Airport bids to be submitted by Sept 14

By agencies   |   Wednesday, 31 August 2005, 07:00 Hrs
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NEW DELHI: The process for restructuring and modernisation of Delhi and Mumbai airports gained momentum today with the Government asking the eight pre-qualified bidders to submit their technical and financial bids by September 14.

Addressing a press conference shortly after the bidders were given the transaction documents, the Secretary Civil Aviation, Ajay Prasad, said the Government would evaluate the bids quickly and hoped to finalize partners for both the airports soon after. "We hope to award the contract for both airports by the end of this year," he said.

Initially, the Government would compare the technical bids with its own list of developmental plans for the two airports and only those bidders who score at least 80 per cent in this round will see their financial bids being evaluated, he said. While bidders can bid for both airports, they will be allowed to manage only one.

The Government has set the minimum Operation Management and Development Agreement (OMDA) fee for the two airports at 5 per cent with the final rate being determined through bidding and stipulated that non-aeronautical activities at Delhi airport be restricted to 5 per cent of the total land and 10 per cent in the case of Mumbai.

The OMDA is considered the mother document under which the Airports Authority of India (AAI), in the interest of better management of the airport and overall public interest, grants the joint venture company (JVC) the right to operate, maintain, develop, design, construct, upgrade, modernize, finance and manage the airport. Initially, the OMDA is for 30 years although it can be extended for another 30 years.

The JVC will have an authorized share capital of Rs 250 crore with an initial subscription of Rs 2 billion. The JVC will charge for aeronautical services at rates specified by the Government for the first three years and thereafter by the Aviation Economic Regulatory Authority (AERA) or the Government.

The transaction document has mandated certain capital expenditure that the successful bidder must undertake at the two airports. In the case of Delhi, the successful bidder must ensure that during the first five years a second runway is constructed, the terminal building is expanded and parking bays are added for aircraft. The Government has fixed the mandated capital expenditure during the first five years at Rs 2,600 crore for Mumbai airport and at Rs 2,800 crore for Delhi airport.

While Airports Authority of India (AAI) and public sector undertakings will hold 26 per cent stake in the project, the remaining share will be with the private sector. The Government has placed a cap of 10 per cent on the equity that a scheduled airline can hold in the project, while foreign airlines have been barred from picking up any equity at all.

The document also provides the right of first refusal (ROFR) to a second airport within 150-km radius of the restructured airports to the JVC by following a competitive bidding process, in which the JVC can also participate if it wishes to exercise the ROFR. However, in the event that the JVC is not the successful bid but is within the range of plus or minus 10 per cent of the most competitive bid received then the JVC will have the ROFR by matching the first ranked bid in terms of the selection criteria for the second airport.

As regards major developmental plans (MDP), the JVC will be required to submit to the Government a plan for any development for which capital cost exceeds Rs 100 crore.

The JVC has to prepare the MDP for construction of terminal building and parallel runways simultaneously with the first master plan. Addressing fears of job losses, the Secretary said no AAI employee would lose job due to the restructuring.

The eight entities participating in the modernization process include Bharti Enterprises, Piramal Holdings Ltd, G Infrastructure Ltd, GVK Industries, DS Construction Ltd, Starlite Infrastructure Ltd, Pan India Paryatan Ltd and Reliance Airport Developers Pvt Ltd.

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