Centre plans to cap airports awarded to bidder in next privatisation round

Thakur had sought the ministry’s response on what measures were envisaged to ensure that the risks related to concentration and over-leveraging are minimised, given the oligopolistic nature of the aviation sector. The PPPAC, under the Department of Economic Affairs, is responsible for appraisal and approval of central sector public private partnership (PPP) projects exceeding Rs 100 crore.

India’s private sector-operated airport ecosystem is dominated by two groups — Adani and GMR — and concerns over the oligopolistic nature of the sector have been flagged over the past few years. Notably, in the previous round of airport privatisation in 2019, the Adani group walked away with all the six airports that were on offer. At present, the Adani group operates eight airports — Mumbai, Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, Mangaluru, and Navi Mumbai. GMR operates six airports, including Delhi, Hyderabad, North Goa (Mopa), Visakhapatnam, Nagpur, and Bidar.

“The number of airport bundles that may be awarded to a single bidder would be capped to mitigate the risks arising from market concentration and potential over-leveraging, including their possible cascading impact across projects. The modalities of such capping are being finalised and would be submitted as part of the proposal seeking final recommendation by the PPPAC,” MoCA said in response to Thakur’s query.

The airports planned to be offered in the next round of privatisation include Amritsar and Kangra-Gaggal (bundle 1), Raipur and Aurangabad (bundle 2), Bhubaneswar and Hubbali (bundle 3), Tiruchirapalli and Tiruparti (bundle 4), and Varanasi, Gaya and Kushinagar (bundle 5). All of these are currently under the Airports Authority of India (AAI). The airports have been bundled to enable cross-subsidisation, with some high-traffic, revenue-generating airports being paired with smaller, loss-making regional airports.

With the in-principle approval of the PPPAC now in place, MoCA will be undertaking a market sounding exercise “wherein outreach to various infrastructure players will be carried out”. Since bundling of airports is being planned for the first time, market reaction to the proposal is required to be “assessed and suitably incorporated” in the proposal, which will then be submitted for final recommendation of the PPPAC.

MoCA also proposed that bidders with relevant cross-sectoral infrastructure experience would be allowed to bid for the airport bundles, instead of restricting the privatisation round exclusively to aviation sector infrastructure developers.

“Considering the nature and breadth of the Concessionaire’s obligations under the instant proposal, and consistent with the decisions taken by the PPPAC at its 85th meeting, it is proposed to permit participation by bidders with relevant cross-sectoral infrastructure experience. Accordingly, eligible technical experience would not be restricted exclusively to the aviation sector and would be assessed with reference to the infrastructure sub-sectors included in the Harmonised Master List of Infrastructure,” MoCA said.

“Under the instant proposal, the Concessionaire would be responsible for the operation, management and development of the airports, including passenger terminals and city-side Infrastructure…The Concessionaire would undertake the Sanctioned Capital Expenditure identified by AAl within three years from the Commercial Operations Date (COD). Thereafter, capacity-addition capital expenditure may be undertaken by the Concessionaire in three phases of expansion following COD,” the minutes of the meeting said.