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India, private firms sign deal on Delhi, Bombay airport modernization

5-Apr-2006

NEW DELHI (XFNews) - Indian civil aviation officials signed agreements to hand over control of the country's two biggest airports to private groups who plan to make the now run-down facilities world class, a government spokesperson said.


The "Operations, Maintenance and Development Agreements" were signed by Airports Authority of India chief K Ramalingam with Civil Aviation Minister Praful Patel looking on, the official said.
The signing comes two months after the contract to modernize Delhi's Indira Gandhi Airport was awarded to Hyderabad-based Indian construction firm GMR Industries, which had teamed up with Germany's Fraport, Agence France-Presse reported.

India's GVK group, partnered by the South African Airport Authority, won the deal for the modernization of Bombay's Chhatrapati Shivaji Airport, which serves India's financial hub.

Patel said both groups will deposit an initial payment of 1.5 bln rupees "within a week, following which the process of transition (handing over of airports to the companies) will take place."

The government sold 74 pct stakes in the airports where a lack of funds has stalled modernization at a time when India's airline market is expanding rapidly.

AAI -- which runs the country's 130 airports -- will keep a 26 pct stake in both facilities which are notorious for a lack of passenger amenities, congested operating conditions and scant duty-free shopping or entertainment for passengers.

The modernization of the two airports -- which have double the number of takeoffs and landings they were designed for -- is expected to cost 54 bln rupees.

The decision by the government to press ahead with the plan, despite stiff resistance from airport workers and Communist allies of the Congress party-led government, is seen as a commitment to the privatization of state-owned companies.

Patel ruled out any changes or reversal of policies on the privatization of the two airports when asked to comment on the Communists' misgivings.

"We have made it clear that the issue of Delhi and Mumbai airports cannot be revisited and there is no room for negotiations on this front," he said.

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