The government is considering setting up a special purpose vehicle on the lines of the Delhi Metro Rail Corporation to develop the Chennai and Kolkota airports. This is a part of the roadmap for future modernisation of airports that the government is working on.
In the case of other 35 airports on the modernisation list, the government will follow a public-private partnership model.
The drama of airport privatisation
"These airports have to be modernised. The SPV model seems to be one that suits us the best. The government had even considered this model for Delhi and Mumbai airports at various stages," said a senior civil aviation ministry official.
This move comes at a time when the government is under pressure to drop Kolkata and Chennai from the list of airports to be privatised. Kolkata and Chennai are part of the long list of airports - which includes 35 non-metro airports - that the government plans to modernise in phases.
As per the model under consideration, foreign airport companies, domestic companies and financial institutions will be allowed to be a part of the SPV. These companies will have an equity stake in the SPV.
However, the government is yet to fix the equity stake the private and foreign companies can have in the SPV.
"We have not decided whether to follow the model of Delhi and Mumbai airports or that of a greenfield airport, when it comes to foreign and private equity in these projects," said the official.
As per the present policy, in the case of Delhi and Mumbai airports, the government has allowed 74 per cent private equity participation with 49 per cent foreign equity. In the case of greenfield airports, foreign equity is permitted up to 100 per cent.
The government also wants to limit the role of external agencies like technical advisers and financial advisers in future airport modernisation projects.
According to senior government officials, as an alternative model, the government will set up a tender committee that will evaluate the bids submitted by various bidders.
"The external advisers will assist the tender committee in evaluating the bids. The last meeting of the empowered group of ministers overseeing the modernisation of the Delhi and Mumbai airports, also favoured a move like this," said the government official.
