Delayed take-off: Airport projects live on hope

The story of new airports in India has been synonymous with regulatory uncertainties, government inertia and land acquisition woes. Put simply, it is a story of big promises, false starts and missed deadlines.

But the industry is still clinging to hopes after Prime Minister Manmohan Singh announced work would be awarded for three airports that would be built from scratch at new locations (greenfield airports) at Navi Mumbai, Goa and Kannur and new international airports at Lucknow, Varanasi, Coimbatore, Trichy and Gaya. Also, new hubs would be developed in Chennai and Delhi to make India a destination, as well as transit point.

Experts said the fact that the prime minister has thrown his weight behind these projects is expected to give a push to the airports in Navi Mumbai and Goa, which have been stuck for a decade. The government had begun planning a second airport in Mumbai from the mid-90s. Initially, it had examined three sites—Navi Mumbai, Rewas Mandwa and Sindhudurg—before selecting Navi Mumbai.

SLOW PROGRESS

Though the Centre announced a policy for new airports in 2008, plans for many airports, including Navi Mumbai, were drawn much earlier. For instance, Mopa airport in Goa received in-principle clearance in 2000. Work yet to begin at Navi Mumbai, Mopa and Kannur airports due to delays in land acquisition and policy changes New airports have been planned at Sindhudurg, Shirdi, (Maharashtra); Gulbarga, Bijapur, Hassan and Shimoga (Karnataka); Pakyong (Sikkim); Dabra and Gwalior (Madhya Pradesh); Durgapur (West Bengal); Paladi-Ramsinghpur (Rajasthan); Kushinagar (Uttar Pradesh); Karaikal (Puducherry) and Ludhiana (Punjab). Work is on at Pakyong, Gulbarga, Shimoga and Durgapur In 2010-11, the airports handled 144 million passengers (domestic plus international). About 70 per cent of the passenger movement was at metro airports. In the 12th plan (2012-17) Indian airports are expected to handle 274 million passengers. New airports are expected to handle 38 million passengers Rs 42,000 crore investment required for airport infrastructure development in 12th Plan

In 2001, City and Industrial Development Corporation (Cidco) had prepared a techno-economic feasibility report for the Navi Mumbai airport. The International Civil Aviation Organisation gave a site clearance two years later, while the Union Cabinet’s in-principle approval came in 2007. Though the environment clearance was received in November 2010, even now, land acquisition problems persist. The request for qualification document to shortlist bidders has not been finalised by the government yet.

“After the Mumbai and Delhi airports were privatised, there were expectations on other airport projects, but that did not happen. Companies were anticipating bids for the Navi Mumbai airport would be issued last year,”’ said Amrit Pandurangi, senior director, Deloitte Touche Tohmatsu.

T C Benjamin, Mahara-shtra’s additional chief secretary (urban development), however, is confident about the progress. “All conditions laid down by the environment ministry have been fulfilled. We have permission from the defence ministry and have moved the Bombay High Court for permission to cut mangroves,” said Benjamin, who is overseeing the Navi Mumbai airport project. “The required government land has been transferred, and now it is a question of private land,”’ he added. The acquisition of about 1,000 acres of private land is the most challenging part, as farmers are asking for Rs 20 crore per acre to part with their land, and this is way above the market price.

Cidco has also prepared a new rehabilitation plan and would now offer developed land, instead of monetary compensation. “Giving cash compensation would increase the project cost and make it unviable. The new compensation plan has been discussed with villagers and is being finalised. Now, land acquisition will move very fast,” Benjamin added.

The Mopa airport in Goa and the Kannur airport in Kerala, too, have been plagued by the problem of land acquisition. Under the planning stage for over a decade, the Mopa airport received the government’s in-principle approval in 2000, while the Kannur airport was cleared in 2008. The Goa government has also finalised a master plan for the airport and Chief Minister Manohar Parrikar had recently said the process of land acquisition was 75-80 per cent complete. An official from the Goa government said the government hoped to finalise bids by the end of 2012-13 and the project would be completed in three years from then.

The Kannur airport, conceptualised in 1996 during the term of then chief minister E K Nayanar, has failed to take off because of land acquisition delays and changes in the planning model. The project cost is pegged at Rs 1,414 crore, of which about Rs 630 crore would be funded by debt. The process of raising equity for the project is not yet over, and Kannur International Airport Limited (KIAL) is still scouting for investors.

“The Kerala government is the main sponsor, and would hold 26 per cent stake. Twenty per cent stake would be given to public sector companies and the rest is open to the private sector. We have received proposals from state oil marketing companies, and these have expressed keen interest. We will not go for an initial public offering. Equity would be mobilised through private placement,’” said

V Thulasidas, head of KIAL and former managing director, Air India. The company already had 1,275 acres and could start work, he added.

“We have invited pre-qualification bids for earth work at the site and hope to start work after the monsoon,” he said, adding the engineering, procurement and construction work for the airport would be awarded by next March.

Leela Group of Hotels Chairman C P Krishnan, who hails from Kannur, has been actively pushing the government to expedite the project. In 2010, the Leela Group had tied up with ILFS and had planned an investment in the airport. But the plan went into cold storage following objections from the Kerala government. A Leela Group of Hotels spokesperson did not respond to a query on the issue.

‘Why does Fraport not criticise Britain?’
The government’s announcement on fast-tracking infrastructure projects was overshadowed by another development in the same week. German airport company Fraport AG, which holds 10 per cent stake in the Delhi airport, said it was shutting its India office, citing lack of opportunities.

While others such as Zurich Airport, Aéroports de Paris and TAV Airport Holdings said they were exploring investment opportunities in India, there galore concerns galore on policies and government support. TAV, a Turkish company, said the government must clearly lay down the project scope, define revenue streams and give a guarantee for revenue. “The investor should be aware of the roles and responsibilities of all the entities that would be involved in the pre-bid and post-bid phases. Besides, the investor also has to be assured works or responsibilities are clearly defined in the tender documents,’’ the company said. However, Airports Authority of India chairman V P Agrawal said though it was easy to criticise, government processes take time. “Britain has not constructed a greenfield airport in the last 50 years. Why do they (Fraport) not criticise Britain?’’ he asked.

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