Airport privatisation 2.0: No prior experience needed

Under the new norms,first timers can apply by furnishing an undertaking that if selected to undertake the airport project.

A decision by the government to allow companies without any prior experience of handling airport operations to bid for upcoming airport projects could set the stage for greater competition among prospective applicants.

The move is aimed at shrinking the process of selecting the developer by effectively doing away with the entire technical shortlisting process that forms part of the bidding process.

This is different from the procedure followed during the award of Delhi and Mumbai airports,where the bidding process was a two-tier one technical expertise of the companies were evaluated first and companies with right technical qualification moved to the second round of the bidding process.

Under the new norms,first timers can apply by furnishing an undertaking that if selected to undertake the airport project,they will engage experienced and qualified personnel for discharging the operation and maintenance Oamp;M obligations.

We will see a lot of interest for the airport projects up for auction,as there is no minimum technical eligibility criteria for companies to bid for Chennai and Lucknow airports. This is also set to make the bidding process fierce and time taking as well, said a government source.

The request for qualification RFQ documents issued for Chennai and Kolkata airports allows anyone,with no technical criteria experience,to be eligible to bid for these airports.

Industry analysts have responded by highlighting the pitfalls of awarding airport projects to people without proper technical expertise,when the rationale behind the award is to get a better manager for the airport.

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The eligibility criteria focuses more on development and construction experience and is rather liberal on Oamp;M experience. It even allows bidders to bring in experienced personnel even after the winning the bid. This appears strange since the key reason behind this exercise is to create world-class service at these airports,said Amber Dubey,partner and head-aviation at KPMG.

In the second phase of airport privatisation,the government has put on block airports in Chennai,Kolkata,Lucknow,Ahmedabad,Jaipur and Guwahati. Of the six airports,RFQs for airports in Chennai and Lucknow have come up and RFQ for Kolkata airport is set to be issued this week.

According to the qualification documents,the new owner will have to invest Rs 1,200 crore for upgrading Chennai airport and Rs 500 crore over a period of five years for Lucknow airport.

The government is working with a tight schedule awarding these projects before the end of the current fiscal,based on a deadline set by the Prime Ministers Office.

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Unlike the procedure followed in Delhi and Mumbai,the government plans to fix the tariff before the award of the project. This would mean that the charges will be fixed and the increase will be linked to Wholesale Price Index.