical and financial criteria, the consortium
would have to meet the minimum net worth criteria also
The GVK-SA consortium won the bid process, in which
the AAI holds 26% stake as per the government requirements.
Model
Followed
PPP structure
in airports is quite new and not many projects have
been executed on the same basis. As
per the structure followed in developing 4 airports
in India, they have been on the basis of BOOT.
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PFF
Schemes & Loan Application