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Govt signs pact to privatise Delhi, Mumbai airports

Written by: Staff

New Delhi, Apr 4: The government's plan to privatise Delhi and Mumbai airports got a boost today with the signing of shareholders agreement and other crucial documents for setting up joint venture companies.

The operation, management and developer agreement (OMDA) is between the Airports Authority of India (AAI) and two private consortiums led by GMR-Fraport and GVK-South African Airports.

While the AAI has 26 per cent holding in the two newly-formed ventures, GMR and GVK have 74 per cent stake each.

The agreements were signed by AAI chief K Ramalingam and director finance V D V Prasada Rao in presence of civil aviation minister Praful Patel and secretary Ajay Prasad.

''The OMDA and the shareholders agreements have been signed. The JV companies are in place and their boards are meeting today,'' Mr Patel told reporters after signing of the agreement.

Added Mr Prasad: ''The ball is now in court of JV companies.

We'll see how soon they can build new world-class airports.'' Others present were chairmen of GMR and GVK groups G M Rao and G V Krishna Reddy.

The OMDA is mother document under which the AAI has granted a joint venture company the right to operate, maintain, develop, design, construct, upgrade, modernise, finance and manage the airport. Initially the OMDA is for 30 years, which can be extended for another 30 years.

Now, a new board of director -- including representatives from the private developers --will be put in place. Each company will give an initial deposit of Rs 150 crore before the assets are transferred to it from the AAI. Officials said the process may take three months or so. The government will continue to manage security as well as air traffic control at both airports.

Both airports will require Rs 5,000 crore to Rs 10,000 crore in the next five years to get anywhere close to international standards.

The signing of agreements for privatising Delhi and Mumbai airports comes amid stiff opposition from the left parties and AAI employees' Unions.

Meanwhile, Reliance Airport Developers has moved the Delhi High Court alleging that the government changed selection process midway, which prevented the Anil Ambani-led company from bagging the contract for Delhi airport despite quoting the highest gross revenue share with the AAI. The matter is still pending.

The government wants to revamp the two airports in its bid to upgrade infrastructure to international standards capable of keeping pace with a booming economy.

AAI union leaders say the profit-making public sector organisation is capable of modernising 35 airports across the country -- besides those in Delhi and Mumbai -- through its resources and expertise.

New Delhi's international airport handles about nine million passengers a year while Mumbai's deals with 12 million. Congested waiting areas, lack of comfortable seating, slow baggage handling and unreliable power supplies make air travel uncomfortable for a fast expanding middle-class despite the introduction of many new budget airlines.

Analysts predict growth rates of 20 per cent a year over the next five years as rising incomes and lower fares make air travel more affordable.


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