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AAI tweaks tender to woo bidders

For starters, the deadline has been extended by another 90 days, making this the third extension

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In an effort to attract more bidders, the national airports operator, Airports Authority of India (AAI), has made some major changes in the terms and conditions for privatisation and modernisation of Sardar Vallabhbhai Patel International Airport (SVPI).

For starters, the deadline has been extended by another 90 days, making this the third extension. This has ostensibly been done to give players more time to understand the operations and maintenance aspects.

The two major changes include AAI’s projected expansion plans of Ahmedabad airport and a longer contract tenure for the operator.

The AAI had invited Request for Proposal (RFP) from bidders for operation and maintenance of select areas of Jaipur and Ahmedabad airports late last year. These areas include terminal building, boarding bridges and apron area, among others, as per the bid document.

Guruprasad Mohapatra, chairman, AAI said, “We have extended the deadline by 90 days after prospective bidders raised concerns and queries. Keeping these in mind, we have made significant changes in the terms and conditions, including mode of payment, internal evaluation, projected capacity, tenure, etc. For example, the contract tenure was 10 years earlier, but we have changed it to 15 years. We also wanted to inform them about the projected capacity of the terminal they will be handling 10 years down the line.”

Till date, AAI has received 12 registrations from prospective bidders, including foreign players. One of the firms has suggested the entire airport be given on lease, on the lines of Delhi and Mumbai airports, since they feel the present structure won’t bring in attractive returns.

However, the cost factor is the overriding concern among airlines as well as other agencies at the city airport.

An official from one of the agencies providing services at SVPI airport said on condition of anonymity, “Ahmedabad airport is mostly used by international airlines as they find it economical when it comes to making a halt on their route instead of Mumbai, where parking and fuel charges are way too high. If the airport is taken over by a private operator, there is a feeling that international airlines will be affected.”

However, Mohapatra played down these concerns saying, “This is not complete privatisation like Mumbai and Delhi. The airport will be with AAI, while only the operations and maintenance will be privatised. The charges or tariff will be as per Airports Economic Regulatory Authority of India (AERA).”

Last year, AAI had rejected Singapore’s Changi Airport’s proposal to operate and maintain Jaipur and Ahmedabad airports twice on the grounds that it was not commercially viable for the government airport operator.

Queries/concerns raised by firms

Provide a term of 20 years whereby the operator will be allowed to extend the term for additional 10 years if the performance is satisfactory and without any non-compliance.

Under the existing criteria, only two entities from India can qualify for the tender. Other entities with significant experience in airport sector would need to partner with international airport operators to qualify. The bid conditions are not conducive for tying up with international airport operators due to limited opportunity size and adverse risk‐return profile of the project. As a result, interested and experienced Indian firms are unable to participate in the tender, thus severely limiting competition.

There is a proposal for building a new airport at Dholera. Request for current status of the project and what are the timelines for the Dholera Airport to be commissioned.

Privatise the entire airport on the lines of Delhi, Mumbai since the present transaction structure does not offer adequate reward to investors.

Changes

Extension for 15 years as against 10 years.
New terminal projected by 2020, of more capacity.
Mode of payment.

New deadlines

June 5
Bid submission start date

September 18
Bid submission last date

September 21
Technical bid opening date

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