India puts six airports up for PPP

The country’s Ministry of Civil Aviation is soliciting bids for the Chennai and Lucknow airports, and expects to start the process for four other airports soon.

Following the recommendation of the central government, India’s Ministry of Civil Aviation (MCA) has begun to solicit pre-qualification bids for public-private partnerships (PPPs) for Chennai and Lucknow airports, which the government body expects to receive by October, according to an MCA statement.

The MCA hopes to receive final financial bids for the two international airports by December. It also expects to put four other airports – in Calcutta, Guwahati, Jaipur and Ahmedabad – up for PPP bids “shortly”, though the Ministry did not give a timeline for these airports. These and most airports in India are currently managed by the Airports Authority of India (AAI).

It was not disclosed what the size of the PPP projects would be, but previous airport PPP projects with international Indian airports, such as Mumbai and Bangalore, have ranged from INR86 billion (€1 billion; $1.3 billion) to INR19 billion, according to the Indian Ministry of Finance.

The PPP projects for all six airports would give the private sector partner full long-term concession rights for the entire airport, from the airside and city side facilities. The winner is expected to be remunerated through levying tariffs and charges for certain aeronautical services, but will need to get those charges approved by the Airports Economic Regulatory Authority, according to the statement.

As part of the PPP, the AAI must be granted a seat on the private company or consortium’s board for the airport. The private bidders are expected to give a share of their operating revenue to the AAI, and “the premium shall constitute the sole criteria for evaluation of bids,” meaning the private bidder that offers the highest share of revenue will be named the winner, according to the statement.

The MCA statement added that it would consider the bidder’s previous experience and financial capacity, but it was unclear exactly how that would be factored into the selection of bids. The PPP projects will also come with conditions, such as “protect[ing] the interests of the existing employees of the airports”.

At the beginning of the summer, India’s government formed a key infrastructure development cell to push forward the PPP model for certain airports, such as Chennai. According to local media reports, poor maintenance and inconsistent security have been drawing complaints from locals and officials alike, and many say they would appreciate better maintenance of the country’s main airports.

However, India has also been struggling with the PPP model for infrastructure. Several major PPP projects, such as the ambitious INR96 billion Mumbai TransHarbour Link road project and a small cancer hospital in southern Mumbai, have drawn no bids from the private sector due to strict tender norms. A few political parties have also voiced opposition to the airport PPP plans.