The Telegraph
Since 1st March, 1999
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Privatisation of two airports set to take off

New Delhi, Sept. 11: The BJP-led central government today decided to privatise Delhi and Mumbai airports by offering 74 per cent stake to strategic partners following the corporatisation of these airports.

“The bidding will begin within four months and the two airports will be handed over within 12 months,” said civil aviation minister Rajiv Pratap Rudy after a late night cabinet meeting. Today’s decision overturned an earlier decision that envisaged the government developing the airports at a cost of Rs 3,500 crore and then leasing out various facilities, such as duty-free shops and ground handling, to private companies.

Bidders will have to be “international airport operators of repute” and will have to obtain security clearance by Indian intelligence agencies. No limits have been set for foreign direct investment in these airports which means the entire 74 per cent stake may be picked up by foreign corporations.

Other parameters such as net worth, minimum bid amount will be decided by an empowered cabinet committee headed by finance minister Jaswant Singh. Other members of the panel include Rudy, law minister Arun Jaitley and disinvestment minister Arun Shourie.

The move to set up the panel comes on the back of rumours that Prime Minister Atal Bihari Vajpayee may give the civil aviation portfolio to Trinamool leader Mamata Banerjee, shifting Rudy back to the coal ministry. With Singh, Jaitley and Shourie — strong advocates of privatisation — any objections from Banerjee, if she does get this portfolio, will automatically be voted out.

The Trinamool leader’s office here said Banerjee could not attend the meeting as she could not reach Delhi on time. “She was informed about the meeting late this morning. The notice was too short,” an aide said.

Today’s meeting also relaxed an earlier cabinet decision which had specified that no airports could be built within 150 kms of these two metro airports.

“The exclusivity arrangement will be decided on a case-to-case basis by the empowered committee,” Rudy said. It would also look into the financial tariff formula, architectural designs and lay down government’s conditions for setting up modern airports, he added.

The two airports would not be given to the same bidders. A group of ministers will decide on the time-frame within which successful bidders will have to set up these airports. “Security and air-traffic control will, however, remain sovereign functions vested with the government.”

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