Published On : Sat, Sep 29th, 2018

Nagpur Airport Privatisation : Only 2 companies bid for project


Nagpur: Of the six companies that had shown interest in bids for privatisation of Nagpur airport, opened up by Mihan India Limited (MIL), only two infrastructure companies – GMR and GVK have eventually placed bids on Friday. The former quoted a higher amount than the latter. It is learnt that six players were qualified to take part in the airport privatization process.

These include GVK, GMR, Ideal Road Builders (IRB), Tata Group, PNC Infrastructure and Essel Group. Out of these, IRB had backed off at the initial stage itself. Other companies, except Tatas, took part in most of the pre-bid talks. Finally, only two companies have bid now.

The companies had to quote a percentage of revenue to be shared with MIL, the current operator. It has been learnt that both the participants have quoted a single digit percentage share, even as a higher share was expected to be quoted. Sources said if it is to be compared with the larger airports, the private parties have quoted revenue share ranging from 30% to 35%. A number of conditions were eased at the insistence of the private players.

The successful bidder will have to pump in Rs 1,685 crore as 74% equity for development of Nagpur airport infrastructure. During pre-bid negotiations, the bidders successfully bargained for increasing the timeline for constructing a second runway. The second runway will be built four years later instead of soon after the takeover by the private company.

The time frame for city side real estate development too has been reduced to two years as against six earlier. This will help the bidders unlock the real estate potential of the area around airport. Delaying the second runway construction will save an expenditure of around Rs 300 crore for the private partner, said sources.

The successful bidder will be acting as strategic partner along with MIL, which is a joint venture between the state government’s Maharashtra Airport Development Company and Airports Authority of India.