Cabinet gives nod to private management of six more airports

      11/09/2018

The Union cabinet on Thursday gave its approval for privatization of the management of six airports, including those in Jaipur and Ahmedabad.

The government’s experience of managing five airports in Delhi, Mumbai, Bengaluru, Kochi and Hyderabad through private participation has been encouraging and has led it to adopt a similar method in managing six more airports, law minister Ravi Shankar Prasad said.

The Union cabinet has given... “in-principle approval for leasing out six airports of AAI (Airports Authority of India) viz. Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru for operation, management and development under public-private partnership (PPP) through (the) Public Private Partnership Appraisal Committee,” he said.

Private participation in infrastructure projects brings efficiency in service delivery, expertise, enterprise and professionalism, apart from harnessing the investments in the public sector, according to a cabinet statement.

PPP in airport management has helped the government raise sizeable revenue and utilize the model for better air connectivity elsewhere in the country, the government said. It hopes the move will bring more foreign investment into airport infrastructure. However, it is not immediately clear whether the private players in the six airports that are to be jointly managed will get land parcels for real estate development beyond aviation requirements. The government also set up an empowered committee of secretaries to oversee the process.

“Roping in a private player for developing airport infrastructure will certainly bring more efficiency in managing the needs of a fast expanding aviation market,” said Kinjal Shah, vice president, corporate ratings, at rating agency Icra Ltd.

India’s civil aviation market has been growing at 19% over the last four years and is projected to be the third largest in the world by 2025, after the US and China. The government is targeting an increase in the number of air passengers from 265 million in 2017 to about one billion in 10-15 years, as more people are travelling by air. This calls for massive investments in airports and greater productivity.

The cabinet also decided to sell 65 million “enemy shares” in 996 companies. These are shares held by people who have migrated to Pakistan post partition. These shares were held by 20,323 shareholders and are under the custody of the ministry of home affairs. The government assumes the total value of these shares to be 3,000 crore in terms of current valuation, Prasad said. Of the 996 firms, only 588 are functional, with 139 of them being listed.

The cabinet also approved the filling of Padur strategic petroleum reserves in Karnataka through the PPP route, which will help the government save 10,000 crore, the minister said. Bids to fill Padur strategic petroleum reserves with 19 million barrels of oil will be invited over the next few months. Such reserves will help India manage supply and price risks, at a time of growing uncertainty in global oil markets, as part of its evolving energy security architecture. Abu Dhabi National Oil Co., the state-run oil company of the United Arab Emirates, is the only one to commit to India’s crude oil reserve programme.