Private airport operators urge government to bar AAI from bidding for PPP projects

Private airports have urged the government to bar the Airports Authority of India (AAI) from bidding for public-private partnership or PPP in any new airport project on the grounds that this will defeat the purpose of attracting private investment in the sector.

The Association of Private Airports Operator has made a request to the aviation ministry in this regard, officials said.

"Once the project is awarded to the AAI, no private funding will come into it and the whole purpose of getting private funding will get defeated," a senior executive at a private airport operator said on condition of anonymity. "Also, the government does not need to call for bids for the project and can directly award the project to the AAI if it wants."

No decision has been taken on this issue yet, said an aviation ministry official, who did not wish to be identified.

"The request was made in a meeting where both Union minister Ashok Gajapathi Raju and minister of state Jayant Sinha were present. On this particular request, joint secretary Arun Kumar said that the ministers will take a decision," the official said. "Neither of the two ministers shared his views on the request."

Analysts, however, said that it does not make sense for the government to ban anyone from bidding for a PPP project. 

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"The AAI was mandated to work on creating airport infrastructure in the country much before the private sector participated in the airport sector. While the AAI has not been exemplary in implementing projects, and the quality offered by it leaves a lot to be desired, I don't really think there is a case to bar AAI from bidding," said Sanjay Sethi, CEO of Nestor Consulting, an infrastructure advisory.

Sethi said that the AAI's participation would rather help the government discover the right price through the tender process.

"If the government can put in a better mechanism to implement and monitor the project to ensure that the project is implemented well, any airport operator can implement it well," he said.

The AAI started bidding for PPP airport projects from Goa, where it lost to GMR, which won the project by offering a higher revenue share than the state-owned airport operator.

Recently, however, the AAI won the Bhogapuram airport project in Andhra Pradesh by defeating GMR, which offered 21.6% of total revenue as revenue share. The AAI offered a revenue share of 30.2%.

The Andhra Pradesh government cancelled the entire tender process, though, saying that the scope of Bhogapuram airport would be expanded from a mere airport to an integrated airport with an aerocity; maintenance, repair and overhaul facilities; Aviation Academy; etc. 

Source: ET

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