Maharashtra state-owned entity CIDCO will get a revenue share of only 12.6 per cent for awarding Navi Mumbai international airport on a public-private-partnership basis, in contrast to a much higher 45.99 per cent that the Airports Authority of India got in the case of modernisation of Delhi airport via PPP mode and 38.7 per cent in case of a similar development for Mumbai international airport.
Analysts attribute this to many factors including Navi Mumbai being a greenfield airport comprising much higher risks, lack of real estate opportunities against those around Delhi and Mumbai airports, alongside the payment of a licence fee by the bidder that will rise with each year. Besides these factors, the lack of investment appetite among the bidders for fresh investments in the long-gestation infrastructure projects is being cited as another reason.
On Monday, GVK-led consortium Mumbai International Airport Ltd (MIAL) had emerged as the winning bidder for the Navi Mumbai airport, offering 12.60 percentage share of the annual revenue to the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO). The second bidder GMR Airports offered a revenue share of 10.44 per cent. In contrast to the winning bids that came in for the modernisation of Delhi and Mumbai international airports, the revenue share being offered by MIAL is much lower.
“Greenfield airports, as in the case of Navi Mumbai, have much higher risks compared to brownfield airports. In the case of Delhi, there were not many issues related to land acquisition and the topography of the land made it easier to develop the airport. For Navi Mumbai, there are much higher development risks,” said an industry executive. Another factor that contributed to lower revenue share is the licence fee that CIDCO will charge private players every year, an aviation sector expert said.
The developer and operator of the Navi Mumbai airport will be charged an annual concession fee ranging from Rs 5 crore in the first year, which will rise each year to Rs 1,250 crore from the 40th year of operation.
The Navi Mumbai airport development will be done via a special purpose vehicle in which CIDCO will hold 26 per cent equity while the remaining will be with the developer. In the case of Delhi and Mumbai, AAI holds only 26 equity but the revenue share it gets is much higher.
DIAL is a 74:26 JV between AAI and a GMR-led consortium, while MIAL is a 74:26 JV between AAI and GVK-led consortium. In the case of Delhi airport, DIAL has to share 45.99 per cent of its revenue with the AAI every year, while MIAL shares 38.7 per cent of its gross revenue from Mumbai airport with the AAI.
On January 25, the CIDCO had given the fifth and final extension for submitting the bids for the Navi Mumbai project after receiving a solitary bid.
Earlier, bidders had raised queries about the challenges in pre-development work, delay in land acquisition and rehabilitation of affected people and other issues. Tata Realty & Infrastructure and the Hiranandani Group had earlier opted out of making financial bids for the greenfield airport.