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Three in race for airport selloff mandate

New Delhi, Nov. 9: The group of ministers (GoM) on airports today decided to go ahead with privatisation of Delhi and Mumbai airports, despite objections from labour unions and several Opposition parties.

At its first meeting here today, the panel pruned the list of firms from which it will select a financial consultant.

The race has been narrowed down to ABN Amro, Ernst & Young and KPMG. The one that is finally chosen will have to chalk out the privatisation plan.

The government wants to offer up to 74 per cent in the two premier airports to a private bidder, retaining security and air traffic control. It will hold the remaining 26 per cent through Airports Authority of India (AAI).

The meeting, attended by finance minister Jaswant Singh, disinvestment minister Arun Shourie, law minister Arun Jaitley and civil aviation minister Rajiv Pratap Rudy decided to pick the financial consultant at its next meeting on November 14, when the short-listed firms’ financial bids will be opened by AAI.

Most analysts expected the ministers to throw their weight behind the plan to privatise the two key airports after the legal setback to the move to sell stake in oil firms. They felt the looming assembly polls would not deter it from pushing ahead with the initiative.

A global technical adviser who will approve and help design the airports in the two cities and oversee the estimated Rs 5000-crore modernisation and expansion plans, will also be appointed.

The civil aviation minister told reporters after the meeting that “the process of privatisation of the two airports has been set in motion with this meeting”. The group will monitor the process, so that it is completed by May 30.

The ministers, with help from the financial adviser, will shortlist prospective bidders based on the technical and financial conditions set out by the consultant, but it is the cabinet that will have the last word.

Reliance, Singapore Airport and a German airport infrastructure company that runs the Frankfurt airport are among those believed to be interested.

Separate bidders would be selected for the two airports. The winner will have to forge a 74:26 joint venture with AAI, and get to run the airport a 30-year contract.

The government also plans to adopt the privatisation model to modernise and develop other important airports – Calcutta, Chennai, Amritsar, Hyderabad and Bangalore.

This decision in favour of privatisation has come despite a decision taken before this year’s union budget that the government would modernise these airports at its own cost for which it had earmarked funds in the budget.

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