EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
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EMERGING CHALLENGES IN
PUBLIC PRIVATE PARTNERSHIP AIRPORT IN INDIA
A DISSERTATION SUBMITTED TO
Dr. P.C.K.RAVINDERAN and Dr.V. BALAKISTA REDDY IN PARTIAL FULFILMENT OF PGDALATM DEGREE
IN AVIATION LAW AND AIR TRANSPORT MANAGEMENT
SIREESH P. Aerodynamics
Aircraft Research and Design Centre HAL, Bangalore.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
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ACKNOWLEDGEMENT
It’s a great pleasure and privilege to be associated with prestigious university
NALSAR. I am very thankful for IAAM for taking the initiative along with
NALSAR to establish Aviation law and air transport management program, first
of its kind in India. I am gratified to Dr. P. C. K. Ravindran and Dr. V. Balakista
Reddy for introducing such a brilliant course.
My sincere gratitude to Prof. S. N. A. Shafi for his help, guidance and
recommendations in preparing this dissertation.
I am grateful to Mr. Chinnarajan my colleague who encouraged me all the way
form the beginning of this program.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
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CERTIFICATE
This is to certify that Mr. SIREESH P. Roll No __________ has submitted his
dissertation on “Emerging Challenges in Public Private Partnership”, as partial
fulfilment for the award of PGDALATM degree in Aviation Law and Air
Transport Management to NALSAR University of Law under my supervision. It
is also affirmed that, the dissertation submitted by him is original, bona-fide and
genuine.
Dr. V. Balakista Reddy
Supervisor
Nalsar University of Law, Hyderabad
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
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Declaration
This dissertation, “Emerging Challenges in Public Private Partnership”, has
been prepared and submitted by the undersigned to NALSAR University of
Law, Hyderabad. As a part of requirement for an award of PGDALATM degree
in Aviation Law and Air Transport Management, under the guidance of
Dr.V.Balakista Reddy. It is to declare that, this dissertation is original, bona-fide
and legitimate work of the undersigned, and has been pursued purely for an
academic interest. This dissertation shall not be used for any political purpose
or connotations or as a testimony against any person or communities or
regime. The views and ideas expressed in this dissertation are exclusively of
the researcher and do not represent any person, organisation or community in
particular.
Signed on: _____________________________________________.
SIREESH P.
Roll No:
Aviation Law and Air Transport Management
NALSAR-IAAM.
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LIST OF ABBREVATIONS PPP- PUBLIC PRIVATE PARTNERSHIP
GDP- GROSS DOMESTIC PRODUCT
AAI- AIRPORT AUTHORITY OF INDIA
NAO- NATIONAL AUDIT OFFICE
PFI- PRIVATE FINANCE INVESTMENT
GHIAL- GMR HYDERABAD INTERNATIONAL AIRPORT LIMITED
ICAO- INTERNATIONAL CIVIL AVIATION ORGANIZATION
AMHS- AERONAUTICAL MESSAGE HANDLING SYSTEM
RFID- RADIO FREQUENCY INDENTIFICATION
BOT- BUILT OPERATE TRANSFER
JVC- JOINT VENTURE COMPANY
VGF- VIABILITY GAP FUNDING
FDI- FOREIGN DIRECT INVESTMENT
DGCA- DIRECTORATE GENERAL OF CIVIL AVIATION
TEFS- TECHNO-ECONOMIC FEASIBILITY STUDY
MOD- MINISTRY OF DEFENSE
PSU- PUBLIC SECTOR UNIT
SPV- SPECIAL PURPOSE VEHICLE
CA- CONCESSION AGREEMENT
SHA- SHARE HOLDER AGREEMENT
SSA- STATE SUPPORT AGREEMENT
LLA- LAND LEASE AGREEMENT
PQB- PRE QUALIFIED BIDDERS
DPR- DETAIL PROJECT REPORT
ADF- ADVANCE DEVELOPMENT FEE
UDF- USER DEVELOPMENT FEE
PSF- PASSENGER SERVICE FEE
BCAS- BUREAU OF CIVIL AVIATION SECURITY
CNS/ATM- COMMUNICATION, NAVIGATION AND SURVEILLANCE / AIR
TRAFFIC MANAGEMENT
DBFOT- DESIGN, BUILD, FINANCE, OPERATE AND TRANSFER
MCA- MODEL CONCESSION AGREEMENT
ATS- AIR TRAFFIC SERVICES
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IMD- INDIA METEOROLOGICAL DEPARTMENT
OMDA- OPERATION MANAGEMENT AND DEVELOPMENT
AGREEMENT
GOI- GOVERNMENT OF INDIA
HIAL- HYDERABAD INTERNATIONAL AIRPORT
BIAL- BANGALORE INTERNATIONAL AIRPORT
DIAL- DELHI INTERNATIONAL AIRPORT
CIAL- COCHIN INTERNATIONAL AIRPORT
AERA- AIRPORTS ECONOMIC REGULATORY AUTHORITY
RTI- RIGHT TO INFORMATION ACT
KIC- KARNATAKA INFORMATION COMISSION
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CONTENT
1.0 ROLE OF AIRPORT INFRASTRUCTURE IN NATIONAL DEVE LOPMENT
1.1 Economy
1.2 Social Payback by Airports
1.3 Influence of Aviation on Tourism
1.4 Environment Benefits of Airports and Aviation
2. AIRPORT ENVIRONMENT IN INDIA.
2.1 Present airport infrastructure in India.
2.2 Major Airports of India
2.3 Present Classification of Airports in India
2.4 Proposed classification of Airports in India
2.5 Greenfield and Brownfield Airports
3 PUBLIC PRIVATE PARTNER SHIP
3.1 Introduction to PPP
3.2 Key drivers and enablers of PPP.
3.2.1 Conventional procurement issues.
3.2.2 Naresh Chandra committee
3.2.4 To meet the growing needs of airport infrastr ucture in
India
3.2.5 Passenger Growth
3.2.6 Cargo Growth
3.2.7 To Meet Financial Requirements to Support Suc h
Growth and to Infuse Private Fund in the Airport
Infrastructure Sector
3.2.8 To Increase the Standards of India Airports-T o
International Standards
3.2.9 Drivers and enablers
3.3 Present Indian scenario
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4. PROCEDURAL GUIDELINES FOR SETTING UP OF PPP AIRP ORT.
4.1 Policy Framework
4.2. Promoters
4.3 Study stages
a. Pre-feasibility Study Stage
b. Detailed Feasibility Study Stage
c. TECS
d. approval decision
4.4 Site Selection
4.5 Detailed Design Stage and Approval
4.6 Project Implementation Stage
4.7 Setting up a Special Purpose Vehicle (SPV)
4.8 Public Private Partnership (PPP) Model
4.9 Bidding Process and Selection criteria
4.10 Viability Enhancement
5.0 CONCESSION AGREEMENT FOR PPP
5.1 Need for a framework
5.2 Elements of financial viability
5.3 Technical parameters
5.4 Performance standards
5.5 Concession period
5.6 Selection of Concessionaire
5.7 Concession fee
5.8 Risk allocation
5.9 Financial close
5.10 User Fee
5.11 Construction
5.12 Operation and maintenance
5.13Reserved Services
5.14 Right of substitution
5.15 Force majeure
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5.16 Termination
5.17 Monitoring and supervision
5.18 Support and guarantees by the Government
5.19 Real estate development
5.20 Miscellaneous
6.0 RESERVED ACTIVITIES
7.0 EMERGING CHALLENGES AND RISKS IN PPP
7.1 General Issues
7.2 Financial Challenges
a) Financial Risk
b) Project Finance and Revenue Streams
c) Revenue Streams
7.3 Legal Challenges
7.4 Public Risk
7.5 Asset Risk
7.6 Operating Risk
7.7 Sponsor Risk
7.8 Default Risk
8.0 EMERGING REGULATORY ISSUES
8.1 Amendment of AAI Act and Aircraft Rules Act
8.2 Regulatory authority for AERA
9.0 THE CHANGED ROLE OF GOVERNMENT UNDER PPP AND NE W SET
OF AGREEMENTS AND NEW LEGAL FRAME WORK
10 .0 PPP airports and RTI Act
10.1 PPP airports public authority or not
10.2 BAIL case
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10.3 In case of brown field airport –AAI act apply – the operator in
AAI shoes
11.0 RECOMMENDATION IN REGULATION FOR PPP
12. CONCLUSION
13. REFERENCES.
14. ANNEXURE.
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PREFACE Over the years, the basic infrastructure in India has been developed to an
extent, which is not sufficient enough while considering India’s geographical
size, its population and the pace of overall economic development.
Infrastructure bottleneck has been a serious concern in India and basic
infrastructure like roads, railways, ports, airports, communication and power
supply are not comparable to the standards prevalent in its competitor
countries.
To develop the Indian infrastructure to a world class and to remove the
infrastructure inadequacy in the country, the investment requirements are
mammoth, which could not be met by the public sector alone due to fiscal
constraints and mounting liabilities of the Government. This would call for
participation of private sector in coordination with the public sector to develop
the public infrastructure facilities. In this direction, the economic reforms
initiated in the country provide forth the policy environment towards public
private partnership (PPP) in the infrastructure development. Sector-specific
policies have also been initiated from time to time to enhance the PPP in
infrastructure building. While the PPP is spreading to develop basic
infrastructure world wide, in India, the participation of private sector in the
infrastructure building has not been much encouraging, despite several rounds
of policy reforms.
Against this setting, the rest of the paper is organized as follows. Section I and
II assesses the Indian market and the need for PPP in the airport infrastructure
development. Section III attempts to review the structure of PPP through
literature survey. Section IV and V evaluates the status of private sector
participation in infrastructure development guidelines and concession
agreement. Section VI captures the Indian experiences in this regard. Section
VII reviews the investment requirements to bridge the infrastructure gap in the
country. Section VIII focuses on the challenges of infrastructure projects with
the status of PPP and overall private sector participation along with sector-
specific concerns. Generic issues while implementing the airport infrastructure
projects in the country with private participation and options thereon are
analyzed in Section IX, X and XI. Finally, concluding observations are drawn in
Section XII.
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1.0 ROLE OF AIRPORT INFRASTRUCTURE IN NATIONAL DEV ELOPMENT
Airports are the gateway for the country; they open doors for trade, tourism.
Economy of a country depends on the trade and tourism, simultaneously the
trade and tourism depends on the airports. A country without national carriers
can still trade with other countries as well catch the fancy of tourists, but the
country without an airport will be handicapped to advance economically. So it
becomes very important for every country to have an airport.
The rapid growth of the trade and tourism between the nations has chosen the
air transport mode for its Quick, Reliable, Efficient and Safe services. The
recent trends in the development of free trade, globalisation, liberalization and
deregulation left the mankind to race with time and air transport is found to be
very appropriate, thus propelling the aviation industry to paramount.
Airports also represent a country’s window on the world. Passengers form their
first impressions about a nation from the state of its airports. They can be
effectively used as symbols of national pride, if we pay sufficient attention to
their quality and maintenance.
In many remote, hilly and inaccessible areas of the country, air transport is the
quickest and sometimes the only mode of travel available. This is especially
true of sensitive regions on the borders with our neighbours in the west, north
and north-east.
Airports need to be integrated with other modes of transport like Railways and
Highways, enabling seamless transportation to all parts of the country.
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1.1 Economy
The impact of air transportation on economic activity differs from other
transportation modes because of its distinctive characteristics speed, cost,
flexibility, reliability, and safety. It is the only realistic long-distance
Transportation mode for high-value perishable commodities and time-sensitive.
Airports being nuclei of economic activity assume a significant role in the
national economy. The quality of airport infrastructure, which is a vital
component of the overall transportation network, contributes directly to a
country's international competitiveness and the flow of foreign investment. The
availability of better air transportation services effectively increases the scope
of new business and industrial economic activity. The economy moves towards
higher value-added products, particularly in agriculture, an increasing
proportion of the produce will have to move by air, both within the country and
abroad. In addition, the more remote and inaccessible regions of the country,
such as the North-east, can realise their true potential when such a transition
becomes possible. Increasing economic activity in turn generates the need for
passenger travel and freight and drives the demand for air transportation
services. Cargo carried by air in India weighs less than 1% of the total cargo
exported, it accounts for 35% of the total value of exports. Better cargo
handling facilities lead to enhanced levels of imports, especially of capital
goods and high-value items. Likewise, It is observed that 2% growth in aviation
industry leads to 1% growth in GDP.
Export and Import Trade of India with World for Last Five Years
EXPORT AND IMPORT DATA
0.00
20,000,000.00
40,000,000.00
60,000,000.00
80,000,000.00
100,000,000.00
120,000,000.00
140,000,000.00
160,000,000.00
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
FINANCIAL YAER
INR
EXPORT IMPORT
(See Annexure –I for export and import data) Fig.1
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1.2 Social Payback by Airports
Airport provides employment in the aviation sector and creates wider
socioeconomic benefits through its potential to facilitate certain types of
activities in a local development. Studies evaluate the direct, indirect and
induced employment impact of air transportation. Direct impact is employment
in the aviation industry, indirect impact is the employment in the industries
down the aviation supply chain, and induced impact is the employment
supported by the expenses of those directly and indirectly employed in the
aviation industry, studies has been assessed that every job in the aviation
industry will create seven other jobs directly or indirectly through its catalytic
impact on tourism and business.
At the macroeconomic level, airport impacts economy by providing employment
and by enabling effects including enabling access: to markets, to people, to
capital, to ideas and knowledge, to labour supply, to skills, to opportunity, and
to resources.
airport industry which in the past was considered to be a simple transit areas
but now the modern airports have become place where one works, eats, makes
purchases, and even sleeps. The whole idea of modern airports is to provide a
pleasant reception area with increasingly commercial outlook; private rooms,
game areas, religious facilities, malls, shopping canters.
Air transport provides significant social benefits few of them as follows:
• Air transport contributes to sustainable development. By facilitating tourism
and trade, it generates economic growth, provides jobs, improves living
standards, alleviates poverty, increases revenues from taxes, and fosters the
conservation of protected areas.
• Air transport is often the only means of transportation to/from remote areas,
and promotes social inclusion by connecting those living in such communities
with the rest of the country.
• The air transport network facilitates the delivery of emergency and
humanitarian aid relief anywhere on earth, and ensures the swift delivery of
medical supplies and organs for transplantation.
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• Air transport improves quality of life by broadening people’s leisure and
cultural experiences. It provides a wide choice of holiday destinations around
the world and an affordable means to visit distant friends and relatives.
• Air transport improves productivity, by encouraging investment and
innovation; improving business operations and efficiency; and allowing
companies to attract high quality employees. And Cities always develop
towards the airport because of its socioeconomic factor.
1.3 Influence of Aviation on Tourism
Tourism and Air Transport industry are complementing each other. Tourism
depends on transportation to bring visitors, while the transportation industry
depends on tourism to generate demand for its services. The growth in tourism
industry directly reflects onto the air transportation. Over the last 25 years, the
number of international tourists has more than doubled. The expansion of
international tourism has a large impact on the discipline of transport
geography.
Transport is the cause and the effect of the growth of tourism. To start with, the
improved facilities have stimulated tourism, and the expansion of tourism has
stimulated transport. Accessibility is the main function behind the basics of
tourism transport. In order to access the areas that are mainly aimed, tourists
will use any transportation mode. However, air transport is the main mode for
international tourism. Air transport plays a dominant role in inter-regional
movements of tourists, which normally entails travel over long-distance. Growth
rates of international air traffic are pegged with growth rates of international
tourism. Attractive package tours, competitive airfare attract more and more
tourist day by days, therefore both the industry is expanding rapidly.
Air transport is far advance than the transport mode. Air transport has
revolutionized the geographical aspect of distances; the most remote areas can
now be attained, any journey around the world can be measured in terms of
hours of travelling. With jet that, can reach up to 1950 km/hrs, international
tourism is no longer an on going adventure.
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Inducement tour - Tourism now a day not only the personal influence, but it also
is group affluence as well, many company to induce their work force arrange
tour overseas, which is the significant reason of Group tour.
“Whatsoever the reason of travelling people need transportation for movement,
the next question arise which mode of transportation? The answer is affordable,
time saving, convenient and safety. So, air transportation is the one meet most
all of the above”, which basically requires good airport infrastructure
Airports provide the only worldwide transportation network, which makes it
essential for global business and tourism. Airport alleviate poverty and helps to
improve living standards by facilitating tourism. Air transport improves quality of
life by broadening people’s leisure and cultural experiences. It provides a wider
choice of holiday destinations around the world and an affordable means to visit
distance friends and relatives. Air transport contributes to sustainable
development not only by facilitating tourism and trade, it generates economic
growth, provides jobs, increase revenues from taxes as well as facilitates the
delivery of emergency humanitarian aid relief and swift delivery of medical
supplies anywhere on the earth.97% of the country's foreign tourists arrive by
air and tourism is the nation's second largest foreign exchange earner.
1.4 Environment Benefits of Airports and Aviation
As with all human activity there is an environmental impact. Aviation is widely
understood to be responsible for 2% of worldwide man-made CO2 emissions;
where as other transport provides 16%. The IPCC provides a comprehensive,
objective, open and transparent assessment of climate change. Today, 80% of
aviation’s greenhouse gas emissions are related to passenger flights exceeding
1,500km/900 miles for which there is no practical alternative.
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AVIATION: ONLY 2% OF MAN-MADE CO 2 EMISSION
Fig.2
AIRCRAFT TODAY ARE 75% QUIETER AND 70% CLEANER THAN 40 YEARS AGO
Aviation’s small contribution to CO2 emissions is not a coincidence, but rather
the result of a constant focus on innovation. Manufacturers must strive to
reduce fuel consumption to remain competitive, but it is much more than just
good business. Since the start of commercial jet services in the 1950s, aircraft,
engine and other related manufacturers have been driven by a number of
factors. Safety is understandably considered above all others, although the cost
of aircraft operations for the airlines has been and remains a critical
consideration. Much of the airlines’ and manufacturers’ focus has always been
to reduce fuel costs. Today, this can account for 36% of airline operating
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expenses, even though manufacturers have reduced the fuel consumption by
37% per 100 passenger kilometres travelled, since 1987. Over the last 50
years, aircraft have become increasingly efficient in terms of their individual
impact on the environment throughout their entire life cycle. This continues to
be driven by the demands of passengers and airlines, as well as both
international and local legislation.
Today, aircraft are 20dB quieter than the closest comparable aircraft produced
in the 1960s, which equates to 75% less perceived noise. Of the entire
population affected by transport noise, 79% live near roads, 14% near railways
and only 7% live near airports. Similarly, everyone has seen pictures or film of
aircraft from that period taking off with plumes of black smoke billowing from the
engines, which is not seen at the world’s airports today. In fact, today’s aircraft
produce 90% less smoke or unburned hydrocarbons than aircraft of the 1970s,
with a carbon monoxide (CO) reduction of more than 50%.
Furthermore, aircraft burn 70% less fuel and, therefore, emit 70% less CO2
than aircraft flying in this period. Another trend having a significant effect is
improved aircraft load factors. In other words airlines have filled their planes
more efficiently, thereby effectively reducing the need for more aircraft or
frequencies, together with their associated fuel burn. Since 1970, airlines have
improved load factors by an average of 0.6 percentage points per year, with
industry wide load factors averaging 76% in 2006.
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2. AIRPORT ENVIRONMENT IN INDIA.
2.1 Present airport infrastructure in India.
There are 449 airports/airstrips in the country. Among these, the AAI owns and
manages 88 airports, 27 civil enclaves at defence airfields and 5 PPP airports
and provides air traffic services over the entire Indian airspace and adjoining
oceanic areas. Historically, air traffic at Indian airports has broadly followed a
particular distribution pattern, except that some airports have changed their
inter-se positions vis-à-vis volume of traffic.
2.2 Major Airports of India
“Major airport means an airport which has, or is designated to have, annual
passenger throughput in excess of one and a half million or any other airport as
the Central Government may, by notification, specify as such”
Presently twelve (12) airports in the country have annual passenger throughput
in excess of one and a half million as can be seen from the following table.
Sl. No. Name of Airport Passenger Throughput
2008-09 (in million)
1 Mumbai 23.43
2 Delhi 22.84
3 Chennai 9.84
4 Bangalore 8.76
5 Kolkata 6.99
6 Hyderabad 6.22
7 Cochin 3.36
8 Ahmedabad 2.83
9 Goa 2.22
10 Trivandrum 1.95
11 Pune 1.77
12 Calicut 1.68
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
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• 2 airports – Mumbai and Delhi being leased airports of AAI under PPP
management, with majority private participation;
• 3 airports – Bangalore, Hyderabad and Cochin being private
• 5 airports – Chennai, Kolkata, Ahmedabad, Trivandrum and Calicut
being airports under the Airports Authority of India; and
• 2 airports – Goa and Pune being Civil Enclaves at defence airfields,
managed and operated by the Airports Authority of India.
2.3 Present Classification of Airports in India
i. International Airports: These are declared as international airports and
are available for scheduled international operations by Indian and foreign
carriers. Presently, Mumbai, Delhi, Chennai, Calcutta and
Thiruvananthapuram are in this category.
ii. Custom Airports: These have customs and immigration facilities for
limited international operations by national carriers and for foreign tourist
and cargo charter flights. These include Bangalore, Hyderabad,
Ahmadabad, Calicut, Goa, Varanasi, Patna, Agra, Jaipur, Amritsar and
Tiruchirapally.
iii. Model Airports: These are domestic airports which have minimum
runway length of 7500 feet and adequate terminal capacity to handle
Airbus 320 type of aircraft. These can cater to limited international traffic,
if required. These include Lucknow, Bhubaneshwar, Guwahati, Nagpur,
Vadodara, Coimbatore, Imphal and Indore.
iv. Other Domestic Airports: All other airports are covered in this category.
v. Civil Enclaves in Defence Airport: There are 28 civil enclaves in Defence
airfields.
2.4 Proposed classification of Airports in India
Reclassification of airports is proposed to develop the capacity of airports in
accordance with the future projections of air traffic:
International Hubs: This category of airports will be that of International Hubs,
which may cover airports currently classified as international airports, and those
eminently qualified to be upgraded. These would at present cover Delhi,
Mumbai, Chennai, Kolkata and Thiruvananthapuram. Airports at Bangalore,
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
21
Hyderabad, Ahmedabad, Amritsar and Guwahati would be added to the list
after their facilities are upgraded to the desired level. International hubs would
be used for dispersal of international traffic to the hinterland. At these airports,
the facilities would be of world-class standards, including convenient
connections for international and domestic passengers, airport-related
infrastructure like hotels, shopping areas, conferencing and entertainment
facilities and aircraft-maintenance bases, among others.
Regional Hubs : The government is keen to encourage the development of
regional airlines with fleets of small aircraft, to provide air-linkages witin the
interior areas of the country. Regional hubs will have to act as operational
bases for regional airlines and also have all the facilities currently postulated for
model airports, including the capability to handle limited international traffic. The
identification of Regional Hubs will be made on the basis of origin-destination
surveys, traffic demand and the requirements of the airlines. The state
government would be closely associated as co-promoters of regional airlines.
Other Operational airports: These would be developed so as to be cost-
effective on the basis of individual needs, to meet the requirements of traffic
handled by them. Airports serving state capitals would be given priority. The
status of individual airports may be reviewed at five-yearly intervals, on the
recommendation of a committee of experts. Grant of status as International
hubs would be with prior cabinet approval. It is clarified that international hubs
shall have the status of an international airport for purposes of bilateral
agreements.
2.5 Greenfield and Brownfield Airports
Greenfield Airport means a new airport which is built from scratch in a new
location because the existing airport is unable to meet the projected
requirements of traffic. The word Greenfield originates from software
engineering, meaning a project which lacks any constraints imposed by prior
work. Brownfield projects are the projects which are modified or upgraded from
existing facilities.
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3 PUBLIC PRIVATE PARTNER SHIP
3.1 Introduction to PPP
PPP can be defined as arrangements whereby private parties participate in, or
provide support for, the provision of infrastructure, and a PPP project results in
a contract for a private entity to deliver public infrastructure-based services.
The mechanics of the arrangements can take many forms and may incorporate
some or all of the following features
•The public sector entity transfers land, property or facilities controlled by it to
the private sector entity (with or without payment in return) usually for the term
of the arrangement;
•The private sector entity builds, extends or renovates a facility;
•The public sector entity specifies the operating services of the facility;
•Services are provided by the private sector entity using the facility for a defined
period of time (usually with restrictions on operations standards and pricing);
and
•The private sector entity agrees to transfer the facility to the public sector
(with or without payment) at the end of the arrangement.
3.2 Key drivers and enablers of PPP.
3.2.1 Conventional procurement issues.
A lot of the blame for the poor record in the design and construction of capital
works on the attitudes and culture of the public sector, which result in time
delays and costs overruns being commonplace. Since then, more complete
and damning evidence has come to hand on the extent of cost overruns and
revenue shortfalls on infrastructure investments phenomena that have come to
be known under the heading ‘appraisal optimism’.
Appraisal Optimism : Optimism bias is the tendency for a project’s costs and
duration to be underestimated and/or benefits to be overestimated. It is
expressed as the percentage difference between the estimate at appraisal and
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
23
the final outturn.
National Audit Office (NAO) undertakes a rolling review of all
government procurement, including PFI procurement, PFI construction
outcomes showed that in contrast to traditionally procured projects, the PFI
projects were largely being delivered on time or early (76 per cent versus 30
per cent) and on budget (78 per cent versus 27 per cent).
Construction performance of PFI and conventional projects
Projects PFI projects NAO census
(%)
Government
procurement survey (%)
On time 76 30
On budget 78 27
UK Green Book calls ‘optimism bias’ – the estimated difference between the
business case and the final outcome for each category of project. For all
projects, time overruns exceeded the estimated duration by 17 per cent.
Differences between actual and estimated costs in large public works transport
projects.
Project Type All regions
Number of projects Average cost escalation (%)
Transport 258 27.6
3.2.2 Naresh Chandra committee
The Indian aviation industry took off on to a higher growth plane following the
liberalization of the airlines industry in the late 1990s. In the decade following
liberalization, the growth was propelled further by the emergence of low-cost
carriers, competition-induced decline in travel costs, and sustained economic
growth. With that, renewed focus came to be placed on the aviation
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
24
infrastructure segment, in which investments by the Airport Authority of India
(AAI)—till then the monopoly owner of most of the Indian airports—had
historically been inadequate. The emphasis on further developing the country’s
aviation infrastructure meant opening up of airports to private investment, as
was one of the key recommendations of The Naresh Chandra Committee
Report on the Road Map for the Civil Aviation Sector—November 2003.
3.2.4 To meet the growing needs of airport infrastr ucture in India
India’s airports have suffered from decades of neglect and underinvestment.
When the Naresh Chandra Committee presented its report to the Ministry of
Civil Aviation in November 2003, it remarked frankly that the country’s
“passenger airports are for the most part an embarrassment”.
The inadequacy of the state of airport infrastructure was exposed as air traffic
expanded dramatically from 2004 onwards, pushing several metro airports to
well beyond their design capacity. Congestion in the terminals, on the runways
and in the air, resulted in a deteriorating passenger experience and an
increasingly inefficient (and costly) operating environment for the airlines.
3.2.5 Passenger Growth
In the recent past, India has encountered an extraordinary growth in passenger
air traffic. In India 87% of the total air traffic is generated by the 15 international
airports (listed in annexure-I), of which a total of 84% of domestic traffic and
93% of international traffic is generated from these airports.
The growth of International and domestic passenger traffic is shown in the
Graphs below. The statistics analysis follows the regression line of polynomial
representing the international and domestic passenger growth respectively.
y = 95946x2 - 317907x + 4E+06
y = 464620x2 - 1E+06x + 1E+07
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
25
International & Domestic Passenger Traffic
y = 95946x2 - 317907x + 4E+06 y = 464620x
2 - 1E+06x + 1E+07
0
20
40
60
80
100
120
19
99
-00
20
00
-01
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
Mil
lio
ns
Calender Year
Pas
seng
er T
raffi
c INTERNATIONAL PASSENGER DOMESTIC PASSENGER
(See Annexure II for the passenger data) Fig.3
The estimates from the graph represent a 100 and 20 million in Domestic and
international air traffic by 2014. While passenger traffic in metros grew by an
average of 31%, smaller stations like Port Blair, Nagpur and Raipur registered
traffic growths of 41.8%, 94.8% and 70.3%, respectively.
According to the Airports Authority of India data, of the top 45 airports, 9
airports registered a 50% growth in passenger traffic. These include
Hyderabad, Pune, Coimbatore, Mangalore, Nagpur, Port Blair, Raipur, Ranchi
and Jaipur. Among the four metros, Kolkata registered the highest growth of
39.5%, followed by Chennai, Delhi and Mumbai at 35%, 27.1% and 22.4%
respectively.
3.2.6 Cargo Growth
The air cargo market in the country has also witnessed increased activity over
the last few years especially with the entry of number of new players in cargo
handling market (terminal management, development and operation).
International operators like Menezies (JV with Bobba group at Bangalore and
GHIAL at Hyderabad) and SATS Singapore (JV with Air India at Bangalore)
have made significant investments for offering newer and better services for
cargo users. International express cargo operators like FedEx and DHL are
also increasingly establishing their presence in the Indian market.
y = 1615.4x2 - 10948x + 114582
y = 195.64x2 + 14984x + 131194
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
26
International & Domestic Cargo Traffic
y = 1615.4x2 - 10948x + 114582 y = 195.64x2 + 14984x + 131194
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
Year
Carg
o in
To
nn
es
INTERNATIONAL CARGO TRAFIC DOMESTIC CARGO TRAFFIC
(See Annexure-III for the cargo data)
Fig.4
Form the polynomial regression analysis and form the graph this is evident that
400000 and 350000 tons of cargo is likely to reach by 2014.
3.2.7. To Meet Financial Requirements to Support Such Growth and to Infuse
Private Fund in the Airport Infrastructure Sector Recognising the potential for
airport infrastructure constraints to stifle the aviation industry, in 2005 the
Government of India announced a USD10 billion airport upgrade and
modernisation programme over 5 years to 2010. A further USD20 billion of
investment is expected in the following 10 years. Acknowledging that it
possesses neither the expertise nor the capital to carry out such an undertaking
by itself, the government has invited private sector participation in the process.
3.2.8 To Increase the Standards of Indian Airports- To International
Standards
The ICAO also standardizes certain functions for use in the airline industry,
such as the Aeronautical Message Handling System AMHS; this probably
makes it an organization. The ICAO defines an International Standard
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
27
Atmosphere (also known as ICAO Standard Atmosphere), a model of the
standard variation of pressure, temperature, density, and viscosity with altitude
in the Earth's atmosphere. This is useful in calibrating instruments and
designing aircraft. The ICAO standardizes machine-readable passports
worldwide. Such passports have an area where some of the information
otherwise written in textual form is written as strings of alphanumeric
characters, printed in a manner suitable for optical character recognition. This
enables border controllers and other law enforcement agents to process such
passports quickly, without having to input the information manually into a
computer. ICAO publishes Doc 9303, Machine Readable Travel Documents,
and the technical standard for machine-readable passports. A more recent
standard is for biometric passports. These contain biometrics to authenticate
the identity of travellers. The passport's critical information is stored on a tiny
RFID computer chip, much like information stored on smartcards. Like some
smartcards, the passport book design calls for an embedded contact less chip
that is able to hold digital signature data to ensure the integrity of the passport
and the biometric data.
3.2.9 Drivers and enablers
Drives Enablers
• Financial need, e.g. budget deficit • Aging or poor infrastructure • Search for greater efficiency and
creativity • Desire to introduce competition • Shortage of domestic experience
or skills • Desire to educate national
contractors and remain competitive
• Bandwagon effect
• Political framework: stability explicit political will or commitment, e.g. a dedicated unit, ability to push schemes through, creative and willing local government
• Legal frame work: no roadblocks, and documentation not excessively complicated
• Public acceptance of private sector involvement and specific impacts, e.g. environmental impact of new airports
• Quality practitioners: good quality, experienced project sponcers and lenders
• Readily available finance, mature or sophisticated banking sector and capital markets culture
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
28
3.3 Present Indian scenario
The privatization initiative that followed gained traction with the award of build-
operate-transfer (BOT) concessions to private players for Greenfield airports at
Bangalore and Hyderabad in 2004 and the privatization of the international
airports at Delhi and Mumbai in 2006. All these airports are now being operated
by separate joint venture companies (JVCs)
The details including Type of PPP, Contract Period, Project Proponent,
Contract Award method, Estimated Project Cost, Amount of Government
Support - (VGF), Legal Instrument, Regulatory framework, financial information
including Equity, Debt, Other Financial Instrument, Market Structure and
Competition of these projects are included in appendix-(3)
While the award of BOT projects for two Greenfield airports and privatization of
the Delhi and Mumbai airports are positive steps towards involving the private
sector in development of the country’s aviation infrastructure, there is also a
growing need to put together a sound regulatory framework for the aviation
industry as a whole and have a functioning and independent regulator to
balance the often opposing demands of the airlines and aviation infrastructure
sectors. The regulatory factor apart, the aviation infrastructure sector is
currently facing the challenges of a weak global economy, declining traffic
levels, and deteriorating financial health of airlines. As a result, revenue
generation by airports has been impacted severely, which, along with the
pressures on liquidity, has caused funding gaps to arise both for private players
as well as the state-owned AAI. Another development that has hit the aviation
infrastructure segment has been the downturn in the real estate sector since
the second half of fiscal 2008-09. The downturn has forced some private airport
concessionaires to look for alternative sources of funds, given that their
business models rely significantly on the development and sale of land adjacent
to the airports. An important issue in all airport privatizations and projects is the
degree of risk transfer to the private sector. To what extent will the
concessionaire or sponsor bear the risk in relation to matters such as existing
asset condition (if privatization), construction costs, operational costs, traffic
volumes, revenues, change of law, non-insurable risks and financing risk? This
is nothing unique to airport concessions and projects – similar issues arise in
most other contexts. Full risk transfer to the private sector is unlikely to be
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
29
achievable. Certain risks, particularly those having a political dimension, will
inevitably need to remain with the Government, such as changes in law, war,
terrorism and expropriation.
See annexure-IV for details
Fig 5
(See annexure-V for details) Fig-6
Development and use of PPPs for delivering infrastructure services has now at
least 11 years of precedence in India, with the majority of projects coming in
line in the last 5 years. Policies in favor of attracting private participation as well
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
30
as innovation with different structures have met with varying degrees of
success. Some sectors like telecommunications, power, and ports and roads,
have done very good progress compared to limited success in other sectors. As
far as current status of projects in place, there have been at least 450 PPP
projects in our main sectors of focus where a contract has been awarded and
projects are underway – in the sense that they are either operational, have
reached construction stage, or at least construction/implementation is
imminent. The total project cost is estimated to be about Rs. 2, 24,175.75
Crore. In this airport counts 19111 crore which is spent for only on five projects.
We see that airport projects account for 1.1% of the total number of projects
and 8.52% by total value. In terms of contract award method the International
Competitive Bidding yielded 39% of total investment in India followed by
Domestic Competitive Bidding with 33% in PPP. However airport count 100%
international competitive bidding which is mainly because of building airport to
international standard and to achieve technically highest of design standard.
Present Greenfield airport details were given in annexure-VII
See annexure-VI for state wise PPP detail in India.
Investor Type
Total
Investment
% of total
number of
projects
% of total
project cost
Foreign Investor 1725.85 7% 1%
Indian Private Investor 134145.57 93% 99%
Total 135871.42 100% 100%
Sector-wise break-up of foreign investor participation in PPP projects
Foreign Investor Versus
Sector
No. of
Projects Investment
% of total
project
cost
Ports 9 416.5 24%
Roads 9 256.22 15%
Airports 4 1053.13 61%
Total 22 1725.85 100%
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
31
Fig-6
Foreign equity participation of 27 foreign companies in PPP projects was only
at Rs 1,725.85 crore which is meager 1 per cent of the total project investment.
Prominent PPP projects where foreign companies have an equity stake include
modernization of Mumbai and Delhi international airports, Delhi-Noida toll
bridge, Papaya port, Bangalore international airports and JNPT container
terminal etc.Airport counts 61% of total foreign investment.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
32
4. PROCEDURAL GUIDELINES FOR SETTING UP OF PPP AIRPORT .
4.1 Policy Framework
• Airport Infrastructure Policy of 1997 provides the following:-
• In view of the fact that there are already a sufficient number of airports,
many of which are not viable; Greenfield airports will normally not be taken
up either in the public or private sector without the prior approval of the
Government. In the case of the Other Airport category run by private
operators, the approval of the DGCA would suffice as at present.
• A Greenfield airport may be permitted where an existing airport is unable to
meet the projected requirements of traffic or a new focal point of traffic
emerges with sufficient viability. It can be allowed both as a replacement for
an existing airport or for simultaneous operation. This aspect will have to be
clearly spelt out in the notice inviting tenders.
• No Greenfield airport will normally be allowed within an aerial distance of
150 kilometers of an existing airport. Where it is allowed as a second airport
in the same city or close vicinity, the parameters for distribution of traffic
between the two airports will be clearly spelt out.
• The Government may, while permitting a Greenfield airport, decide whether
it will be in the public or private sectors or be taken up as a joint venture.
• Where the Government decides to set up a Greenfield airport through the
AAI on social considerations even though the same is not economically
viable, suitable grant-in-aid will be provided to AAI to cover both the initial
capital cost as well as the recurring losses.”
4.2. Promoters
The Central Government, Airports Authority of India, State Government, a local
self Government Institution e.g. Municipality, Corporation etc., a private
company, a consortium or a group of individuals can act as the promoter for the
Greenfield airport either individually or jointly.
4.3 Study stages
a. Pre-feasibility Study Stage
The promoter, after preliminary clearance of Ministry of Civil Aviation on his
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
33
proposal in the first instance, will commission a pre-feasibility report to study
the overall potential of the project and see whether the project is attractive
enough to warrant detailed study. The study should cover demand, technical,
manpower, financial, economic and social modules of the project. The study
may also utilize secondary research and information. The promoter shall submit
the pre-feasibility report to the Ministry for further approval. The cost of the pre-
feasibility will be borne by the promoter.
b. Detailed Feasibility Study Stage
Based on study of pre-feasibility report, the promoter shall again approach the
Central Govt. for preliminary clearance of undertaking a detailed Techno-
Economic Feasibility Study (TEFS). The Central Govt. after due examination of
all modules of pre-feasibility study will determine whether the project shows
promise of meeting the financial, economic and social criteria which have been
set for public investment expenditure. In case, the Govt. find it appropriate, it
may permit the promoter to take up detailed TEFS.
c. The primary promoter will commission a TEFS including simulation study for
conflict free operation by a competent professional body. Cost of TEFS
including the simulation study will be borne by the primary promoter. During this
phase, the accuracy of variables will be further improved to see if the project
has potential for success. This may require primary research etc.
d. Upon establishing the technical / financial viability through sensitivity analysis
of realistic traffic and revenue projections, as emerging from the TEFS, the
primary promoter will submit the proposal to the Ministry with full justification,
inter alia, enclosing the TEFS and other studies in this regard. Such proposal
shall cover the respective State Government’s commitments to the proposal in
respect of acquisition of land, supply of water and power, construction of
access roads and other financial support. It is only after TEFS that the most
important decision has to be made whether the project should be approved.
4.4 Site Selection
Site selection for any Greenfield airport will be undertaken by the promoters at
pre-feasibility stage only in consultation with Director General of Civil Aviation
(DGCA) including AAI, Ministry of Environment & Forest, and Ministry of
Defence (MOD). In case, the Greenfield airport is proposed at a location, which
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
34
has an existing airport, while taking the decision to accord approval for the
Greenfield airport, the Government would also decide whether the existing
airport would be closed down or the new airport would be a second airport with
full-fledged simultaneous commercial operations. In case, the existing airport is
decided to be closed down, the unrecovered investments of AAI in the existing
airport will have to be compensated by a suitable mechanism such as share in
the concession fee to be given by the greenfield operator to the Govt. The
Government shall, in general, promote competition in setting up a greenfield
airport in addition to the existing one.
If a Greenfield airport is established in lieu of an existing AAI airport, the
existing airport with all assets will revert to AAI. AAI may decide on the future
usage of the airport in consultation with Ministry of Civil Aviation. The issue of
providing employment to AAI’s employees working at the AAI airport after its
closure has engaged attention of the Govt. The JVC will absorb AAI employees
subject to merit and efficiency in operational/ management dep’t. Against
vacancies at the airport.
4.5 Detailed Design Stage and Approval
Based on the TEFS and State Government/Promoters’ recommendations, the
Central Government will consider giving approval for the airport project as per
the extant policy. The approval will be given by the Union Cabinet as per the
Civil Aviation Policy. The Central Government after approval will then go ahead
to develop detailed design of the project which should then result in formulation
of operational plan. At this stage, the project can once again be reviewed
whether it shall meet required criteria.
4.6 Project Implementation Stage
A Steering Committee is set up by State Govt. / promoter comprising of officials
of the State Govt. and the Ministry of Civil Aviation as this stage involves
coordination and allocation of resources. This Committee will oversee the
implementation of the project, funding proposal, and preparation of tender and
other documents, bidding and selection of the preferred investor. The State
Govt./ promoter will designate an agency preferably a PSU to coordinate the
activities and assumes responsibilities and authority for moving ahead .
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
35
4.7 Setting up a Special Purpose Vehicle (SPV)
The State Govt./ promoter shall set up a SPV wholly owned buy it to begin with.
Later, on the selection of successful bidders, the private investor will be
inducted in the SPV with 74% equity shares.
4.8 Public Private Partnership (PPP) Model
• The State Government as a primary promoter may consider joint venture
(JV) with private investors through Public Private Partnership Model (PPP).
In case it proposes to have a joint venture with private promoters, it shall be
the primary responsibility of the State Government to choose private sector
partners through a transparent competitive bidding process subject to the
guidelines on foreign equity participation.
• State Govt. / AAI may also participate in the JV with equity which will be
limited to 13% each (Rs. 50 crores cap or 13%, whichever is lower in case
of AAI)
4.9 Bidding Process and Selection criteria
• The Joint Venture Partner / Greenfield Operator shall be selected by the
State Govt. through a transparent competitive bidding process based on
technical and financial criteria. While inviting bids from prospective bidders
by the State Govt. / promoters, the draft Concession Agreement (CA),
Shareholder Agreement (SHA), State Support Agreement (SSA), Land
Lease Agreement (LLA), (CNS/ATM) Agreement, principles of Finance
Agreement, principles of Airport Operator Agreement along with format of
commitment from lenders regarding debt/ equity will be furnished to the pre-
qualified bidders. Before inviting technical and financial bids, these
documents will be frozen in consultation with Pre- Qualified Bidders (PQBs).
• It may be divided into technical and financial criteria. The technical criteria
may include financial, development and management abilities. A broad list
of these will be made part of the bid documents. The financial criteria could
be the minimum bid for State Support and viability gap funding or maximum
concession fee.
• The successful bidder inducted into SPV through SHA shall use the
Detailed Project Report (DPR) for realizing and operationalising the project.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
36
4.10 Viability Enhancement: - The Greenfield airport project can be made
Viable by following means:-
(i) Land and external infrastructure provided by the State Government for the
airport on lease through Land Lease Agreement with variety of combinations
such as token lease, moratorium on lease, deferred payment of lease etc.
(ii) The State Government may enter into a State Support Agreement in
addition to Land Lease Agreement with the greenfield airport operator providing
for State Support such as grant, infrastructure loan, interest free loan etc.
(iii) Central Government may levy an Advance Development Fee (ADF) from
embarking passengers at the existing airport or for the development of new
airport on terms and conditions as per ADF rules framed by the Ministry.
(iv)The Greenfield airport operator may be allowed to levy a User Development
Fee (UDF) at the new airport, subject to the Regulatory regime in force.
(v) Aeronautical Charges may be leviable at the airport shall be as approved by
the Govt. / Regulator.
(vi)The Passenger Service Fees (PSF) levied at all airports would be applicable
to the Greenfield airports also. ADF / UDF would be charged in addition to the
PSF. PSF being levied through passenger tickets will have two components viz.
(a) Security charges, (b) levy for Airport Maintenance and Upkeep. The PSF
components collected through airline passenger tickets will be passed on by
the airline to AAI as far as security component is concerned and the Greenfield
operator for service component.
(vii) Concessions have also been given by the Union Govt. through budget
pronouncement from time to time.
• While Security will be the responsibility of the Central Govt. {through AAI/
Bureau of Civil Aviation Security (BCAS)}, the airport operator will be
required to provide security equipments, operate and maintain as per
standards laid down by the Bureau of Civil Aviation Security (BCAS), and
meet the costs thereof.
• Communication, Navigation and Surveillance (CNS) / Air Traffic
Management (ATM) equipment along with allied infrastructure required for
Greenfield airport will be provided by Airports Authority of India (AAI) at its
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
37
cost and the revenue from (RNFC)/ (TNLC) accrue to AAI directly. The
Greenfield operator will provide ATC tower, required buildings/ office
accommodation, utilities on payment of rental on mutually agreed terms.
The State Govt. / Operator will also earmark land for a residential colony for
CNS/ATM personnel. The colony will be developed by AAI at its own cost.
The Greenfield airport operator will sign a CNS / ATM agreement with AAI in
this regard wherein AAI will commit performance standards also in terms of
aircraft movement per hour.
• If the selected Greenfield airport operator wants to take initiative in
developing business strategies through traffic building at the airport, the
Central Government may consider giving positive support keeping in view
the overall bilateral requirements also as per the Civil Aviation Policy.
• The airport operator would be allowed to optimize the use of land subject to
the applicable land rules and regulations of the State Government on land
use and encouraging non-aeronautical revenues. In this context, the
concept of developing the entire area with an integrated approach may be
encouraged. While the land given by State Govt. may be used to raise non-
aero revenue, the JVC and the State Govt. will ensure that the airport does
not assume real estate orientation. Hence, the land leased out will be first
used for full length aero development over the concession period. Only the
residual land will be subject to non-aero exploitation for those activities
which are directly related with passengers, cargo, air transport industry/
services etc.
• Landing, parking, housing charges will accrue to the airport operator.
• The airport operator will provide requisite space and facilities for regulatory
agencies like Customs, Immigration, Health, Plant and Animal Quarantine,
Security and State Governments on terms and conditions as per CA.
• The JVC while providing healthy corporate governance, will ensure that
major contracts are awarded through a competitive bidding process, arm
length method for related parties transaction and achieve the best value of
money for JVC through a mechanism of independent engineer, auditors etc.
The EPC Contract of the JVC shall also be awarded through transparent
and competitive procedures by the JVC.
• The Centre/ State Governments in due course will evolve following model
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
38
agreements for the purposes of selection of JV partner through a
Competitive bidding process:-
(i) CA
(ii) SHA
(iii) SSA
(iv) LLA
(v) CNS-ATM
• The sequence of signing agreements will generally be as follows:-
(i) SHA amongst shareholders at the time of induction in SPV
(ii) Stands deleted
(iii) EPC contract process to firm up costs by SPV
(iv)Selection of financial arranger and finalization of landing
conditions by SPV
(v) Financing Agreements
(vi) Direct Agreements of lenders with GOI
(vii) The work begins
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
39
5.0 CONCESSION AGREEMENT FOR PPP
5.1 Need for a framework
Accelerated economic growth, aided by expansion of air services in a
competitive environment, has manifested itself in a rapid increase in air traffic.
For providing connectivity to regions hitherto not served by commercial flights, it
is necessary to expand the network of air services by setting up new airports.
Some of the State Governments have already taken steps for setting up
Greenfield airports. Examples in the past include Cochin, Hyderabad and
Bangalore where Greenfield airports have been commissioned with the active
support and participation of the respective State Governments. The policy
relating to setting up of Greenfield airports has since been liberalised by the
Central Government and several new projects are being planned in different
states. The airport sector has been witnessing significant interest from both
domestic as well as foreign investors following the policy initiatives taken by the
Central Government to promote Public Private Partnerships (PPP) on Design,
Build, Finance, Operate and Transfer (DBFOT) basis. However, the actual
inflow of investment has been less than expected, and future prospects will
depend on adoption of a comprehensive policy and regulatory framework
necessary for addressing the complexities of PPP, and particularly for
balancing the interests of users and investors. Moreover, transformation of
rules will have to be accompanied by a change in the institutional mindset. For
building and operating a Greenfield airport on DBFOT basis, a precise policy
and regulatory framework is being spelt out in this Model Concession
Agreement (MCA). This framework addresses the issues which are typically
important for limited recourse financing of infrastructure projects, such as
mitigation and unbundling of risks; allocation of risks and rewards; symmetry of
obligations between the principal parties; precision and predictability of costs
and obligations; reduction of transaction costs; force majeure; and termination.
It also addresses other important concerns such as user protection,
independent monitoring, dispute resolution and financial support from the
Government. The MCA also lays out a structure for commercialising airports in
a planned and phased manner through optimal utilisation of resources on the
one hand and adoption of international best practices on the other. The
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
40
objective is to secure value for public money and provide efficient and cost-
effective services to the users.
5.2 Elements of financial viability
The four critical elements that determine the financial viability of an airport are
concession period; traffic volumes; user fees and other revenues; and capital
costs. The concession period for such capital-intensive projects is normally in
the range of 50 to 60 years. This timeframe should enable a robust project
structure and any further extension in the concession period would improve
financial viability only marginally as the present value of projected revenues
after 50 years would be very low from the Concessionaire’s perspective. For a
Greenfield airport, the traffic projections are likely to be conservative as it would
take time for traffic to build up. As a result, user fees alone may not provide
financial viability, especially since they would have to be kept at affordable
levels. Additional revenues can, however, be generated from non-aeronautical
sources and real estate development to enable some cross-subsidisation of
user fees. Three of the four parameters stated above could be virtually taken as
given, and as a result capital cost is the variable that will determine the financial
viability of an airport project. If the potential for non-aeronautical and real estate
revenues is inadequate, bidders may seek an appropriate capital grant/subsidy
from the Government in order to reduce their capital investment for arriving at
an acceptable rate of return. As such, reduction in capital costs and phasing out
some capital expenditure can help improve project viability significantly. Though
PPPs undertaken so far in the sector have been financially viable and self-
sustaining, the government’s initiative to build Greenfield airports in remote
areas may require cost-efficient designs as well as some capital subsidy.
5.3 Technical parameters
Unlike the normal practice of focussing on construction specifications, the
technical parameters proposed in the MCA are based mainly on output
specifications, as these have a direct bearing on the level of service for users.
Only the core requirements of design, construction, operation and maintenance
of the airport are to be specified and enough room would be left for the
Concessionaire to innovate and add value.In sum, the framework focuses on
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
41
the ‘what’ rather than the ‘how’ in relation to the delivery of services by the
Concessionaire. This would provide the requisite flexibility to the
Concessionaire in evolving and adopting cost-effective designs without
compromising on the quality of service for users. Cost efficiencies would occur
because the shift to output-based specifications would provide the private
sector with a greater opportunity to innovate and optimise on designs in a way
normally denied to it under conventional input based procurement
specifications.
5.4 Performance standards
For an airport project, the Concessionaire would not only procure the civil works
and equipment, it would also provide various passenger related services as
well as cargo handling. The efficiency of its operations would normally be
reflected in the quality of service provided to the users. The MCA, therefore,
identifies the key performance indicators relating to operation of the
aeronautical assets, terminal building, cargo terminal etc., and specifies
penalties for failure to achieve the requisite levels of performance, especially in
relation to user services. The MCA includes a Passenger Charter that the
Concessionaire should publish and implement for the benefit of users of the
airport. This will add to the accountability of the Concessionaire to the users.
5.5 Concession period
The concession period should normally be long enough to enable the
concessionaire to recover its investment with a reasonable rate of return. In the
case of a Greenfield airport, the traffic build-up may be gradual and the
investments in airport infrastructure as well as real estate may take long to
recover. As such, a total concession period of 50 to 60 years has been
provided. This would enable the Concessionaire to realise the full potential of
the project and thus offer a competitive bid. A shorter concession period would
require a greater capital subsidy and/ or higher user charges. The time required
for construction of the airport (about two to three years) has been included in
the concession period so as to incentives early completion that would maximise
the revenues of the Concessionaire.
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42
5.6 Selection of Concessionaire
Selection of the Concessionaire will be based on open competitive bidding. All
project parameters such as the concession period, user fees, price indexation,
real estate development and technical parameters are to be clearly stated
upfront, and short listed bidders will be required to specify the concession fee
that they are willing to offer to the Government. The bidder who offers the
highest concession fee should win the contract. In exceptional cases where
instead of offering a concession fee, the bidders seek a capital grant/ subsidy
from the Government, the bidder who seeks the lowest grant would win the
contract.
5.7 Concession fee
Concession fee will be a fixed sum of Re. 1 per annum for the concession
period. The Concessionaire shall, commencing from the 20th year of the
Concession Period, pay a Premium equal to 1 per cent of the total realisable
fee which shall be increased every year by an additional 1 per cent of the total
realisable fee. Where bidders do not seek any grant and are willing to offer a
higher Premium to the Government and/or an earlier commencement of its
payment, they will be free to do so, subject to a ceiling of 40 per cent of the
total realisable fee. In case of an exceptionally viable project, the bidders would
be free to offer an upfront payment in addition to a share in the fee. The
rationale for the above fee structure is that in the initial years, debt service
obligations would entail substantial outflows. Over the years, however, the
Concessionaire will have an increasing surplus in its hands on account of the
declining debt service on the one hand and rising revenues on the other.
Recognising this cash flow pattern, the concession fee to be paid by the
Concessionaire will be based on an ascending revenue-share.
5.8 Risk allocation
As an underlying principle, risks have been allocated to the parties that are best
suited to manage them. Project risks have, therefore, been assigned to the
private sector to the extent it is capable of managing them. The transfer of such
risks and responsibilities to the private sector would increase the scope of
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
43
innovation leading to efficiencies in costs and services. The commercial and
technical risks relating to construction, operation and maintenance are being
allocated to the Concessionaire, as it is best suited to manage them. Other
commercial risks such as the rate of growth of traffic have also been allocated
to the Concessionaire. On the other hand, all direct and indirect political risks
are being assigned to the Government. It is generally recognised that economic
growth will have a direct influence on the growth of traffic and that the
Concessionaire cannot in any manner influence the rate of economic growth.
By way of risk mitigation, the MCA provides for extension of the concession
period in the event of a lower than expected growth in traffic. Conversely, the
concession period is proposed to be reduced if the traffic growth exceeds the
expected level. The MCA provides for a target traffic growth and stipulates an
increase of upto 20 per cent in the concession period if the growth in traffic is
less than projected. For example, a shortfall of 6 per cent in the target traffic will
lead to extension of the concession period by 9 per cent. On the other hand, a
reduction of up to 10 per cent of the concession period is stipulated in the event
of a higher than expected growth. For example, an increase of 6 per cent in the
target traffic will reduce the concession period by 6 per cent.
5.9 Financial close
Unlike other agreements for private infrastructure projects which neither define
a time-frame for achieving financial close, nor specify the penal consequences
for failure to do so, the MCA stipulates a time limit of 180 days for achieving
financial close (extendable for another 120 days on payment of a penalty),
failing which the bid security shall be forfeited. By prevalent standards, this is a
tight schedule, which is achievable only if all the parameters are well defined
and the requisite preparatory work has been undertaken. The MCA represents
a comprehensive framework necessary for enabling financial close within the
stipulated period. Adherence to such time schedules will usher in a significant
reduction in costs besides ensuring timely provision of the much-needed
infrastructure. This approach would also address the typical problem of
infrastructure projects not achieving financial close for long periods.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
44
5.10 User Fee
A precise mechanism for determination of user fee has been specified for the
entire concession period since this would be of fundamental importance in
estimating the revenue streams of the project and, therefore, its viability. The
user fee shall be based on the rates to be notified by the Government prior to
bidding for the contact. The MCA provides for indexation of the tariffs to the
extent of 60 per cent thereof linked to WPI. Since repayment of debt would be
substantially neutral to inflation, the said indexation of 60 per cent is considered
adequate. A higher level of indexation is not favoured, as that would require the
users to pay more when they should be receiving the benefit of a depreciated
asset. A higher indexation would also add to uncertainties in the financial
projections of the project. In respect of non-aeronautical services, however, the
Concessionaire shall be free to determine the charges thereof.
5.11 Construction
Handing over possession of at least 90 percent of the required land as well as
procuring the environmental clearances are proposed as conditions precedent
to be satisfied by the Government before financial close. The MCA defines the
scope of the project with precision in order to enable the Concessionaire to
determine its costs and obligations. Additional works may be undertaken within
a specified limit, but only if the entire cost thereof is borne by the Government.
Before commencing the collection of fees, the Concessionaire will be required
to subject the airport to specified tests for ensuring compliance with the
specifications and standards relating to safety and quality of service for the
users. The Schedules would include the master plan of the airport. The Master
Plan should specify the land use and other restrictions on development of the
airport and should also earmark vacant land for future expansion of the airport.
5.12 Operation and maintenance
Operation and maintenance of the airport is proposed to be governed by strict
standards with a view to ensuring a high level of service for the users, and any
violations thereof would attract stiff penalties. In sum, operational performance
would be the most important test of service delivery. The MCA provides for an
elaborate and dynamic mechanism to evaluate and upgrade safety
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
45
requirements on a continuing basis. The MCA also provides for traffic
regulation, security and rescue operations.
5.13 Reserved Services
Certain services at any airport are to be provided by government agencies. The
MCA specifically details the obligations of the Concessionaire in respect of the
reserved services with a view to ensuring that the respective agencies are able
to provide such services without any obstacles from the Concessionaire.
5.14 Right of substitution
The project assets may not constitute adequate security for lenders. It is the
project revenue streams that constitute the mainstay of their security. Lenders
would, therefore, require assignment and substitution rights so that the
concession can be transferred to another company in the event of failure of the
Concessionaire to operate the project successfully. The MCA accordingly
provides for such substitution rights.
5.15 Force Majeure
The MCA contains the requisite provisions for dealing with force majeure
events. In particular, it affords protection to the Concessionaire against political
actions that may have a material adverse effect on the project.
5.16 Termination
In the event of termination, the MCA provides for a compulsory buy-out by the
Government, as neither the Concessionaire nor the lenders can use the airport
in any other manner for recovering their investments. Termination payments
have been quantified precisely as compared to the complex formulations in
most agreements relating to private infrastructure projects. Political force
majeure and defaults by the Government are proposed to qualify for adequate
compensatory payments to the Concessionaire and will thus guard against any
discriminatory or arbitrary action by the Government. Further, the project debt
would be fully protected by the Government in the event of termination, except
for two situations, namely, (a) when termination occurs as a result of default by
the Concessionaire, 90 per cent of the debt will be protected, and (b) in the
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
46
event of non-political force majeure such as Act of God (normally covered by
insurance), 90 per cent of the debt not covered by insurance will be protected.
However, no termination payment will be due to payable if the Concessionaire
fails to commission the project owing to its own default. A different method of
valuation has been adopted for the real estate. It will enable a more transparent
and predictable valuation of real estate in the event of termination.
5.17 Monitoring and supervision
Day-to-day interaction between the Government and the Concessionaire has
been kept to the bare minimum by following a ‘hands-off’ approach, and the
Government shall be entitled to intervene only in the event of a material default.
Checks and balances have, however, been provided for ensuring full
accountability of the Concessionaire. Monitoring and supervision of
construction, operation and maintenance is proposed to be undertaken through
an Independent Engineer (a qualified firm) that will be selected by the
Government through a transparent process. Its independence would provide
added comfort to all stakeholders, besides improving the efficiency of project
implementation. If required, a public sector consulting firm may discharge the
functions of the Independent Engineer. The MCA provides for a transparent
procedure to ensure selection of well-reputed statutory auditors, as they would
play a critical role in ensuring financial discipline. As a safeguard, the MCA also
provides for appointment of additional or concurrent auditors. To provide
enhanced security to the lenders and greater stability to the project operations,
all financial inflows and outflows of the project are proposed to be routed
through an escrow account.
5.18 Support and guarantees by the Government
By way of comfort to the lenders, loan assistance from the Government has
been stipulated for supporting debt service obligations in the event of a revenue
shortfall resulting from political force majeure or default by the Government.
Guarantees and/ or compensation have also been provided to protect the
Concessionaire, though for a limited period, from construction of competing
airport which can upset the revenue streams of the project.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
47
5.19 Real estate development
Provision for development of real estate by the Concessionaire has been made
in the MCA. The Concessionaire can grant sublicenses for the real estate and
the same would revert to the Government at the end of the concession period.
Real estate in the form of developmental rights over adjacent lands could also
be provided for improving project viability. While allowing sufficient flexibility to
the Concessionaire with respect to exploitation of commercial space at the
airport, the MCA stipulates some limits and restrictions to prevent excessive
commercialisation.
5.20 Miscellaneous
a) A regular traffic census and annual survey has been stipulated for keeping
track of traffic growth. Sample checks by the Government have also been
provided for. As a safeguard against siphoning of revenue share by the
Concessionaire, a floor level in present and projected traffic has also been
stipulated. The MCA addresses other important issues such as dispute
resolution, suspension of rights, change in law, insurance, defects liability,
and indemnity, redressal of public grievances and disclosure of project
documents.
b) Security Issues
Any other ground handling service providers selected through competitive
bidding on revenue sharing basis by the airport operator subject to security
clearance from Bureau of Civil Aviation Security and observance of
performance standards as may be laid down by the airport.
c) CNS / ATM
The Airports Authority of India provides Communication, Navigation,
Surveillance and Air Traffic Management (CNSATM) services at all the civil
airports in the country which covers Indian airports measuring over 2.8
million square nautical miles (land area 1.05 million square nautical miles
and oceanic area 1.75 million square nautical miles). CNSATM services are
provided by AAI at 9 other airports also which are not managed by AAI i.e.
Delhi, Mumbai, Bangalore, Hyderabad, Cochin, Lengpui, Diu, Puttaparthy
and Vidyanagar airports.
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48
6.0 RESERVED ACTIVITIES
On any Greenfield airport to be developed under these Policy Guidelines,
activities relating to Air Traffic Services (ATS), security, customs and
immigration would be reserved for central government agencies. Provision of
these services would be governed by the policy to be laid down by the Central
Government from time to time. Prior to grant of license, an applicant for license
shall procure the following clearances
Defence clearance: An applicant seeking a license would need prior
clearance from the Ministry of Defence. Guidelines for this purpose
would be issued by the Ministry of Defence from time to time.
(b) Air Traffic Services (ATS): Functions related to ATS are being
discharged by AAI. The applicant will have to enter into a CNS/ATM
Agreement with AAI for the provision of ATS services at the proposed
airport. ATS would be provided on a cost recovery basis and AAI
would publish a standard agreement for this purpose. The Airport
Company would also provide the required infrastructure to AAI free of
cost for provision of ATS.
(c) Security: The applicant will have to enter into an agreement for provision
of security by the concerned authority. The cost of providing security
will have to be borne by the Airport Company. Guidelines for this
purpose would be issued by the Ministry of Civil Aviation from time to
time.
(d) Customs: In case of an international airport, the applicant will obtain
clearance from the Department of Revenue for provision of Custom
services. The cost of providing these services will have to be borne
by the Airport Company. Ministry of Finance would issue the
necessary guidelines from time to time.
(e) MHA Clearance: The applicant seeking a license would need prior
clearance from the Ministry of Home Affairs regarding location of the
airport, acquisitions and installation of security equipment and
verification of credentials of the developers.
(f) Immigration: In case of an international airport, the applicant will procure
clearance from the Ministry of Home Affairs for provision of
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
49
immigration services. The cost of providing these services will have
to be borne by the Airport Company. Ministry of Home Affairs would
issue the necessary guidelines from time to time.
(g) BCAS Clearance: The applicant seeking a license would need prior
clearance from BCAS regarding location of the airport and acquisition
and installation of security equipment.
(h) Airport Meteorological Services: The applicant will have to enter into a
CNS/ATN agreement with IMD for provision of meteorological
services at the proposed airport to be provided by India
Meteorological Department (IMD). The meteorological services would
be provided on a cost recovery basis and IMD would publish a
standard agreement for this purpose. The airport company would
also provide the required infrastructure to IMD free of cost for
provision of meteorological services.
A memorandum of understanding would be entered into between the Airport
Company and each GOI agency/department providing the following
Reserved Activities, setting out the terms and conditions on which the said
services shall be provided by the relevant GOI agencies/departments:
Customs control
Immigration services
Health services
Plant quarantine services and
Animal quarantine services
NOTE: MEMORANDUM OF UNDERSTANDING CAN BE CHANGED FR OM
TIME TO TIME
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
50
7.0 EMERGING CHALLENGES AND RISKS IN PPP
7.1 General Issues
1. PPPs are considered appropriate where private sector project management
skills, more innovative design and risk management expertise can be
brought in to give substantial benefits. In their opinion, however, PPP is
unlikely to deliver value for money in other areas, for example where the
transaction costs of pursuing PPP are disproportionate compared to the
value of the project or where fast paced technological change makes it
difficult to specify contractual requirements over the long term.
2. The reality is that many things can go wrong, and often do, with difficulties in
securing right of way, delays in meeting environmental impact process
requirements, inadequate design, planning changes, slowness in securing
permits, underestimation of project construction and operations costs,
overestimation of traffic-based revenues, ‘teething’ problems, and a slow
build-up of patronage. These problems are compounded by a failure of the
contracting parties to adopt a realistic and cooperative approach to the
assessment, mitigation and sharing of risks.
3. The PPP are joint ventures of a number of private companies which agree
in advance to subcontract each of the different activities and take equity
stakes in the SPV to cement the relationship. two problems are thereby
introduced. First, good constructors may be teamed with less good
financiers. Superior knowledge of one activity may not carry over to other
activities. Second, competition is limited to those bodies which are part of
the group. Companies, especially local entities, with perhaps good technical
know-how but poor financial capability are unable to bid because the
activities are jointly, rather than separately, auctioned. Transparency and
competitiveness in the bidding process are lost, or more correctly traded-off
for innovation opportunities, which the authors consider may not always be
the best solution.
4. Cost of capital- In summary, most PPP/PFI projects involve substantial
private sector finance and, in all but very exceptional circumstances, this
finance in itself will be more costly than public sector borrowing, although
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
51
there are many hidden costs in the latter. Clearly, governments are not
immune from fiscal difficulties, which can lead to credit rating downgrades
and higher project costs, but the main reason why the government’s cost of
borrowing is low is that it can levy taxation to repay the debt. Due to these
taxing powers, lenders to government consider that it is unlikely to default,
and so demand a lower interest rate risk premium. But having the true risks
hidden and passed on to taxpayers in the form of a contingent liability does
not mean that public investments are risk-free. Project risks depend more
on the project’s design than on the specific financing mechanism
5. BUNDLING- The economic efficiency of ‘bundling’ from an ‘incomplete’
contracting perspective, in which imperfections arise because it is hard to
foresee and contract about uncertain future events. PPPs are generally
entered into for a lengthy period of time, usually 20 to 30 years, and are
developed in an environment of uncertainty. As such they exhibit, as Hart
suggests, the characteristics of ‘incomplete’ contracts, and their usefulness
as integrated arrangements hinges on the nature of contracting costs.
6. VALUE FOR MONEY-Value for money has been defined as ‘the optimum
combination of whole life cost and quality (or fitness for purpose) to meet
the user’s requirement’. Value for money is improved by the transfer of
appropriate risk as the supplier is able to reduce either the probability that
the risk will occur, the financial consequences if it does eventuate, or both.
There comes a point, however, when this transfer becomes sub-optimal. If
risks that, in fact, cannot be best managed by the private sector continue to
be transferred to private bodies, value for money will decline since the
premium demanded by the private sector will outweigh the benefit to the
public procurer. Optimum, rather than maximum, risk transfer is the
objective of the PPP arrangement.
Over this issuers airport infrastructure face nine categories of specific risk
• Technical risk, due to engineering and design failures;
• Construction risk, because of faulty construction techniques and cost
escalation and delays in construction;
• operating risk, as a result of higher operating costs and maintenance costs;
• Revenue risk, e.g. because of traffic shortfall or failure to extract
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
52
resources, the volatility of prices and demand for products and services sold
(e.g. minerals, office space, etc.) leading to revenue deficiency;
• Financial risks arising from inadequate hedging of revenue streams and
financing costs;
• Force majeure risk, involving war and other calamities and acts of God.
• Regulatory/political risks, resulting from planning changes, legal changes and
unsupportive government policies;
• Environmental risks, because of adverse environmental impacts and hazards;
• Project default, as a result of failure of the project from a combination of any
of the above.
7.2 Financial Challenges
a) Governments frequently have been motivated to enter into PPP
arrangements by the desire to reduce debt (and contain taxation), while
facing pressure to improve and expand public facilities. However, the PPPs
are the only way of delivering the public infrastructure (and the services)
that the community wants is exaggerated, for PPPs still draw on public
funds when user charges do not cover the cost of services. What differs is
that the public payments are made over a very different time frame. When
infrastructure is provided under a PPP, the government does not own the
asset but, instead, enters into a contract to purchase infrastructure and
related ancillary services over time from the private sector. These operating
payments must cover operating costs as well as giving the service providers
a return on risk capital, therefore a project delivered under a partnerships
approach will have a similar (although not identical) effect on the
government’s annual operating surplus to that if the asset was publicly
funded.
Figure 7.1 illustrates the cash flow differences between public funding and a
PPP project. From the public sector side, PPPs require little or no upfront
capital expenditure but involve a larger operating expenditure over time to
purchase the services. By contrast, the public asset approach requires a large
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
53
Fig 7.1
Comparison of public funding and partnerships on cash flow
Upfront capital funding commitment and relatively lower operating expenditure
over time. Thus the PPP route may on these grounds hold some attractions to
a government with a backlog of infrastructure projects and facing an uncertain
fiscal climate. But the major merit is in terms of the predictability of costs and
funding. A PPP ensures that whole-of-life costing and budgeting are
considered, providing infrastructure and related ancillary services to
specification for a significant period, and including any growth or upgrade
requirements. This provides budgetary predictability over the life of the
infrastructure and reduces the risks of funds being diverted (for example, away
from scheduled refurbishment) during the life of the project, impacting on
residual value risk to the asset.
b) Financial Risk
Under this heading there are a number of risks. First, the financial parameters
may change prior to the private party fully committing to the project, adversely
affecting price. Second, the financiers (debt and equity) may not continue to
provide funding to the project. Third, the financial structure may not be
sufficiently robust to provide fair returns to debt and equity over the life of the
project, calling into question its continuing viability. In evaluating these risks, the
government is mindful of the fact that private sector entities and their financiers
must be confident of the stability of the revenue stream, and the continued
involvement of the financiers in the project provides some comfort to it that the
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
54
consortium has incentives to deliver the contracted services. Nonetheless,
many of the problems begin at the outset, and what is needed is for
government to undertake a reality check and not to encourage underbidding.
Experience has shown that if the partnership does not work financially for the
private sector – where, for example, the consortium has materially under priced
its bid to win the project – it is unlikely that the project will work for the
government either. Where a private party drives a bad bargain for itself (the
‘winner’s curse’), which it may do when under intense competitive pressure or
under internal pressure because of the loss of other contracts, the project can
set off along a wrong trajectory which is likely to result in continuing difficulty, if
not commercial failure. Also to be watched are situations in which the sponsor
is dependent on refinancing at more favourable rates to make the contract
commercially viable in the longer term. While ordinarily this may be possible
when the project enters a lower risk phase, if an event materializes and risk is
assessed as remaining at comparatively high levels, the private party may find
itself in an untenable commercial situation, prompting default or walk away.
c) Project Finance and Revenue Streams
Characteristic of DBFO-type projects is the participation of private risk capital,
with the expectation that those with money at risk will require there to be a
harder-nosed approach to project evaluation, risk management and project
implementation. Project-financing techniques are employed and a mixture of
instruments and methods is available, including asset-based financing, leasing,
hire purchase, and the use of special-purpose non-recourse financing vehicles.
The underlying premise is that projects are income producing and borrowings
can be serviced from these proceeds. Future income from the investment is
earmarked for the service of the borrowings, providing security to the financiers
by decoupling the servicing of the loans from the financial fortunes of the
owners or sponsors of the investment. A fairly standard approach is for the
sponsors of a project to establish a special purpose vehicle company (SPV) in
which they are principal shareholders. Each sponsor holds a sufficiently small
share of the equity in the joint venture so that for legal and accounting purposes
the SPV cannot be construed as a subsidiary. Funding of the project is then
routed through the SPV.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
55
Revenue Streams
When private financiers commit funds under PPPs for infrastructure, they need
to be convinced that a viable revenue stream can be tapped. In a public–private
arrangement, revenues to the private firm can come from two sources, namely
consumer payments, or public entity payments (or from some combination of
both). The source is important because it determines
(1) The incentives of a private firm to adjust the cost and quality to consumers’
willingness to pay for them,
(2) The amount and timing of public expenditures, and
(3) The nature of the risks to which revenues are exposed.
In order to attract private participation, the first prerequisite is an economic
regulatory framework which provides clarity and certainty to investors on the
commercial potential of any specific airport operation. The absence of a clear
set of guidelines for airport operators ensures that their revenue models remain
subject to national debate and controversy. Resources are allocated
inappropriately; further reducing investor confidence in future projects, denying
India access to critical expertise and capital. The end result is likely to be
under-construction – and, ultimately, continued suppression of economic
expansion and consumer benefits.
7.3 Legal Challenges
a) The absence of a reliable commercial and legal framework.
Legal framework: Ideally a robust system of commercial laws needs to be in
place. Private sector interests have to be protected under the existing laws.
Government agencies have also to facilitate the involvement of the private
sector in infrastructure projects or public utilities. Restrictions on public
procurement may adversely affect the implementation of PPPs. PPP projects
usually require a number of permits, consents and administrative decisions.
The partners of the public entity are often foreign companies, the operations of
which sometimes face additional restrictions in the host country.
b) Taxation. A good appreciation of the taxation ramifications is needed in any
dealings with private sector entities. The very complexity of PPPs creates many
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
56
points where an unhelpful taxation system can impose itself. For example, are
direct grants from the public sector to pay for a portion of the PPP asset
taxable? Is the hardback of the asset to the public sector assessed for tax? Is
property used in the PPP exempt from taxation? Can infrastructure assets be
depreciated for taxation purposes? The existing taxation system, like the legal
system, may be ill-equipped to deal with PPPs.
c) Accounting. Determining the appropriate accounting treatment of PPPs has
proven to raise complicated and controversial issues. The main problem
consists of providing a correct answer to the question: in whose books should
the assets covered by a given agreement be reported? Recognizing a given
asset in the balance sheet also means recognizing a related liability in the
accounts. Assets covered by a given agreement should be recognized in the
accounting records of the party which is not only exposed to the greatest extent
to the economic risk associated with using those assets, but which is also able
to make use of related economic benefits to the greatest extent. A detailed
analysis of each individual case must be conducted in order to determine this,
focusing on the variability over time of the revenue and costs connected with
using a given asset and the parties exposed to the greatest risk. Evolving
international standards largely accept this point, but not all national systems do,
creating ambiguities as to the conditions under which PPP payment obligations
can be treated as off-balance sheet transactions by the public sector
7.4 Public Risk
Government has a duty to insist that facilities are constructed, operated and
maintained in accordance with relevant legislation and codes of practice in
order to ensure the safety and well-being of consumers and workers. It may
need to exercise its rights to ‘step in’ in order to prevent or mitigate a serious
risk to the environment or to public health, or to the safety of people or property,
or to guarantee continuity of an essential service or to otherwise discharge its
statutory duties. Step-in rights ordinarily exist as part of a package of remedies
that the government can take for project company default. They may also need
to be exercised simply because the private body is unable to deal with a
particular situation appropriately, for example, in an emergency, necessitating
government intervention. In certain cases government has a duty to ensure the
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
57
continuity of the contracted services to the public and needs to retain the ability
to assume control of them
Temporarily if the public interest is jeopardized. This will include stepping in to
contracted services on which the quality of its own delivery of core services
depends.
Determining the circumstances in which government should exercise its step-in
rights involves balancing the private sector’s desire to limit step-in instances
and government’s need to ensure that it has the ability to protect the provision
of the contracted services and, where relevant, core public services. Where that
balance is struck depends on the nature of the project and the sensitivity of the
public service involved. A step-in clause usually includes provisions for a
government ‘step-out’ when the relevant situation has been resolved. That
decision also needs careful assessment.
7.5 Asset Risk
Most infrastructure facilities have a physical life measured in decades. On
expiry of the concession, the government may be expecting to take possession
of an asset that still has a considerable working life at an acceptable
maintenance cost. Asset risk can arise for a number of reasons: the facility
design life or technical life may prove shorter than anticipated; the maintenance
and upgrade costs of keeping the facility serviceable might exceed expectation;
the asset may be damaged or destroyed through a force majeure event; the
project company may lose the asset through default and early termination; and
the facility may not have the value which the project financial structure has
ascribed to it.
These risks can be mitigated in part through agreed maintenance and
refurbishment schedules, combined with a right to survey the asset and compel
performance if the maintenance obligations are not being met. The contract
may also need to allow for some flexibility to upgrade the infrastructure over
time, along with incentives to do so. There may also be some non-insurable
force majeure events which come under material change in circumstances
clauses, with some government risk-sharing with the SPV.
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58
7.6 Operating Risk
This is the risk that the processes for delivering the contracted services will be
affected in such a way as to prevent the private party from delivering these
services according to the agreed specifications and/or within the projected
costs. Operating risks relate to production and operation procedures,
availability and quality of inputs, quality and efficiency of project management
and maintenance and upgrade requirements, with the consequence that the
costs of operating the facility will exceed projections and therefore diminish
projected returns so that the facility will not perform to the required standards.
While the structure of a PPP is such that the government frees itself from those
operating risks that would attach to itself owning and operating the facility,
operational failure still poses a risk to government in that it may be left without
the services for which it has contracted. If the contract is breached and the
private party is not highly capitalized, the subcontractors may seek to walk
away, limiting government’s ability to obtain redress. For this reason,
guarantees from the sponsors or the private party’s parent companies or
performance bonds may be required to cover performance obligations during
the operational phase of the contract. If the contract is correctly structured and
the sponsors have invested a large amount of capital, the low risk of them
walking away may not warrant the costs to government of requiring operating
guarantees. However, this is not always the case, leaving sponsor risk that has
to be evaluated and managed.
7.7 Sponsor Risk
Typically, when a project structure is put together, the SPV that contracts with
the government is simply an entity created to act as the legal manifestation of a
project consortium, and it has no historical financial or operating record that
government bodies can assess. It is supported by external equity contributions
often provided by portfolio investors with no relationship to the project beyond
their commitment of equity and expectation of financial return. Government
therefore relies on the reputation of the consortium members to fulfil the project
obligations. Sponsor risk usually arises when the SPV and/or its subcontractors
are unable to meet their contractual obligations, and the government is unable
to enforce those obligations against the sponsors or recover some form of
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
59
compensation or remedy from them for the losses sustained by it as a result of
the SPV’s breach. In addition, it may occur when the sponsor(s) is, for security
or other probity reasons, unsuitable to be involved in, or connected with, the
delivery of the project, and consequently may harm the project or bring it into
disrepute. Should, after financial close, the SPV not be regarded as adequately
capitalized, the government could seek security from the sponsors or parent
guarantees or performance bonds, to ensure that the body is fully committed to
delivering the required outputs. These sureties are particularly significant in the
operational phase when construction guarantees under the construction
subcontracts are no longer in place and the sponsor may seek to walk away
from the contract rather than address operational difficulties – leaving the SPV
to be liquidated in circumstances where it lacks the resources to compensate
government for the contract breach. The sponsor may also want to sell its
interest in the SPV, and the government needs to make sure that it retains
sufficient control over any changes to the ownership of the private party, in
order to mitigate sponsor risk.
In some circumstances, parent guarantees may be a poor method of providing
security to government, inconsistent with the preference of many sponsors for
infrastructure projects to be of a non-recourse or limited recourse nature. It may
be more efficient to use performance bonds. One way of keeping down the cost
of the guarantees or performance bonds is to have the value at the minimum
required to cover necessary costs (such as the cost of installing a new
operator). Again, these issues necessitate careful management over time, and
may require ongoing tests of probity, continued tests of capability, and topped-
up letters of credit or performance bonds to meet claims or to underpin
operational performance obligations.
7.8 Default Risk
Default (breach of the contract) occurs when the contracting enterprise is
unable to perform its contractual obligations, including the inability to meet
deadlines, to perform to a specified standard, and to continue loan repayments.
Invariably, the contract will recognize the differing scale and consequences of
contractual breaches by accepting some defaults (material defaults) as giving
rise to a right of termination, and others (non-material defaults) as attracting an
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
60
obligation to rectify but not on their own allowing the other party to terminate the
contract. However, a non-material default may become a material default if it is
not rectified within the period allowed and progress is unsatisfactory, or if the
default recurs. In these circumstances the remedies available to government
may include the right of step-in, as well as a right to terminate the contract. In
extreme cases, government can have the underlying infrastructure assets
transferred to it, subject to a predefined valuation mechanism. Before looking to
terminate the contract in the event of a default, government generally seeks
other avenues of redress (e.g. abatement of service charge). Termination is
viewed as an option of last resort, and can have very real ramifications and
costs for government (if, for example, it is unable to find alternative services or
is unable to deliver its own services). Contracts generally provide for adequate
resolution periods and distinguish between – and provide different regimes for –
material and non-material defaults. The presence of a reasonable resolution
regime for defaults is important for financiers, and one that imposes harsh
penalties without a reasonable opportunity to remedy defaults is likely to make
the project difficult to finance and increase the cost of finance, leading to a less
attractive value-for-money outcome. Good contract management aims to keep
the contract in operation for the benefit of both parties, not to seek occasions
for it to end, if circumstances are propitious. On the other hand, if the project
has little possibility of becoming viable under the present operators, it may be
better to cut losses quickly. The real issue becomes one of developing a good
monitoring system.
Along with these specific risks, there are also some problems to overcome,
such as:
• potential difficulties in putting together a cost-effective financial package;
• limited financial flexibility of the public sector arising from the long term
commitment of funds under the PPP contract;
• complex, more expensive and time-consuming transactions costs in the
development stage, requiring dedicated resources from both public and
private sectors;
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
61
7.9 Risk matrix for public private partnership airp ort
Type of Risk Source of Risk Risk taken by
Site conditions Ground condition, supporting
structures
Construction contractor
Site preparation Site redemption, tenure,
pollution/discharge, obtaining
permits, community liaison
Operating company /
project company
Land use
technical risks
Native title, culture heritage fault
in tender specifications
contractor design fault
Government
Design contractor
Construction risk
cost overrun
Inefficient work practice and
wastage of materials
Construction contractor
Delay in
completion
Changes in law, delay in
approval etc, lack of coordination
of contractors, failure to obtain
standard planning approvals
Project company/
investors construction
contractor
Failure to meet
performance
criteria
Quality shortfall/ defects in
construction / commissioning
test failure
Insurer construction
contractor / project
company
Operating risk
operating cost
overrun
Project company request for
change in practice
Industrial relation, repairs,
occupational health and safety,
maintenance, other costs
government change to output
specifications
Project company /
investors
Operator
Government
Delays or
interruption in
operation
Operator fault Operator
Shortfall in
service quality
Government delays in granting
or renewing approvals, providing
contracted inputs
Operating faults
Government
Operator
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
62
Revenue risk
increase in input
prices
Contractual violations by
government owned support
network
Contractual violations by private
supplier other
Government
Private supplier
Project company/
investors
Change in taxes,
tariffs demand
for output
Fall in revenue
Decreased demand
Project company/
investors
Financial risks
interest rates
inflation
Force majeure
risk
Regulatory/
political risk
Change in law
Fluctuations with insufficient
hedging payments eroded by
inflation floods, earthquake,
riots, strikes
Construction period operating
period
Project company/
government
Construction contractor
project company, with
government
compensation as per
contract
Political
interference
Breach / cancellation of licence
expropriation
Falure to renew approvals,
Government
Insurer, project
company/ investor
government
Project default
risks
Discriminatory taxes, import
restrictions combination of risk
Equity investors followed
by bank, bondholders
and institutional lenders
government
Asset risk Sponsor suitability risk technical
obsolescence termination
Residual transfer value
Project company/
operator
Government, with
compensation for
maintenance obligation
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
63
7.10 PRESENT PPP AIRPORT AND RISK STRUCTURE
Modernization of Mumbai International Airport
Risk
Allocation RISK DESCRIPTION
Pre-Construction AAI shall obtain approval and authorization
from GoI to make lease of the Airport and grant
relevant Clearances requisite for operation and
management of the Airport by the JVC, among
others as per the OMDA Agreement.
AAI and JVC to jointly enter into State
Government Support Agreement, State Support
Agreement.
JVC shall deliver full Upfront Fee to AAI, deliver
bank guarantees, among others as per the
OMDA Agreement.
Technical Risk (Acceptance of Site, Drawing or
Document) to be borne by the JVC as per the
OMDA Agreement.
Construction To be borne by the JVC as per provisions of the
OMDA Agreement.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
64
Operational Transfer of Rights in Airport and Transition
Phase (3 months from Effective Date): JVC
shall perform at its own risk and cost (including
payment obligations to counter parties) under
all existing contracts and agreements between
AAI or any Relevant Authority and any third
party as relatable to the Airport from the
Effective Date, as if JVC was an original party
to such contracts and agreements.
AAI shall provide operational support (for a
period of 3 years from the Effective Date) to the
JVC through the General Employees at the
estimated annual Operation Support Cost.
Commercial Subject to the provisions of the OMDA
Agreement, the JVC shall be fully and
exclusively responsible for, and shall bear the
commercial risks in relation to the design,
financing, modernization, construction,
completion, commissioning, maintenance,
operation, management and development of
the Airport and all its other rights and
obligations under or pursuant to the Agreement.
Financial Subject to the provisions of the OMDA
Agreement, the JVC shall be fully and
exclusively responsible for, and shall bear the
financial risks in relation to the design,
financing, modernization, construction,
completion, commissioning, maintenance,
operation, management and development of
the Airport and all its other rights and
obligations under or pursuant to the Agreement.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
65
Political Step-in Rights of AAI: In the event of an
emergency, AAI shall have the right to
temporarily assume control (upto 3 months) of
the Airport in place of the JVC as per provisions
of the State Support Agreement.
Waiver of Immunity: The execution, delivery
and performance by AAI of the Agreement
constitute private and commercial acts rather
than public or governmental acts and
accordingly, no immunity from proceedings
brought against it or its assets in relation to this
Agreement shall be claimed.
Regulatory No relief on account of Change in Law is
available under the OMDA Agreement, and is
dealt with as per terms of the State Support
Agreement.
In the event that JVC becomes qualified to avail
the benefits available under Section 10(23)(g)
and Section 80 IA of the Indian
Income Tax Act, 1961, as a result of which, the
JVC incurs an increase in net after tax return or
other financial gain or benefit, the JVC shall
notify AAI and pay to AAI an amount that would
put the
JVC in the same financial position it would
have, had the Benefits not been available.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
66
Force Majeure The time for compliance or performance by the
affected Party of any obligation, with any time
limit or exercise of any right affected by Force
Majeure, shall be extended by the period during
which such Force Majeure continues and by
such additional period thereafter as is
necessary
to enable the affected Party to achieve the level
of activity prevailing before the event of Force
Majeure.
Modernization of Delhi International Airport
Risk
Allocation RISK DESCRIPTION
Pre-Construction
AAI shall obtain approval and authorization from GoI to
make lease of the Airport and grant relevant
Clearances requisite for operation and management of
the Airport by the JVC, among others as per the OMDA
Agreement. AAI and JVC to jointly enter into State
Government Support Agreement, State Support
Agreement.
JVC shall deliver full Upfront Fee to AAI, deliver bank
guarantees, among others as per the OMDA
Agreement. Technical Risk (Acceptance of Site,
Drawing or Document) to be borne by the JVC as per
the OMDA Agreement.
Construction
To be borne by the JVC as per provisions of the OMDA
Agreement.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
67
Operational
Transfer of Rights in Airport and Transition Phase (3
months from Effective Date): JVC shall perform at its
own risk and cost (including payment obligations to
counter parties) under all existing contracts and
agreements between AAI or any Relevant Authority
and any third party as relatable to the Airport from the
Effective Date, as if JVC was an original party to such
contracts and agreements.
AAI shall provide operational support (for a period of 3
years from the Effective Date) to the JVC through the
General Employees at the estimated annual Operation
Support Cost.
Commercial Subject to the provisions of the OMDA Agreement, the
JVC shall be fully and exclusively responsible for, and
shall bear the commercial risks in relation to the
design, financing, modernization, construction,
completion, commissioning, maintenance, operation,
management and development of the Airport and all its
other rights and obligations under or pursuant to the
Agreement.
Financial Subject to the provisions of the OMDA Agreement, the
JVC shall be fully and exclusively responsible for, and
shall bear the financial risks in relation to the design,
financing, modernization, construction, completion,
commissioning, maintenance, operation, management
and development of the Airport and all its other rights
and obligations under or pursuant to the Agreement.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
68
Political Step-in Rights of AAI: In the event of an emergency,
AAI shall have the right to temporarily assume control
(upto 3 months) of the Airport in place of the JVC as
per provisions of the State Support Agreement.
Waiver of Immunity: The execution, delivery and
performance by AAI of the Agreement constitute
private and commercial acts rather than public or
governmental acts and accordingly, no immunity from
proceedings brought against it or its assets in relation
to this Agreement shall be claimed.
Regulatory No relief on account of Change in Law is available
under the OMDA Agreement, and is dealt with as per
terms of the State Support Agreement.
In the event that JVC becomes qualified to avail the
benefits available under Section 10(23)(g) and Section
80 IA of the Indian Income Tax Act, 1961, as a result of
which, the JVC incurs an increase in net after tax return
or other financial gain or benefit, the JVC shall notify
AAI and pay to AAI an amount that would put the JVC
in the same financial position it would have, had the
Benefits not been available.
Force Majeure The time for compliance or performance by the affected
Party of any obligation, with any time limit or exercise
of any right affected by Force Majeure, shall be
extended by the period during which such Force
Majeure continues and by such additional period
thereafter as is necessary to enable the affected Party
to achieve the level of activity prevailing before the
event of Force Majeure.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
69
Bangalore International Airport
Risk
Allocation RISK DESCRIPTION
Pre-
Construction
• The Ministry of Civil Aviation shall endeavor that all
learances to be granted by it or that are within its direct
control and as are required for or in connection with the
Project, are granted by it.
• Technology risk to be borne by BIAL.
Construction
To be borne by BIAL as per the project contract
Operational
• To be borne by BIAL as per the project
contract.
• Government of India (GoI) shall carry our Reserved
Activities like Customs, Immigration and Quarantine,
Security, Meteorological Services at the Airport.
Commercial
To be borne by BIAL as per the project contract.
Financial
To be borne by BIAL as per the project contract.
Political : Sovereign Immunity: Government of India (GoI)
unconditionally and irrevocably agrees that the execution,
delivery and performance by it of this Agreement and those
comprising the Security, constitute private and commercial
acts rather than public or governmental acts. Also, in case
of any proceedings against it or its assets in relation with
this Agreement, no sovereign immunity shall be claimed.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
70
Regulatory : If as a result of Change in Law, BIAL suffers an increase
in costs or reduction in net after tax return or other financial
burden, loss, liability or damage in connection with its
development or operation of the Airport, the aggregate
financial effect of which exceeds Rupees ten million
(10,000,000) in any financial year, BIAL may notify
Government of India (GoI) and propose amendments to this
Agreement so as to put BIAL in the same financial position
as it would have occupied had there been no such Change
in Law.
Force Majeure : Neither Party shall be liable for any failure to comply, or
delay in complying, with any obligation under or pursuant to
this Agreement and they shall not be required to perform
their obligations to the extent that the performance by either
Party of its obligations under this Agreement is prevented,
hindered, impeded or delayed in whole or in part by reason
of Force Majeure and in particular, but without limitation,
the time allowed for the performance of any such
obligations (including, without limitation, achieving the
Airport Opening Date) shall be extended accordingly.
Hyderabad International Airport
Risk
Allocation RISK DESCRIPTION
Pre-
Construction
• The Ministry of Civil Aviation shall endeavor that all
Clearances to be granted by it or that are within its direct
control and as are required for or in connection with the
Project, are granted by it. (Government of India (GoI) shall
limit its responsibilities to the permissions within its domain
and not take any responsibility for the permission within the
domain of Government of Andhra Pradesh (GoAP)).
• Technology risk to be borne by HIAL.
Construction To be borne by HIAL as per the project contract
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
71
Operational • To be borne by HIAL as per the project contract.
• Government of India (GoI) shall carry our Reserved
Activities like Customs, Immigration and Quarantine,
Security, Meteorological Services at the Airport.
Commercial To be borne by HIAL as per the project contract.
Financial To be borne by HIAL as per the project contract.
Political • Sovereign Immunity: Government of India (GoI)
unconditionally and irrevocably agrees that the execution,
delivery and performance by it of this Agreement and those
comprising the Security, constitute private and commercial
acts rather than public or governmental acts. Also, in case
of any proceedings against it or its assets in relation with
this Agreement, no sovereign immunity shall be claimed.
Regulatory • If as a result of Change in Law, HIAL suffers an increase
in costs or reduction in net after tax return or other financial
burden, loss, liability or damage in connection with its
development or operation of the Airport exceeding Rupees
ten million (10,000,000) in any financial year, HIAL may
notify Government of India (GoI) and propose amendments
to the Agreement so as to put HIAL in the same financial
position as it would have occupied had there been no such
Change in Law.
Force Majeure • Neither Party shall be liable for any failure to comply, or
delay in complying, with any obligation under or pursuant to
this Agreement and they shall not be required to perform
their obligations to the extent that the performance by either
Party of its obligations under this Agreement is prevented,
hindered, impeded or delayed in whole or in part by reason
of Force Majeure and in particular, but without limitation,
the time allowed for the performance of any such
obligations (including, without limitation, achieving the
Airport Opening Date) shall be extended accordingly.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
72
8.0 EMERGING REGULATORY ISSUES
8.1 Amendment of AAI Act and Aircraft Rules Act
� AAI Act, 1994 was amended by Indian Parliament in 2003 to facilitate
private sector participation in development of Greenfield airports. Which,
inter-alia, provides exclusion of ‘Private Airports’ from the ambit of AAI Act.
� The Aircraft Rules, 1937, were also amended, which, inter-alia, provide
conditions for grant of licence, validity of licence, tariff fixation including
levy of Passenger Service Fee and User Development Fee, Ground
handling provisions etc.
8.2 Regulatory authority for AERA
The Parliament of India enacted an Act called “The Airports Economic
Regulatory Authority of India Act, 2008”. the establishment of a statutory
authority is to regulate tariff for the aeronautical services, determine other
airport charges for services rendered at major airports and to monitor the
performance standards of such airports.
As per the Act, AERA is to perform the following functions in respect of major
airports:
• To determine the tariff for the aeronautical services;
• To determine the amount of the development fees in respect of major
airports;
• To determine the amount of the passengers service fee levied under rule 88
of the Aircraft Rules, 1937 made under the Aircraft Act, 1934; and
• To monitor the set performance standards relating to quality, continuity and
reliability of service as may be specified by the Central Government or any
authority authorized by it in this behalf.
Also, as per the Act, an airport, which is “designated” to have annual passenger
throughput in excess of one and a half million could come under AERA’s
purview for tariff determination and monitoring of set performance standards. In
other words, an airport where actual passenger throughput is not in excess of
1.5 million but which has a designated capacity of 1.5 million or above would
qualify to be a major airport.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
73
9.0 THE CHANGED ROLE OF GOVERNMENT UNDER PPP AND NE W SET
OF AGREEMENTS AND NEW LEGAL FRAME WORK
A switch from traditional public procurement methods to infrastructure provided
under a PPP signals a changed role for the public sector. This section
examines the different role for government occasioned by the PPP
procurement process relative to the conventional procurement method.
As managers of contractual relationships, public bodies authorize contracts
(government as concession grantor), evaluate infrastructure needs
(government as network planner), provide supporting facilities (e.g. land) and
pay for services (government funding), define performance outcomes and
standards (government as customer), undertake detailed procurement planning
(government as project manager), ensure facilities are constructed, used and
maintained satisfactorily (government as inspector), require compliance with
standards and specifications (government as overseer), monitor business and
financial viability (government as contract manager), assess environmental
impacts (government as protector of the environment),and guarantee
community access and achieve social policy objectives (government as
representative of the public interest).
The table below sets out the major stages involved in developing a typical PPP
project and indicates the different perspectives that the government must apply
in each stage. At the same time, a very different obligation are placed on the
private sector entity because the government is not acquiring and taking
immediate ownership of infrastructure assets but, rather, is contracting to buy
infrastructure and related ancillary services from the private sector over time.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
74
Stages Main Tasks Government Role
Define service need
• identify service needs customer, network planner
• consider network effects, corridor planning
• allow scope for innovation
• determine outputs
Appraisal
• examine various alternatives (refurbishment,
• reconfiguration, new assets)
• evaluate financial consequences, risks and otherimpacts
• network planner, protector of environment,
• representative of public
interest
Business case
• quantify risks and costs, establish net benefit
• cost–benefit analysis, PSC• obtain funding and project approval
• network planner, funding
Project development
• assemble project resources (steering committee, project director, probity auditor,procurement team)
• create a project plan
• project manager
Bidding process
• develop and issue expression of interest invitation
• evaluate responses and preparea
shortlist • issue Project Brief
• evaluate bids
• concession
grantor
Project,
finalization review Final negotiation
• confirm value for money and achievement of policy intent
• establish negotiation
• probity review • execute contract
• financial close
• network planner, • representative of
public interest • concession
grantor, funding
Contract
management
• handover to contract • Management • Team
• formalize management
responsibilities • finalize project delivery • handle variations to contract • monitor the service outputs • maintain the integrity of the contract
• inspector, overseer, contract
• manager
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
75
10 .0 PPP airports and RTI Act
10.1 PPP airports public authority or not
Because of the government’s equity stake and a range of tax, cess and other
exemptions granted the PPP may be considered as public authority. Under
section 2(h) of the RTI act, public authority includes non-government
organisations substantially financed, directly or indirectly by funds provided by
the appropriate government. The crucial point examined was whether or not the
PPP is “substantially financed” directly or indirectly through government.
10.2 BAIL case
The State promoters have 26 per cent stake in Bangalore International Airport
Limited (BIAL), the company developing the airport. Yet, the ordinary citizen
cannot ask for information about the airport from its promoters apparently
because the BIAL is “a company in the private sector,” is not a “public authority”
and “provisions of the Right to Information Act 2005 and Karnataka
Transparency in Public Procurements 1999” are not applicable.
As defined by the RTI Act, is any body or institution that is controlled or
substantially financed, directly or indirectly by funds provided by the appropriate
government. The 26 per cent stake by State promoters in the BIAL, is enough
to consider the BIAL a public authority and all rules and regulations of the RTI
act are applicable to it.
On 14 may the Karnataka information commission (KCI) ruled that the
Bangalore international airport limited (BAIL) can be constructed as “public
authority” and therefore it would be within the purview of the RTI act. This issue
arose out of an RTI application regarding suo motu disclosure by BAIL sought
Benson Isaac, a citizen
While refusing to entertain Isaac’s RTI application, BAIL took the stand that it
was not a public authority as defined under the act and as such was not under
any obligation to make disclosures under RTI.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
76
The KIC took onto account section 14 of the comptroller and auditor general
(CAG) act 1971 which address the question of “substantially financed” for the
purpose of public audit of the accounts of a body or authority.
It noted that apart from equity by the private promoters and government
promoters, financing for BIAL includes rs. 350 crores interest-free debt from the
government of Karnataka under a state support agreement, exemption from
entry taxes, exemption of property taxes for 5 years, lease of land on
confessional rent, wavier of stamp duties and registration charges, exemption
from fees for change of land use and exemption from payment of road cess.
The KIC noted that even excluding indirect support such as tax and cess
exemptions, total government funding of BIAL is Rs.434 crores, which is higher
than the total share of the private promoters- Siemens, unique Zurich and
Larsen & toubro. If the indirect support is also taken into account, the
government support would be much higher, noted the KIC.
Observing this and more, the KIC came to the conclusion that “the BIAL is a
body substantially financed by the government is therefore a public authority as
defined under section 2(h) of the act.”
The implication of this landmark judgment is that citizen will now be able to
access information through RTI in respect of many public private partnership
(PPP) infrastructure projects which often are vital concern to the people at
large.
10.3 In case of brown field airport –AAI act apply – the operator in AAI
shoes
� AAI Act, 1994 was amended by Indian Parliament in 2003 to facilitate
private sector participation in development of Greenfield airports. Which,
inter-alia, provides exclusion of ‘Private Airports’ from the ambit of AAI Act.
� The Aircraft Rules, 1937, were also amended, which, inter-alia, provide
conditions for grant of licence, validity of licence, tariff fixation including levy
of Passenger Service Fee and User Development Fee, Ground handling
provisions etc.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
77
� Government will have no role in the management of such private sector
airports except for security and Air Traffic Control. The amendment also
provides for levying ‘Advance Development Fee’ at existing airports to
finance new airports in lieu of the existing one and ‘Users Fee’ at the new
airports.
� Government of India formulated a new national policy on airport
infrastructure in 1997 to provide a broad framework for development of
airport infrastructure with public and private sector participation.
� This Policy provides for foreign equity participation in airport projects upto
74 % with automatic approvals and 100% on case-to-case basis. Foreign
airports authorities can also participate. Private sector participation is
encouraged in the development of cargo infrastructure including satellite
freight cities.
� The policy permits development of Greenfield Airports where an existing
airport is unable to meet the projected requirements of traffic or a new focal
point of traffic emerges with sufficient viability. It can be allowed both as
replacement for an existing airport or for simultaneous operations.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
78
11.0 RECOMMENDATION IN REGULATION FOR PPP
a) Rather than there being a ‘model’ of a partnership, PPPs should be thought
of as a process, designed to ensure that all the risks are valued and taken
into account in a meaningful way. Because both parties have committed
resources and prestige to the success of the project, the partnership relies
on a detailed step-by-step analysis of cost-sharing arrangements, risk
mitigation and risk allocation.
b) It recognizes that the PFI/DBFO route involving an SPV may be the most
appropriate one for very complex projects, involving significant risks in the
design and construction phase that carry over into the operational phase.
Here project management disciplines and having some or all of the partners
putting their equity at risk are relevant conditions, and there is a strong case
for the integration of the contractors and subcontractors.
c) Treatment of risk: the conception of risk allocation with a PPP is
straightforward. The government frees itself entirely from asset-based risk
(including design, construction, operation and possibly residual value risk),
and becomes the purchaser of a product that is risk-free in the sense that
government does not pay if the service is not delivered, or is not delivered to
the specified standards. That is, the public sector purchases the long-term
provision of a service of a guaranteed standard, along with the security that
if the service is not provided at the right time or to a satisfactory quality then
reduced payments are made or compensation is received. a satisfactory
quality then reduced payments are made or compensation is received. That
is the underlying philosophy. In practice, risk allocation in a PPP is more
complex. Rather than shifting all risk to the private sector, the policy aims at
allocating risk to the party that is best suited to manage it and demonstrating
value for money for any expenditure by the public sector. Those in the best
position to manage a particular risk should do so at the lowest price.
Unloading inappropriate forms of risk onto the private entity merely adds
unnecessary cost to a PPP agreement, as the private sector does not bear
risk cheaply. Driven by the requirement for ‘value for money’, the
government may agree to assume some risks for which the private party
would charge too much if the risk transfer to the private party were to remain
complete. Only ‘efficient’ levels of risk should be transferred to the private
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
79
party, reducing individual risk premia and the overall cost of the project.
Thus the conceptual framework underlying PPPs is that, as service recipient
paying only on satisfactory delivery, the government initially transfers all
project risk to the private party. It is then a matter for government to
determine, on a value-for-money basis and having regard to the cooperative
framework of the partnership, what risks it should ‘take back’ to achieve an
optimal risk position. Taking back means a deliberate decision by
government to assume or share a risk that would otherwise lie at the door of
the private party. The outcome of this analysis is reflected in the contract.
The upshot is that a PPP contract differs from a standard procurement
contract because it is not part of a traditional product supplier/buyer
relationship. Under a PPP, the parties allocate risks between them and work
together in an ongoing relationship to meet project objectives. It is also more
complex than a procurement agreement.
d) PPP is better if the quality of the service can be well specified in the initial
contract (or, more generally, there are good performance indicators that can
be used to reward or penalize the service provider), whereas the quality of
the building cannot.
e) A fully integrated (bundled) approach where construction incorporates a
particularly innovative special-purpose design, leading to integration
between construction risk and operating risk. But, with most public projects
following well-established design principles, such cases are regarded as
rare.
f) PPP do provide such a ‘proper mechanism’ for private sector involvement,
but they have to be managed to bring about good outcomes. From our
knowledge the factors that need to be put in place are as follows:
– consensus among participating bodies
– a clear approval process
– allocation of ownership rights
– identification of rights and responsibilities
– a valid comparator for value for money
– A clear business model.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
80
g) Government bodies must view the transaction as the purchase of a service
and not the acquisition of the underlying asset (with payment made when
the service is provided satisfactorily, not when the asset is built).
h) Both parties must accept that the transaction is not a purchaser–supplier
contract but is a partnership in which there is a sharing of risks and
responsibilities.
i) It is necessary to establish that both sides have the capabilities to fulfil and
carry out their side of the bargain. The private party has to have the abilities
and motivation. The government agency must understand the market and
have the capacity to formulate the business plan and manage the contract.
j) Interaction is essential during the tendering process, and the negotiations
for contract fulfilment need to be managed with cooperation and
forbearance. Competitive tensions will inevitably surface and they must be
recognized and dealt with in the right spirit.
k) Careful preparation work has been undertaken with respect to:
l) Timelines need to be established that are realistic and take into account
other commitments.
m) The PPP contract should be sufficiently flexible to take account of any new
targets and future monitoring and reporting requirements that may develop
over the lifetime of the project.
n) Risk allocation has to be cost-effective so that risks are allocated to the
party best able to manage them and respond to the incentives they offer.
This last factor is essential for maximizing efficiency. Only by transferring
risk can there be certainty that the private sector has the incentives to price
and produce efficiently. The risk allocation in PPPs is the topic of the next
chapter when we consider the nature of the risks and the ‘tools’ available for
allocating risks between the participating parties. But first we outline a case
study of a recent hospital project in the UK with particular focus on the
reasons for going ahead with the deal. The type of incentives just mentioned
featured prominently in the decision.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
81
o) Risk and managements
p) Identify all the project risks. These include the general risks which feature in
the risk matrix and the project specific risks (for example, the risk to public
health in a water project);
q) Determine the core services which are to be provided by government and
for which the risk cannot be transferred to the private party;
r) Examine each risk and identify those which government is best placed to
manage as a result of the level of control it exercises and those which it may
otherwise not be optimal to leave with the private party. These should in
each instance be taken back by government;
s) Ascertain whether any of the remaining risks should be shared because of
market convention or specific factors relating to the project; and
t) Adjust the risk allocation inherent in the basic PPP adjustment structure and
use the contract to reflect that adjustment and allow for any power
imbalance between the parties arising from special government powers.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
82
CONCLUSION
For the sector as a whole, progress is still slow. In the first two years of the
VGF scheme the government granted approval to 23 proposals with estimated
funding of just US$683 million while IIFCL has so far approved 64 credit
proposals worth US$3.8 billion. In March 2006 IIFCL has disbursed only
US$105 million against approvals for 57 projects amounting to US$3.2 billion
although disbursals will pick up in the latter part of these long-gestation
infrastructure projects. For their part, government officials argue that the lower
expected VGF disbursals are because projects are more robust than previously
anticipated.
Limited access to long-term financing from non-government resources due to
the absence of a well-developed debt market is also constraining the increase
in PPP projects. However, most private sector participants believe that the
availability of money is not the problem; too much money chasing too few
projects is the main issue. Other factors hindering the growth of PPP in India
include the absence of a regulatory and policy framework governing PPP
projects. There is a great deal of contractual ambiguity and over reliance on
protracted legal procedures to handle any conflicts that may arise between the
concerned authorities and private sector partners, a problem compounded by
the lack of independent regulators and adjudication authorities. Contract
enforcement is another cause for concern, even orders by the Supreme Court
sometimes proving hard to implement on the ground. However, the relatively
progressive Ministry of Civil Aviation managed to push the Airports Economic
Regulatory Authority (AERA) bill through the Cabinet in May 2007. Although the
parliament has passed the bill, its eventual implementation will lead to the
creation of an independent regulator to set tariffs and other charges for
aeronautical services and monitor performance standards of airports as well as
to the establishment of an appellate tribunal to adjudicate disputes. The general
absence of such strong institutions has resulted in messy disagreements
between the government and private sector participants in some prominent
PPP projects. The Delhi airport privatization programme, for instance, landed
up in controversy after the Delhi International Airport Ltd (DIAL) - a consortium
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
83
led by the GMR Group - decided to form a subsidiary to develop the land
around the airport. DIAL's new arm plans to charge private builders a high
deposit (totaling around US$700 million) and treat it as a cost while lowering
the rent, thereby reducing the revenue due to AAI (which is supposed to
receive 45.9 per cent of DIAL's revenue). A disapproving Ministry of Civil
Aviation finally referred the dispute to India's attorney general, who recently
gave a judgment in favour of DIAL. Although the airport modernization
programme had already hit air pockets due to political opposition to privatizing
more airports, such disputes could make the government even more hesitant to
invite more private developers into public projects. The process of obtaining
approvals from various ministries and government departments is
cumbersome, and private investors have faced long delays in acquiring land for
the projects and getting regulatory clearances. However, the government has to
get its act together on this front by clearly allocating responsibility for individual
projects to different agencies.
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
84
References:
1. http://www.capaindia.com/PDFs/AERA%20April%2009.pdf
2. http://civilaviation.nic.in/moca/airppol.htm#role
3. http://infrastructure.gov.in/mca.htm
4. http://infrastructure.gov.in/pdf/Greenfield%20Airport.pdf
5. http://www.capaindia.com/PDFs/AERA%20April%2009.pdf
6. http://www.ipcc.ch/pdf/special-reports/spm/av-en.pdf
7. http://planningcommission.nic.in/
8. public private partnership in construction by Duncan cartlidge.
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money by OECD.
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Noel and W. Jan Brzeski
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by Albert .N.Link
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19. http://www.icao.int/
20. http://www.aai.aero/AAI/main.jsp
21. http://civilaviation.nic.in/aera/mainpage.htm
22. http://www.hyderabad.aero/
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AL_HOME
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25. http://www.csia.in/
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EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
85
ANNEXURE
Annexure-I EXPORT
S.No. Country 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1 AFGHANISTAN TIS 74,333.46 63,164.15 82,227.81 100,192.14 182,344.16
2 ALBANIA 2,349.56 2,485.12 2,020.77 2,804.38 5,589.70
3 ALGERIA 103,889.54 120,152.38 151,952.64 151,747.96 299,636.27
4 AMERI SAMOA 568.51 130.55 124.09 80.59 58.26
5 ANDORRA 80.61 39.59 58.16 53.26 412.37
6 ANGOLA 32,751.82 67,146.25 90,717.60 106,027.64 170,381.68
7 ANGUILLA 123.32 51.49 404.86 70.27 39.04
8 ANTARTICA 4.08 20.58 168.47
9 ANTIGUA 471.02 500.44 636.89 748.05 1,314.82
10 ARGENTINA 83,714.57 88,327.70 95,798.55 116,569.32 160,966.71
11 ARMENIA 3,253.57 3,184.55 3,908.03 7,988.56 9,221.80
12 ARUBA 199.13 274.59 661.99 270.88 900.86
13 AUSTRALIA 323,617.14 363,586.27 418,457.01 463,013.06 657,633.39
14 AUSTRIA 52,635.44 58,649.35 59,705.70 73,725.43 232,281.02
15 AZERBAIJAN 13,836.39 12,753.60 11,105.75 10,370.55 15,910.20
16 BAHAMAS 2,492.85 4,141.54 27,690.31 7,068.34 1,034.54
17 BAHARAIN IS 70,301.55 85,114.86 83,071.38 101,333.63 131,407.49
18 BANGLADESH PR 732,887.76 736,872.18 736,596.95 1,174,321.30 1,131,721.47
19 BARBADOS 780.28 1,024.38 1,206.23 1,013.76 1,761.65
20 BELARUS 4,766.12 5,409.66 6,504.93 8,526.90 16,350.95
21 BELGIUM 1,127,648.32 1,271,195.60 1,572,170.46 1,694,309.84 2,030,939.59
22 BELIZE 451.53 1,180.94 710.38 2,467.02 1,312.25
23 BENIN 21,173.80 42,775.13 68,554.93 110,842.92 93,677.50
24 BERMUDA 284.91 146.86 339.92 503.94 351.17
25 BHUTAN 38,004.47 43,905.27 26,018.73 34,885.74 50,927.26
26 BOLIVIA 1,780.09 2,902.06 2,469.47 3,063.56 4,382.33
27 BOSNIA-HRZGOVIN 1,229.58 587.92 1,646.85 2,024.38 2,449.17
28 BOTSWANA 3,552.48 4,771.83 4,916.37 6,814.12 11,704.04
29 BR VIRGN IS 49.79 295.42 397.13 171.99 17,119.26
30 BRAZIL 304,711.88 482,853.41 657,677.17 1,013,178.34 1,187,440.98
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
86
31 BRUNEI 2,275.46 19,010.55 3,759.13 4,206.74 7,994.52
32 BULGARIA 11,124.42 10,655.39 18,192.93 28,690.97 33,011.76
33 BURKINA FASO 9,480.82 8,824.91 6,785.93 13,006.24 21,960.15
34 BURUNDI 3,253.90 4,749.77 3,586.04 3,238.25 6,494.28
35 C AFRI REP 392.65 616.24 1,090.57 525.45 1,122.73
36 CAMBODIA 8,148.07 10,710.02 23,603.66 21,510.37 21,507.71
37 CAMEROON 11,995.56 15,366.28 37,555.03 29,232.00 42,335.75
38 CANADA 389,467.70 452,287.04 502,450.46 509,400.52 624,678.79
39 CANARY IS 45.37 18,323.59 35.78 17.11
40 CAPE VERDE IS 270.28 66.89 96.22 169.85 175.76
41 CAYMAN IS 303.09 173.63 145.02 258.38 265.85
42 CHAD 1,580.65 1,861.89 12,740.30 5,267.52 7,188.97
43 CHANNEL IS 66.02 48.29 162.43 87.41 22.18
44 CHILE 49,965.75 67,361.05 169,826.43 100,443.79 177,677.13
45 CHINA P RP 2,523,296.90 2,992,491.28 3,752,978.03 4,359,741.59 4,266,133.36
46 CHRISTMAS IS. 163.98 36.68 16.91 926.01 96.56
47 COCOS IS 183.84 84.06 113.76 34.82 0.72
48 COLOMBIA 148,590.78 201,451.27 260,923.11 304,907.57 168,762.56
49 COMOROS 1,095.77 2,257.83 7,030.69 3,917.99 11,732.01
50 CONGO D. REP. 1,268.91 898.08 546.48 1,686.01 7,048.26
51 CONGO P REP 41,902.23 49,418.63 61,657.14 60,803.20 96,329.64
52 COOK IS 37.56 40.8 2.14 49.83 60
53 COSTA RICA 7,403.17 7,110.03 9,280.20 12,743.20 15,711.43
54 COTE D' IVOIRE 45,393.32 46,989.80 64,099.13 104,142.84 43,288.06
55 CROATIA 10,264.76 12,841.95 24,747.91 29,155.85 39,161.66
56 CUBA 3,341.95 5,274.66 12,148.67 7,702.08 17,075.91
57 CYPRUS 13,198.64 14,348.77 15,108.63 19,278.70 114,200.89
58 CZECH REPUBLIC 39,537.63 42,887.59 46,336.11 72,580.62 83,299.38
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
87
59 DENMARK 137,374.13 181,647.03 207,161.34 199,651.29 267,651.55
60 DJIBOUTI 57,793.27 101,989.22 139,207.94 184,276.22 160,806.39
61 DOMINIC REP 9,901.64 14,074.42 16,754.46 17,110.95 23,514.00
62 DOMINICA 910.62 1,161.01 1,287.59 1,184.19 1,197.18
63 ECUADOR 10,206.10 11,598.16 23,652.76 22,293.27 58,350.32
64 EGYPT A RP 199,824.37 297,706.24 344,350.86 562,131.18 759,464.44
65 EL SALVADOR 3,993.94 5,311.52 7,993.01 4,881.17 7,676.42
66 EQUTL GUINEA 1,724.19 2,850.43 2,152.15 4,445.17 2,969.06
67 ERITREA 3,792.58 3,621.44 3,008.65 44,531.43 7,354.63
68 ESTONIA 4,599.55 6,136.90 12,710.98 28,089.71 22,455.87
69 ETHIOPIA 24,939.38 33,089.99 52,384.09 79,579.55 114,291.89
70 FALKLAND IS 20.85 13.14 114.04 24.14 42.67
71 FAROE IS. 64.18 97.83 149.04 96.89 27.29
72 FIJI IS 12,843.97 12,864.33 20,101.12 19,426.76 39,679.98
73 FINLAND 64,495.58 90,625.54 87,924.24 96,419.44 120,559.43
74 FR GUIANA 36.14 21 34.9 890.02 17,546.61
75 FR POLYNESIA 239.5 337.3 927.82 825.78 587.01
76 FR S ANT TR 63.97 5,700.00 36.78 4.01 0.78
77 FRANCE 755,271.75 920,707.57 950,601.41 1,045,415.11 1,377,671.15
78 GABON 4,653.10 7,341.37 7,531.04 10,405.17 9,922.00
79 GAMBIA 6,691.74 7,437.41 12,459.87 12,184.62 14,067.84
80 GEORGIA 12,039.46 15,131.79 18,533.07 37,405.02 33,414.71
81 GERMANY 1,269,875.33 1,587,701.77 1,800,723.12 2,059,892.83 2,919,475.35
82 GHANA 82,262.34 88,909.82 208,633.62 324,961.98 249,717.48
83 GIBRALTAR 291.31 149.64 7,884.05 518.7 4,025.93
84 GREECE 137,642.42 249,743.87 304,306.09 213,659.96 406,323.82
85 GREENLAND 19.48 1,492.73 1.18 23.7 38.41
86 GRENADA 105.18 386.06 353.62 502.22 207.18
87 GUADELOUPE 610.82 496.42 773.97 625.39 684.83
88 GUAM 171.19 154.98 1,215.51 234.19 248.38
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
88
89 GUATEMALA 16,999.96 20,337.09 33,502.31 30,041.40 36,984.11
90 GUINEA 23,056.59 23,138.03 36,223.70 52,546.00 35,446.38
91 GUINEA BISSAU 416.59 326.15 307.79 1,796.93 16,491.57
92 GUYANA 3,082.18 4,937.72 5,951.67 5,475.73 5,555.41
93 HAITI 4,576.25 7,228.63 9,822.70 10,746.83 20,342.04
94 HEARD
MACDONALD
19.66 24 5.31 5.43 0.09
95 HONDURAS 9,572.94 15,317.73 51,204.17 38,322.31 31,588.43
96 HONG KONG 1,658,790.01 1,979,610.39 2,117,937.83 2,538,525.32 3,039,069.39
97 HUNGARY 48,568.73 37,261.30 46,846.21 92,466.11 199,667.93
98 ICELAND 5,800.97 5,779.27 5,200.01 5,541.14 5,708.88
99 INDONESIA 598,756.65 611,063.22 917,696.77 869,277.93 1,157,782.95
100 IRAN 553,282.72 526,123.79 656,482.05 784,482.83 1,156,517.42
101 IRAQ 58,944.80 69,041.06 92,066.55 109,130.26 198,127.14
102 IRELAND 95,249.84 123,864.37 102,184.09 126,414.59 203,497.12
103 ISRAEL 451,902.26 531,944.06 597,937.21 645,339.92 658,430.72
104 ITALY 1,027,129.27 1,115,267.10 1,621,242.79 1,574,812.54 1,736,487.94
105 JAMAICA 6,033.65 11,447.67 9,111.92 9,931.50 10,342.24
106 JAPAN 956,101.81 1,098,539.39 1,295,361.13 1,551,559.21 1,380,771.30
107 JORDAN 57,622.91 81,891.55 80,881.48 143,802.45 196,036.40
108 KAZAKHSTAN 36,581.85 40,228.56 37,710.02 45,034.32 60,244.72
109 KENYA 191,693.99 255,254.87 595,254.94 635,609.27 614,088.18
110 KIRIBATI REP 177.82 37.92 1,520.00 71.5 980
111 KOREA DP RP 55,675.01 24,143.62 47,742.02 342,420.51 403,661.57
112 KOREA RP 468,043.69 808,970.14 1,137,900.98 1,148,153.52 1,835,359.19
113 KUWAIT 189,357.35 227,447.64 277,989.71 274,490.59 362,840.57
114 KYRGHYZSTAN 22,271.78 12,438.38 16,852.48 12,706.31 10,385.08
115 LAO PD RP 1,190.39 2,422.73 1,076.38 1,542.58 4,445.31
116 LATVIA 7,826.98 12,571.09 18,010.54 23,920.68 20,389.30
117 LEBANON 30,311.51 31,804.06 30,307.41 38,869.00 61,349.66
118 LESOTHO 6,026.37 5,655.79 2,470.46 3,431.63 15,730.64
119 LIBERIA 8,224.40 9,363.53 10,916.54 9,242.05 13,483.02
120 LIBYA 77,970.65 45,731.67 39,011.82 54,517.18 59,829.60
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
89
121 LIECHTENSTEIN 213.07 148.68 315.25 70.69 2,109.99
122 LITHUANIA 13,747.13 14,807.99 18,362.14 23,778.95 27,293.60
123 LUXEMBOURG 5,227.82 4,722.13 7,748.71 4,694.13 5,138.89
124 MACAO 940.78 1,088.84 732.04 1,797.56 2,580.30
125 MACEDONIA 1,167.39 1,739.46 2,578.95 3,345.98 4,755.99
126 MADAGASCAR 16,231.29 18,881.92 20,650.42 23,013.25 111,534.40
127 MALAWI 26,176.12 19,318.59 19,277.43 25,848.02 40,906.58
128 MALAYSIA 487,084.68 514,398.01 590,192.56 1,033,728.54 1,578,036.20
129 MALDIVES 21,393.88 29,918.78 31,096.43 36,055.22 59,028.43
130 MALI 9,746.31 12,353.24 28,891.37 12,982.88 17,907.49
131 MALTA 14,151.69 53,707.45 27,413.19 13,861.52 48,608.92
132 MARSHALL ISLAND 23.72 93.45 8,634.20 36.02 49.56
133 MARTINIQUE 239.01 372.72 952.31 797.58 19,097.74
134 MAURITANIA 11,104.07 19,986.30 9,827.12 11,588.90 16,367.53
135 MAURITIUS 116,012.77 88,296.78 333,275.80 437,245.94 439,831.09
136 MEXICO 165,606.49 196,160.66 242,437.53 238,204.69 301,051.91
137 MICRONESIA 153.34 3.19 14.68 20.09 41.97
138 MOLDOVA 2,518.52 2,403.24 2,497.39 2,981.03 3,065.25
139 MONACO 332.57 167.72 381.14 195.91 158.76
140 MONGOLIA 605.66 516.14 1,066.79 3,051.03 7,059.86
141 MONTSERRAT 177.78 112.42 70.59 28.66 93.28
142 MOROCCO 50,540.04 56,452.49 74,343.33 83,745.29 110,544.19
143 MOZAMBIQUE 36,530.66 56,466.45 86,753.70 179,489.16 191,948.96
144 MYANMAR 50,859.74 49,009.52 63,374.59 74,619.38 101,776.52
145 N. MARIANA IS. 12.71 24.01 9.05 34.93 205.42
146 NAMIBIA 3,245.03 6,484.58 8,363.95 16,519.08 41,920.85
147 NAURU RP 6.52 4.83 8.33 29.84 52.67
148 NEPAL 333,903.93 380,738.81 420,138.23 606,348.08 715,577.12
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
90
149 NETHERLAND 721,088.56 1,095,671.92 1,208,248.30 2,103,846.13 2,888,996.20
150 NETHERLANDANTIL 2,369.95 4,843.32 5,811.37 4,085.12 8,633.71
151 NEUTRAL ZONE 28.54 10,198.75 4.39
152 NEW CALEDONIA 374.34 526.83 1,464.80 899.57 2,055.12
153 NEW ZEALAND 41,886.64 62,823.84 227,770.60 63,819.20 85,696.81
154 NICARAGUA 5,111.90 4,708.16 6,758.94 21,517.23 9,447.83
155 NIGER 18,103.82 9,850.76 6,481.71 19,104.29 11,834.18
156 NIGERIA 289,662.55 386,964.68 408,822.31 436,162.10 706,530.56
157 NIUE IS 7.87 1.71 50 2.99 3.66
158 NORFOLK IS 43.41 39.37 245.06 195.04 181.99
159 NORWAY 46,642.97 57,646.14 82,972.37 106,308.47 172,119.42
160 OMAN 120,268.74 180,827.06 285,267.87 377,358.31 354,968.47
161 PAKISTAN IR 6.76 610,688.43 782,736.66 0.01
162 PALAU 234,117.76 305,146.68 73.1 65.22 653,206.80
163 PANAMA C Z 23.27 28.78 227.61 266.63 99.66
164 PANAMA REPUBLIC 214.12 2,004.22 74,525.03 27,542.67 439.19
165 PAPUA N GNA 25,139.56 27,914.97 4,861.40 5,930.75 55,942.32
166 PARAGUAY 6,416.07 4,078.29 12,348.18 18,727.93 8,950.52
167 PERU 5,396.48 7,252.12 56,836.89 115,487.41 17,636.87
168 PHILIPPINES 30,922.00 37,303.49 263,596.76 249,073.46 139,324.62
169 PITCAIRN IS. 185,219.60 219,005.40 30.88 14.01 337,935.11
170 POLAND 9.13 0.43 138,582.66 179,961.34 12.57
171 PORTUGAL 79,212.50 100,481.31 165,721.87 199,155.96 234,698.64
172 PUERTO RICO 100,273.81 115,503.36 12,920.87 14,185.79 199,195.84
173 QATAR 6,591.19 8,529.00 149,939.95 216,550.06 30,438.24
174 REUNION 94,095.16 114,817.02 9,839.44 13,422.15 307,192.44
175 ROMANIA 4,132.44 6,581.92 76,637.48 105,996.30 17,487.09
176 RUSSIA 47,608.79 37,364.53 408,548.71 378,346.96 228,655.44
177 RWANDA 283,636.04 324,589.03 6,219.23 5,199.71 495,824.21
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
91
178 SAHARWI A.DM RP 3,758.26 4,709.91 2.62 13,672.29
179 SAMOA 6.47 4.69 93.93 171.64 27.77
180 SAO TOME 123.4 159.69 393.17 596.63 317.69
181 SAUDI ARAB 45.22 182.49 1,171,137.11 1,492,255.46 459.77
182 SENEGAL 634,460.47 801,248.19 68,895.23 79,689.56 2,294,014.13
183 SEYCHELLES 31,110.81 41,395.16 5,844.40 28,888.77 66,069.08
184 SIERRA LEONE 4,772.59 4,703.44 9,403.73 12,122.08 41,355.12
185 SINGAPORE 5,895.68 8,207.53 2,746,160.82 2,966,223.24 21,858.39
186 SLOVAK REP 1,797,534.89 2,401,965.25 16,307.16 19,205.70 3,775,688.18
187 SLOVENIA 10,719.19 9,477.38 40,193.43 48,080.91 16,430.93
188 SOLOMON IS 28,472.47 33,913.35 132.91 11,223.92 73,298.14
189 SOMALIA 115.4 98.8 38,941.73 48,892.80 408.87
190 SOUTH AFRICA 21,165.93 17,558.25 1,016,527.68 1,069,875.52 30,883.97
191 SPAIN 442,142.40 676,000.35 849,693.12 922,504.63 899,429.11
192 SRI LANKA DSR 624,263.18 710,883.44 1,020,638.25 1,137,428.97 1,138,792.36
193 ST HELENA 634,964.97 896,391.21 750.46 653.6 1,089,497.01
194 ST KITT N A 47.14 343.35 175.92 216.29 85.81
195 ST LUCIA 219.96 182.17 298.14 217.88 322.13
196 ST PIERRE 210.42 325.1 10,115.02 2,204.48 494.83
197 ST VINCENT 1,116.17 709.4 155.49 189.15 1.31
198 SUDAN 112.68 181.19 182,686.19 164,172.97 371.07
199 SURINAME 142,633.84 130,449.92 7,531.83 4,530.49 221,794.09
200 SWAZILAND 7,897.87 6,935.48 2,133.88 4,164.50 6,364.85
201 SWEDEN 10,006.03 2,318.72 175,293.03 218,818.23 20,585.39
202 SWITZERLAND 108,643.69 144,505.28 211,095.95 247,593.88 257,963.42
203 SYRIA 243,027.94 212,300.92 184,818.20 270,911.07 352,525.70
204 TAIWAN 113,759.19 122,492.04 413,348.74 698,497.17 166,657.08
205 TAJIKISTAN 277,907.23 278,500.66 3,374.67 4,997.12 668,173.16
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
92
206 TANZANIA REP 2,961.79 2,763.18 130,694.35 236,454.70 7,630.08
207 THAILAND 78,127.12 107,783.96 653,562.38 727,877.20 472,958.89
208 TIMOR LESTE 405,008.07 476,076.01 240.46 162.04 872,399.50
209 TOGO 703.43 174.31 55,147.25 92,333.02 422.42
210 TOKELAU IS 118,337.65 40,331.73 68.71 18.17 65,620.17
211 TONGA 65.06 32.62 225.83 135.63 15.8
212 TRINIDAD 316.06 196.37 48,903.89 54,763.53 148.77
213 TUNISIA 12,995.28 29,504.28 49,486.13 49,992.79 143,698.43
214 TURKEY 33,454.86 36,554.99 598,311.51 704,338.53 96,789.44
215 TURKMENISTAN 325,168.46 447,197.82 15,309.07 14,517.51 637,029.19
216 TURKS C IS 6,854.40 8,336.26 238.02 335.13 19,145.32
217 TUVALU 142.36 182.48 42.85 2,625.27 236.38
218 U ARAB EMTS 86.26 61.57 5,444,497.47 6,291,503.22 2,959.92
219 U K 3,301,512.11 3,803,884.65 2,542,129.00 2,696,748.35 11,022,907.95
220 U S A 1,653,971.05 2,239,920.89 8,536,848.54 8,338,806.93 3,034,457.97
221 UGANDA 6,185,157.56 7,682,808.04 48,609.62 61,857.99 9,645,841.97
222 UKRAINE 34,138.18 41,017.22 131,061.29 160,480.30 100,749.23
223 UNION OF SERBIA
& MONTENEGRO
93,336.06 114,308.73 5,428.86 5,371.72 180,771.03
224 UNSPECIFIED 4,156.12 3,699.82 109,508.10 146,773.93 6,382.94
225 URUGUAY 167,963.42 84,939.82 16,695.75 20,441.67 2,031,903.63
226 UZBEKISTAN 11,011.87 12,364.57 13,432.07 16,224.15 29,728.79
227 VANUATU REP 9,590.91 10,819.55 1,014.48 868.96 20,927.32
228 VENEZUELA 743.09 813.23 57,234.92 57,782.33 2,409.86
229 VIETNAM SOC REP 32,337.83 41,800.54 444,623.84 645,128.09 84,764.70
230 VIRGIN IS US 249,800.55 305,786.46 711.75 455.82 794,947.72
231 WALLIS F IS 697.21 278.13 274.57 19.1 621.12
232 YEMEN REPUBLC 41.87 41.54 536,639.08 409,668.74 70.51
233 ZAMBIA 110,717.19 123,440.62 49,037.69 53,225.19 353,281.31
234 ZIMBABWE 22,647.10 29,448.45 14,444.58 12,841.47 49,058.39
India's Total
Export 37,533,952.62 45,641,786.15 57,177,928.52 65,586,352.18 84,075,505.87
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
93
IMPORT
S.No. Country 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1 AFGHANISTAN TIS 21,120.40 25,866.13 15,613.31 43,976.20 59,245.85
2 ALBANIA 14.35 85.62 16.76 224.63 81.46
3 ALGERIA 2,836.78 6,485.22 339,488.55 496,169.26 451,753.95
4 AMERI SAMOA 24.38 128.92 38,119.73 467.23 114.02
5 ANDORRA 10.19 12.43 4.08 40.8
6 ANGOLA 407.66 1,438.17 111,098.32 409,608.66 653,900.05
7 ANTIGUA 2.88 50.99 5.36 17.51
8 ARGENTINA 242,448.07 333,837.75 506.13 25.61 35.38
9 ARMENIA 348.6 919.42 398,459.26 364,530.43 234,594.26
10 ARUBA 8.36 34,480.40 1,515.24 1,276.40
11 AUSTRALIA 1,718,418.00 2,190,614.78 18.17 8.3
12 AUSTRIA 117,873.85 152,310.25 3,171,090.05 3,155,208.44 5,049,651.71
13 AZERBAIJAN 3,464.81 2,595.41 206,156.66 235,735.88 320,738.18
14 BAHAMAS 20,397.65 95.08 30,339.88 69,510.92 86,416.95
15 BAHARAIN IS 54,758.43 83,925.72 5,485.80 98.28 19,754.74
16 BANGLADESH PR 26,676.51 56,240.09 213,109.67 333,881.62 636,671.99
17 BARBADOS 4.47 15.58 103,390.55 103,468.16 141,846.07
18 BELARUS 5,537.57 16,761.77 65.82 13.07 37.46
19 BELGIUM 2,061,865.48 2,091,983.27 42,248.92 50,410.47 125,541.11
20 BELIZE 4.45 13.8 1,874,160.28 1,754,571.92 2,605,788.66
21 BENIN 35,849.35 34,299.65 2,670.88 5,408.71 48.19
22 BERMUDA 585.64 19.91 36,563.01 28,987.66 49,119.57
23 BHUTAN 31,902.98 39,301.99 250.24 155.04 31,262.39
24 BOLIVIA 96.06 417.16 64,000.12 78,260.06 68,786.18
25 BOSNIA-HRZGOVIN 54.87 173.4 1,332.79 1,427.16 3,421.21
26 BOTSWANA 187.57 63.13 190.71 4,922.60 632.41
27 BR VIRGN IS 0.97 82.48 26.01 0.25 9,778.74
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
94
28 BRAZIL 356,035.76 395,386.84 8,712.27 70.95 147.86
29 BRUNEI 242.27 389.35 448,731.16 381,813.84 544,949.69
30 BULGARIA 8,067.64 10,653.70 129,068.31 90,868.70 188,194.37
31 BURKINA FASO 3,792.39 1,191.19 35,181.48 48,163.66 27,187.64
32 BURUNDI 194.24 16.21 2,517.05 7,793.52 18,889.87
33 C AFRI REP 115.4 162.24 2.03 742.95 323.13
34 CAMBODIA 108.27 343.61 200.71 461.53 1,149.03
35 CAMEROON 5,262.64 5,413.18 714.94 1,155.25 1,197.33
36 CANADA 348,543.47 407,258.01 3,443.26 7,571.91 14,390.41
37 CAPE VERDE IS 0.78 804,269.25 794,017.51 1,129,675.53
38 CAYMAN IS 1.77 10.87 93.05 1.07 159.85
39 CHAD 701.81 32.14 26,533.75 65,058.47 58.67
40 CHILE 155,270.24 192,368.44 74.65 394.76 1,883.47
41 CHINA P RP 3,189,230.68 4,811,665.23 867,814.22 741,939.94 666,443.07
42 CHRISTMAS IS. 29.72 7,900,860.72 10,911,607.12 14,760,559.50
43 COLOMBIA 6,365.48 4,142.25 6,971.82 284.11 260.81
44 COMOROS 67.03 1,719.72 6.37 18.63
45 CONGO D. REP. 1,140.61 6,289.91 34,668.60 33,756.81 8,104.24
46 CONGO P REP 9,872.98 19,454.58 3,142.49 834 143.44
47 COOK IS 3.38 7,709.94 5,547.29 47,379.75
48 COSTA RICA 15,935.09 16,761.49 27,036.17 41,967.83 218,453.37
49 COTE D' IVOIRE 71,928.94 85,857.23 12.14 0.2
50 CROATIA 924.25 13,055.71 19,875.75 35,584.56 33,977.75
51 CUBA 776.21 1,468.98 82,202.22 80,217.68 145,197.24
52 CYPRUS 2,170.99 11,302.38 25,813.10 7,430.87 7,137.32
53 CZECH REPUBLIC 78,782.03 115,279.09 503.61 5,735.42 616.25
54 DENMARK 121,414.00 228,424.71 50,082.04 58,529.75 68,127.22
55 DJIBOUTI 1,399.82 1,484.60 160,068.12 179,893.01 218,371.15
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
95
56 DOMINIC REP 1,239.80 2,365.81 153,925.59 186,886.22 218,073.47
57 DOMINICA 152.92 75.77 970.07 1,830.79 1,685.39
58 ECUADOR 10,306.65 9,000.59 822.3 1,135.27 4,763.87
59 EGYPT A RP 68,585.21 97,598.66 169.39 425.35 291.4
60 EL SALVADOR 823.33 913.79 22,318.80 87,230.92 15,004.57
61 EQUTL GUINEA 325.15 32.45 788,705.58 798,278.20 976,506.19
62 ERITREA 446.46 438.36 1,127.53 2,358.84 2,665.85
63 ESTONIA 322.46 3,992.64 47.2 66,050.25 88.42
64 ETHIOPIA 4,609.62 3,770.97 154.38 600.78 2,740.54
65 FAROE IS. 10.36 11,869.63 4,328.14 7,138.32
66 FIJI IS 135.18 376.92 5,136.59 5,482.41 5,127.45
67 FINLAND 174,699.15 258,326.33 6.4 0.93 436.63
68 FR GUIANA 175.42 12.99 71.34 11.64
69 FR POLYNESIA 3.27 7.04 8,413.10 103.55 325.99
70 FR S ANT TR 33.72 1.23 275,924.79 373,001.40 557,769.67
71 FRANCE 851,046.97 1,821,101.32 72.38 770.25 2,527.82
72 GABON 19,231.65 18,636.77 12.42 9.17 44.78
73 GAMBIA 5,175.57 5,712.52 0.73 1.92
74 GEORGIA 6,926.24 8,798.20 1,905,933.21 2,517,563.53 2,116,519.65
75 GERMANY 1,804,156.35 2,666,872.86 52,302.36 48,520.64 76,962.53
76 GHANA 23,038.66 34,943.93 8,104.79 6,079.55 12,492.60
77 GIBRALTAR 1.75 158.56 33,956.51 4,304.82 7,409.24
78 GREECE 10,701.24 24,958.04 3,414,674.94 3,973,603.74 5,492,241.61
79 GREENLAND 5.64 0.02 46,701.35 56,554.48 77,856.21
80 GRENADA 15.98 69.22 5.43 98.49
81 GUADELOUPE 318.04 115.73 94,867.89 51,029.76 31,933.84
82 GUAM 96.35 523.21 21.95 0.06 1.42
83 GUATEMALA 476.89 809.54 29.77 7.43 33.42
84 GUINEA 12,398.74 9,852.01 72.08 79.64 33.24
85 GUINEA BISSAU 31,841.07 42,558.57 87.68 142.9 34.07
86 GUYANA 3,220.54 9,408.89 949.4 1,433.91 1,322.06
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
96
87 HAITI 458.39 129.26 154,934.34 281,951.86 120,995.25
88 HONDURAS 102.08 138.24 22,503.52 25,706.44 46,596.16
89 HONG KONG 777,373.79 977,107.64 6,676.82 6,373.60 5,024.90
90 HUNGARY 14,165.84 13,999.00 513.22 790.51 817.18
91 ICELAND 1,031.48 2,796.90 48.13 13.62
92 INDONESIA 1,176,190.06 1,331,795.58 766.01 857.93 2,197.06
93 IRAN 184,313.68 311,004.87 1,123,930.26 1,086,707.05 2,973,253.51
94 IRAQ 503.45 908.11 52,452.66 45,600.43 88,152.53
95 IRELAND 82,289.84 71,681.09 1,689.17 1,522.92 1,620.70
96 ISRAEL 443,972.70 456,543.75 1,886,485.99 1,942,053.15 3,075,129.40
97 ITALY 616,955.00 821,552.51 3,451,547.40 4,394,593.48 5,582,184.47
98 JAMAICA 1,189.96 945.52 2,500,501.79 2,749,466.41 3,428,501.21
99 JAPAN 1,453,593.31 1,797,990.11 130,633.23 104,550.82 110,214.16
100 JORDAN 159,905.54 195,836.23 488,558.03 574,633.67 949,903.46
101 KAZAKHSTAN 6,915.21 11,642.77 1,210,171.66 1,569,445.00 1,998,356.25
102 KENYA 20,994.42 21,480.40 272.95 9,327.01 506.38
103 KOREA DP RP 4,191.67 25,046.69 2,079,487.72 2,545,779.99 3,583,282.46
104 KOREA RP 1,576,541.54 2,020,577.01 213,223.53 275,738.00 800,087.81
105 KUWAIT 137,465.04 204,478.80 39,910.77 30,915.45 73,352.81
106 KYRGHYZSTAN 280.93 652.81 25,556.87 34,829.71 37,619.20
107 LAO PD RP 23.24 46.34 17.49 0.59 29.45
108 LATVIA 495.95 4,484.86 222,471.06 64,852.28 24,147.79
109 LEBANON 9,194.92 8,196.83 2,174,699.81 2,430,790.74 3,965,818.96
110 LESOTHO 0.04 2,711,417.52 3,095,993.03 4,319,944.55
111 LIBERIA 20,227.22 56,073.33 348.4 364.42 451.63
112 LIBYA 6,112.33 5,284.61 162.52 45.69 214.92
113 LIECHTENSTEIN 229.86 351.56 14,163.44 16,575.32 53,692.34
114 LITHUANIA 7,924.61 12,820.68 5,026.93 3,790.52 6,248.27
115 LUXEMBOURG 4,354.22 7,129.41 21,347.30 96,487.68 120.55
116 MACAO 0.06 71.34 61,029.12 501,066.51 63,531.98
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
97
117 MACEDONIA 37.86 1,701.17 172.92 1,495.16 307,213.58
118 MADAGASCAR 3,580.30 7,243.57 9,116.41 3,900.94 34.64
119 MALAWI 2,282.80 796.94 14,413.56 14,420.78 262,067.29
120 MALAYSIA 1,032,979.47 1,069,473.44 88.27 152.39 11,413.46
121 MALDIVES 274.94 876.34 116.18 112.04 113.09
122 MALI 5,874.24 1,137.20 8,704.09 6,733.17 320.23
123 MALTA 16,561.31 7,006.95 2,269.47 6,217.63 8,538.00
124 MARSHALL ISLAND 0.3 79,234.68 2,395,876.10 2,417,613.44 3,355.31
125 MARTINIQUE 1.21 15.67 1,382.76 1,669.73 3,259,156.48
126 MAURITANIA 575.83 453.19 1,260.34 1,611.17 1,793.35
127 MAURITIUS 3,228.42 3,245.36 90,477.91 3,144.03 4,303.65
128 MEXICO 37,124.07 43,216.90 6,611.80 26.89 2,332.29
129 MICRONESIA 4.11 0.86 2.2 62.15
130 MOLDOVA 65.29 93.59 290.21 473.6 185.33
131 MONACO 421.83 41.91 6,565.80 4,055.79 2,039.52
132 MONGOLIA 92.4 717.45 357,648.55 476,543.09 6,557.86
133 MONTSERRAT 10.62 24.79 9.7 6.12 799,801.38
134 MOROCCO 162,725.56 202,051.99 206.13 157.74 0.21
135 MOZAMBIQUE 18,673.96 22,406.53 79.75 385 3,044.07
136 MYANMAR 182,382.99 232,862.77 1,015.88 3,742.61 159.29
137 NAMIBIA 22 9,195.00 21.13 41.88 8,358.64
138 NAURU RP 758.1 81.65 222,309.64 200,747.26 5.81
139 NEPAL 155,385.77 168,173.09 12,811.14 19,078.92 429,263.55
140 NETHERLAND 355,613.52 464,673.27 354,094.52 325,928.14 14,824.63
141 NETHERLANDANTIL 24.44 151.99 424,076.82
142 NEW CALEDONIA 4,125.68 1,375.50 1,546.76 8,441.50 32.24
143 NEW ZEALAND 57,493.70 95,909.48 343.21 163.13 1,596.75
144 NICARAGUA 89.55 2,430.90 138,450.90 252,725.72 12,396.21
145 NIGER 324.52 337.29 523,286.18 772,866.39 225,567.56
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
98
146 NIGERIA 21,746.00 32,081.93 488.25 504.88 866,962.05
147 NORFOLK IS 39.54 56.8 9,656.09 4,094.35 639.92
148 NORWAY 105,626.95 128,101.62 120,266.43 135,305.78 4,754.70
149 OMAN 9,259.82 117,584.07 34.13 153.59 195,096.15
150 PAKISTAN IR 42,673.53 79,498.02 2,448.30 269.33 290.43
151 PANAMA C Z 3,929.95 211.81 3,179,651.97 3,066,290.73 74.33
152 PANAMA REPUBLIC 40,830.45 109,549.31 131.63 15.95 3,999,547.98
153 PAPUA N GNA 42,773.49 28,389.94 7.35 166.53
154 PARAGUAY 1,245.16 1,863.38 345,727.77 654,444.76 392.55
155 PERU 16,331.74 10,208.86 208,233.76 456,384.48 512,341.29
156 PHILIPPINES 84,199.37 104,260.26 146,272.82 115,871.88 546,437.92
157 PITCAIRN IS. 0.46 0.92 4.65 166,838.70
158 POLAND 40,602.95 47,733.33 13.73 4.48
159 PORTUGAL 8,511.83 13,392.17 138,370.13 100,570.33 4.37
160 PUERTO RICO 2,231.29 3,235.98 126,685.82 78,154.92 64,680.01
161 QATAR 302,323.52 399,179.06 1,286.33 183.06 103,976.04
162 REUNION 1,547.88 1,467.17 58,097.01 63,269.74 263.91
163 ROMANIA 75,684.48 119,592.32 75,737.13 82,387.82 121,693.97
164 RUSSIA 594,328.52 895,294.01 2.33 1.96 116,542.91
165 RWANDA 324.52 17.04 53,032.94 76,179.69 0.01
166 SAMOA 25.61 13,790.83 14,373.07 121,491.09
167 SAO TOME 7.51 3,084.79 3,509.00 25,510.32
168 SAUDI ARAB 584,626.77 722,693.17 935,908.92 988,889.45 4,721.84
169 SENEGAL 81,414.15 129,525.86 2,490.47 5,025.66 1,589,469.10
170 SEYCHELLES 259.93 507.37 132,011.66 168,123.18 11,354.13
171 SIERRA LEONE 1,022.07 1,578.07 1,090,283.53 993,832.96 152,425.37
172 SINGAPORE 1,191,311.70 1,484,833.35 741.45 267.38 1,978,742.31
173 SLOVAK REP 10,285.90 17,645.53 500.1 2.13 1,080.42
174 SLOVENIA 9,637.32 10,454.25 1.59 9.36
EMERGING CHALLENGES IN PUBLIC PRIVATE PARTNERSHIP IN AIRPORTS
99
175 SOLOMON IS 132.36 1,227.80 6,056,149.96 7,811,031.38 27.18
176 SOMALIA 3,356.92 5,116.33 32,924.24 60,376.01 8,974,703.51
177 SOUTH AFRICA 987,443.96 1,094,352.70 338.66 379.31 99,452.94
178 SPAIN 175,029.46 253,891.51 1,058.77 20,183.12 536.35
179 SRI LANKA DSR 170,019.05 255,768.08 2,483,996.69 3,268,217.81 3,588.12
180 ST HELENA 19.02 215.09 8,958.71 17,886.42 3,456,141.62
181 ST KITT N A 4.85 16,426.37 23,185.33 20,913.92
182 ST LUCIA 4.05 883.49 2,645.81 34,414.52
183 ST PIERRE 42.83 1,575.69 8,209.58 3,112.44 235.78
184 ST VINCENT 1,033.23 32,867.49 1,118,413.70 1,454,655.62 2,741.46
185 SUDAN 10,280.03 14,440.92 283,669.65 400,097.68 2,488,228.72
186 SURINAME 430.01 2,870.94 212,955.68 254,091.64 466,128.41
187 SWAZILAND 1,412.66 10,460.10 103.04 1.97 162,367.62
188 SWEDEN 421,156.65 518,974.60 2.07 35.7 11.38
189 SWITZERLAND 2,668,898.37 2,902,482.09 1.6 1,540.71
190 SYRIA 1,715.00 2,270.64 7,900.77 11.71 12,484.21
191 TAIWAN 490,685.00 612,284.48 1,066.39 14,468.76 11.08
192 TAJIKISTAN 1,835.92 2,607.04 40,424.61 173,722.03 3,007.23
193 TANZANIA REP 59,152.95 53,019.98 496.17 343.79 183,956.05
194 THAILAND 389,050.73 536,409.91 25,750.29 14,958.46 535.08
195 TIMOR LESTE 6.71 19.3 874,623.00 857,810.52 17,439.11
196 TOGO 20,682.40 35,089.60 4,128,316.92 3,957,082.02 888,754.71
197 TOKELAU IS 0.98 13.24 35,995.02 8,155.82 5,270,320.98
198 TONGA 49.88 759,424.86 966,396.61 76,397.86
199 Trade to
Unspecified
Countries
1,969,299.95 8,621,800.16 3,644.23 3,899.27 1,294,132.16
200 TRINIDAD 6,268.35 807.65 44,392.18 66,221.28 8,066.21
201 TUNISIA 42,657.98 44,783.94 789,880.06 926,400.41 91,817.54
202 TURKEY 60,621.87 85,800.78 270.17 19.89 1,235,265.25
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203 TURKMENISTAN 4,882.40 5,468.81 34,509.81 24,509.51 99.76
204 TURKS C IS 1,550.19 109.6 30.66 63,404.96
205 TUVALU 0.97 72.14 16.61 6.37
206 U ARAB EMTS 2,085,317.23 1,927,703.35 23,012.34 70,164.39 80.31
207 U K 1,602,345.39 1,740,081.50 65,256.00 62,845.56 46,896.84
208 U S A 3,145,813.32 4,185,945.49 150,630.51 680,148.98 276,172.05
209 UGANDA 2,966.86 1,255.84 5,457.35 3,454.20 664,242.24
210 UKRAINE 242,030.80 350,817.85 144.94 163.39 5,537.56
211 UNION OF SERBIA
& MONTENEGRO
1,910.44 862.17 639.12 769
212 UNSPECIFIED 11,672,714.29 10,983,028.66 3,917,494.34 5,423,319.30 169.64
213 URUGUAY 1,820.26 1,788.98 1,888,929.92 1,994,151.94 10,592,643.31
214 UZBEKISTAN 14,135.89 11,570.74 5,310,541.44 8,462,542.31 2,676,770.80
215 VANUATU REP 91.54 21,293.72 2,137.74 6,086.68 8,481,827.99
216 VENEZUELA 1,806.11 4,228.41 451,866.00 356,346.79 8,804.17
217 VIETNAM SOC REP 38,865.36 58,169.04 785.18 1,707.55 703,995.74
218 VIRGIN IS US 31.67 164.54 307,679.87 715,187.06 6,173.83
219 WALLIS F IS 71.78 0.86 3,292.52 5,330.22 654,700.57
220 YEMEN REPUBLC 13,848.03 4,428.49 15,330.50 6,470.69 6,510.27
221 ZAMBIA 10,318.29 17,957.69 4,173.63 418.33 32,924.00
222 ZIMBABWE 12,197.03 11,311.17 336,257.42 159,794.62 3,396.47
India's Total
Imports 50,106,454.03 66,040,890.33 84,050,631.33 101,231,169.93 137,443,555.45
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Annexure-II
ANNUAL - TOTAL DOMESTIC TRAFFIC AND OPERATING STATI STICS OF INDIAN CARRIERS FOR LAST TEN YEARS
AIRCRAFT FLOWN PASSENGERS CARGO CARRIED (TONNE) TONNE KMS PERFORMED (MILLION) .
YEAR HOURS (NO)
KMS (000)
CARRIED (no)
KMS PERFORMED (MILLION)
AVAILABLE SEAT KMS (MILLION)
PAX load factor (%) FREIGHT MAIL TOTAL PAX FREIGHT MAIL TOTAL
AVAILABLE TONNE KMS (MILLION)
WEIGHT LOAD FACTOR (%)
1999-00 231173 128637 12711139 11419 19089 59.8 137670 21209 158879 977 142 22 1141 2042 55.9
2000-01 250470 136928 13712215 12283 19897 61.7 143541 23127 166668 1052 152 19 1223 2127.2 57.5
2001-02 267329 147113 12853918 11572 20849 55.5 137983 22573 160556 989 143 23 1155 2212.8 52.2
2002-03 295173 165827 13951034 12848 22833 56.3 156254 23331 179585 1086 164 23 1273 2380.8 53.5
2003-04 343795 189336 15676948 14566 24936 58.4 176611 20879 197490 1257 191 19 1467 2551.3 57.5
2004-05 398714 213618 19445043 18030 27790 64.9 218004 27147 245151 1558 229 29 1816 2840.2 63.9
2005-06 475352 252668 25204988 23709 35077 67.6 224958 31523 256481 2067 238 35 2340 3488 67.1
2006-07 648408 347912 35792747 33519 48702 68.8 245652 20769 266421 2910 252 23 3185 4750 67.1
2007-08 805934 439378 44384302 41718 60590 68.9 282288 20277 302565 3637 272 21 3930 5984 65.7
2008-09 808442 426099 39467072 37704 59160 63.7 252971 24637 277608 3260 236 24 3520 5908 59.6
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ANNEXURE-III
ANNUAL-TOTAL INTERNATIONAL TRAFFIC IN CARGO AND OPERATING STSTICTICS OF INDIAN CARRIERS FOR LAST TEN YEARS
AIRCRAFT FLOWN CARCO CARRIED (TONNE)
YEAR HOURS(NO) KMS(000) CARRIED(NO)
KMS.PERFORMED
(MILLION)
AVAILABLE
SEAT KMS
(MILLION0
PAX
LOAD
FACTOR
(%) FRIEGHT MAIL TOTAL PAX FRIEGHT MAIL TOTAL
AVAILABLE
TONE KMS
(MILLION)
WEIGHT
LOAD
FACTOR(%)
1999-00 94796 64454 3656642 13186 17956 73.4 98743 1555 100298 1226 390 12 1628 2311 70
2000-01 97961 65965 3827701 13928 18318 76 99832 1519 101351 1294 404 11 1709 2346 73
2001-02 110652 74547 3698442 13408 19311 69.4 95587 1942 97529 1248 371 12 1631 2457 66
2002-03 129091 84513 4200765 15819 21406 73.9 102089 1640 103729 1473 401 10 1884 2678 70
2003-04 146019 97687 4492576 18108 24972 72.5 95420 2278 97698 1680 399 13 2092 3154 66
2004-05 175368 119497 5326221 22272 31126 71.6 110157 2000 112157 2058 509 12 2579 3919 66
2005-06 237506 161848 6547185 27858 40452 68.9 110196 1983 112179 2561 562 14 3138 5143 61
2006-07 268672 186221 7561226 30355 44624 68 121991 1703 123694 2803 609 11 3422 5734 59.7
2007-08 338325 241006 9108469 36129.6 54465 66.3 140221 2680 142901 3389 769 21 4179 7588 55.1
2008-09 403323 286582 10049361 40740.8 62172 65.5 170732 3360 174092 3953 960 25 4938 8812 56
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SCHEDULED DOMESTIC PASSENGER TRAFFIC AND PASSENGER LOAD FACTOR OF ALL SCHEDULED AIRLINES FOR LAST TEN YEARS.
PAX. LOAD FACTOR (%)
SL. NO. YEAR SCHEDULED DOMESTIC PASSENGER CARRIED (IN LAKHS)
% CHANGE IN SCHEDULED DOMESTIC PASSENGERS CARRIED
1 1999-00 127.1 59.8 -
2 2000-01 137.1 63.7 7.9
3 2001-02 128.5 55.5 -6.3
4 2002-03 139.5 56.3 8.6
5 2003-04 156.8 58.4 12.4
6 2004-05 194.5 64.9 24
7 2005-06 252 67.6 29.6
8 2006-07 357.9 68.8 42
9 2007-08 443.8 68.9 24
10 2008-09 394.7 63.7 -11.1
ANNUALISED GROWTH RATE OVER LAST TEN YEARS = 13.42
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Annexure-IV
Sector Wise Contract Award Method
Total Number of Projects based on Contract Award Method
Sectors
Total
Number of
projects
Domestic
Competitive
Bidding
International
Competitive
Bidding
Negotiated
MOU
Value of
Contracts (Rs.
Crore)
Airports 5 0 18808 0 19111
Education 1 93.32 0 0 93.32
Energy 24 100 0 16014.59 17110.59
Ports 43 4816 24037 34591.95 66498.95
Railways 4 696.56 0 905 1601.56
Roads 271 62779.2 34161.9 1259.2 102004.78
Tourism 29 1367.76 982.32 0 2467.08
Urban Development 73 4645.83 9758.91 15 15288.47
Total 450 74583.67 87748.13 52785.74 224175.8
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Annexure-V
Sector-wise
Sector-wise Total Number
Based on
100 Between 100
Between
251 to
More than
500 Value of
of Projects crore to 250 crore 500 crore crore contacts
Airports 5 0 0 303 18808 19111
Education 1 93.32 0 0 0 93.32
Energy 24 175.59 558 2669 13708 17110.59
Ports 43 96 970 2440 62992.95 66498.95
Railways 4 0 102.22 905 594.34 1601.56
Roads 271 3162.5 5526.49 32861.87 60453.92 102004.7
Tourism 29 742.56 674.52 0 1050 2467.08
Urban
Development 73 1283.86 1468.7 2403.91 10132 15288.47
Total 450 5638.83 9299.93 41582.78 167739.21 224175.8
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Annexure-VI
State-Wise
State
Total
Number of
Projects
Based on
100 crore
Between 100
to 250 crore
Between 251 to
500 crore
More than 500
crore Value of contacts
Andhra Pradesh 63 1062.93 1554.27 3188.53 33473.7 39279.43
Bihar 2 4 0 418.04 0 422.04
Chandigarh 1 15 0 0 0 15
Chhattisgarh 4 70 304 464 0 838
Delhi 9 95 0 408.2 10374 10877.2
Goa 2 30 220 0 0 250
Gujarat 27 130.06 277.22 3360.9 14943.71 18711.89
Haryana 2 0 0 756 0 756
Jharkhand 6 131 550 0 0 681
Karnataka 95 980.39 1692.55 12203.31 24615.6 39491.85
Kerala 11 114 112 615.5 11131 11972.5
Madhya Pradesh 37 1027.32 1117.28 2694.95 2949 7788.55
Maharashtra 28 118.5 745.5 1099.84 32061.95 34025.79
Orissa 16 235.1 0 500 6888.34 7623.44
Pudducherry 2 0 0 419 1867 2286
Punjab 19 537.26 434.72 572 0 1543.98
Rajasthan 49 523.92 783.79 833 3112.7 5253.41
Sikkim 24 175.59 558 2669 13708 17110.59
Tamil Nadu 30 143.31 555.6 6412.87 5340 12451.78
Uttar Pradesh 5 0 0 1458.57 649.21 2107.78
West Bengal Inter-State 5 13 0 160.45 200 195 1214.4 2294.67 641 5984 2055.4 8634.12
Total 450 5638.83 9299.93 41582.78 167739.21 224175.8
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Annexure-VII DETAILED PROJECT INFORMATION
Bangalore International Airport Project Name
Bangalore International Airport
State Karnataka Location Devanhalli
The airport site covers an area of approximately 4300 acres. It is situated on NH7, 30 km north of Bangalore. The first phase of the airport would consist of a 4000-metre-long runway, taxiways and an apron area with aircraft stands and a terminal building.
Capacity / Size
Ultimate design capacity of 50 mppa (million passengers per annum). Airport capacity to be developed to 11.5 mppa under Phase 1. The first phase of the airport would consist of a 4000-metre-long runway, taxiways and an apron area with aircraft stands and a terminal building.
Type of PPP BOOT Type of Nodal Department
Centre
Contracting Authority
Ministry of Civil Aviation, Government of India
Contract Period
30 yrs. Additional Information : : Greenfield Airport Concession Agreement shall continue from its commencement until the 30th anniversary of the Airport Opening Date whereupon the term of the Agreement shall at the option of BIAL be extended for a further period of 30 years. BIAL may at any time prior to the 27th anniversary of the Airport Opening Date, exercise the option of extending the term of the Concession Agreement by another 30 years. The 30 year period excludes Construction Period of 33 months from Financial Close Financial Close to be achieved within 6 months from the date of signing of Concession Agreement
Project Proponent Project Company/Developer /Operator
Bangalore International Airport Limited (BIAL)
Legal Status of Project Company
Joint Venture Company
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Siemens Larsen and Toubro (L&T)
EPC Contractor
Skytanking-Indian Oil Consortium Unique Zurich GlobeGround India Air India-Singapore Air Terminal Services (SATS) Bobba Group-Menzies Aviation LSG Sky Chefs, Taj SATS HMS Host Corporation Nuance-Shoppers Stop Consortium Bharat Petroleum Corporation Limited, ST Airport Services Private Limited (STARS)
O&M Contractor
Skytanking-Indian Oil Contract Award Method
International Competitive Bidding
Estimated Project Cost
Rs. 1930 Cr.
Project Benefits and Outcomes
First Phase- Airport to cover an area of 3800 acres Construction of a passenger terminal, 4000 m long runway, entrance/exit taxi-ways, an isolation bay, air-side road system, two-way access road, air traffic complex (ATC), aeronautical equipment, rescues and fire-fighting facilities, airline support acilities, fuel farm, terminal parking, administration and maintenance buildings, ground equipment maintenance area, cargo complex and boundary/security wall. Additional phases to incorporate more facilities which will be developed based on projected passenger traffic and growth requirements
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Performance Monitoring
BIAL shall design, procure, construct, complete, test and commission the Initial Phase, and remedy any defects in respect thereof, in accordance with the Master Plan, Good Industry Practice and Applicable Law. BIAL shall ensure that the Works shall conform with the Specifications and Good Industry Practice. BIAL shall at all times comply with Applicable Law in the operation and maintenance of the Airport and will operate, maintain, keep in good operating repair and condition in accordance with Good Industry Practice and, in accordance with the Standards and renew, replace and upgrade to the extent reasonably necessary, the Airport. In order to assist BIAL and Government of India (GoI) achieve their objectives under the Concession Agreement a joint coordination committee shall be formed comprising BIAL, Government of India (GoI) and the other Relevant Authorities providing the Reserved Activities. The joint coordination committee shall meet once a month commencing with the first month following the execution of the Concession Agreement. Throughout the term of this Agreement the Airport performance shall be monitored by passenger surveys. The criteria used to measure the Airport performance shall be the IATA Global Airport Monitor service standards or such criteria as may be mutually agreed upon from time to time (the "Standards"). The first such survey shall be conducted during the third (3rd) year after Airport Opening. From the date the Independent Regulatory Authority (IRA) has power to review, monitor and set standards and penalties and regulate any such related activities at the Airport, BIAL shall be required to comply with all such regulations framed by IRA.
Legal Instrument
BOOT
Market Structure and Competition
BIAL has the exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of the Airport (but excluding the right to carry out the Reserved Activities and to provide communication and navigation surveillance/air traffic management services which are required to be provided by AAI). No new or existing airport shall be permitted by Government of India (GoI) to be developed as, or improved or upgraded into, an International/Domestic Airport within an aerial distance of 150 kilometers of the Airport before the twenty-fifth anniversary of the Airport Opening Date.
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Regulatory Framework
At present there is no Independent Regulatory Authority for airports to perform key regulatory functions including tariff setting, licensing, compliance oversight, ensuring fair competition, etc. Most of these functions shall be governed by the Concession Agreement. Ministry of Civil Aviation, Government of India is administering the Concession Agreement.
Tariffs other users and in respect of both domestic and international aircraft and passenger movements, at rates consistent with ICAO Policies, the following Regulated Charges: Landing, Housing and Parking charges (domestic and international), Passenger Service Fee (domestic and international) The charges to be adopted by BIAL at the time of Airport Opening will be the higher of: (a) The AAI tariff effective 2001 duly increased with inflation index up to the Airport Opening Date, or (b) The then prevailing tariff at the other AAI airports. User Development Fee (UDF) (domestic and international): BIAL will be allowed to levy UDF with effect from Airport Opening Date, duly increased in the subsequent years with inflation index from embarking domestic and international passengers, for the provision of passenger amenities, services and facilities and the UDF will be used for the development, management, maintenance, operation and expansion of the facilities at the Airport. Route Navigation Facilities Charges and Terminal Navigational Landing Charges shall be levied and collected by AAI. BIAL shall, in consideration for the grant by Government of India (GoI) of the Concession, pay to GoI a fee amounting to four per cent (4%) of Gross Revenue annually as Concession Fee. The Concession Fee in respect of the first 10 Financial Years shall be payable in 20 equal half-yearly installments, while the Concession Fee in respect of the 11th Financial Year and each succeeding Financial Year shall be payable annually.
F I N A N C I A L I N F O R M A T I O N Equity:
INVESTOR COUNTRY % HOLDING AMOUNT (Rs. Crore) Karnataka State Investment and Industrial Development Corporation (KSIIDC)
India 13 40.95
Airports Authority of India (AAI) India 13 40.95 Siemens Project Ventures GmbH Germany 40 126
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Unique Zurich Airport (Flughafen Zeurich AG) Switzerland 17 53.55 Larsen & Toubro Ltd. India 17 53.55 Total Equity : Rs. 315 Cr.
Debt : INVESTOR AMOU
NT TENOR (YEAR)
MORATORIUM (YEAR)
TYPE
COMMENTS
State Support
Rs. 350.00 Crore
10 10 1 Interest Free Loan
ICICI led consortium
Rs. 735.00 Crore
3
Other Lenders
Rs. 461.50 Crore
3
Total Debt : Rs. 1546.5 Cr. Other Financial Instrument
Advance Security Deposits received from third party service providers
Total Others Rs. 68.5 Cr. Debt : Equity 83 % : 17 % Government Equity : Private Equity
26 % : 74 %
Government Support
VGF by Sponsoring Authority : Rs. 0 Cr.
VGF under VGF scheme of DEA : Rs. 0 Cr.
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Other Support AAI equity investment is capped at Rs. 500 million. Land lease Agreement – Lease of land of 4000 acres at concessional rent of Rs. 1 till commencement of operations. Thereafter at the rate of 3% p.a. for a period of 6 years and 6% p.a. subsequently with an annual increase of 3%. Tax Benefits: Benefit has been assumed u/s 80IA of the Income-tax Act 1961 for tax exemption in respect of profits & gains from the business of development of an infrastructure facility viz., airport. A deduction of 100% of the profits & gains derived from such business has been assumed for any 10 consecutive assessment years out of 15 years beginning from the year in which BIAL begins to operate and maintain the infrastructure facility. Exemptions from Income Not Forming Part of Total Income: Withholding tax for technical fees payments to Germany and Switzerland will continue as per the Double Taxation Avoidance Agreements of India with the respective countries. No withholding tax on reimbursement of development costs/pre-SHA costs to foreign promoters. No R&D Cess payable on remittances on reimbursements made to foreign promoters and payments made under Operation Management Services Agreement (OMSA).
Project Cost (at Financial Close)
Rs. 1930 Cr.
Cochin International Airport Project Name Cochin International Airport State Kerala
Location
Nedumbassery (Cochin) Located 25 KMS North East of Cochin, with NH 47, the main Railway line and MC road to Trivandrum in close vicinity.
Capacity / Size
First airport in India to be developed through PPP. The airport covers an area of 1200 acres. The airport project includes 3400 m long runway, two separate centrally air-conditioned terminals for domestic and international operations measuring a total area of around 4.5 lakh sq.ft., integrated cargo complex capable of handling perishable/non perishable and dangerous cargo.
Type of PPP BOO
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Type of Nodal Department Centre Contracting Authority Airport Authority of India Contract Period Additional Information : : Greenfield Project Project Proponent
Project Company/Developer /Operator Legal Status of Project Company EPC Contractor O&M Contractor
Cochin International Airport Limited (CIAL) Public Limited Company
Investments in Facilities/Govt. Assets Estimated Project Cost Rs. 303 Cr. Estimated Project Cost Rs. 303 Cr. Legal Instrument
BOO
Equity F i n a n c i a l I n f o r m a t i o n
INVESTOR: over 10,000 shareholders (NRIs, mainly of Keralite origin) from 29 countries Government of Kerala
Total Equity : Rs. 85 Cr. Other Financial Instrument
Interest free security deposits of Rs. 12 crore from various airport service Providers
Debt : Total Debt : Rs. 218 Cr. Project Cost (at Financial Close)
Rs. 303 Cr.
Modernization of Delhi International Airport Project Name Modernization of Delhi International Airport State Delhi Location Delhi Sector Airports Capacity / Size
Ultimate design capacity of 100 mppa (million passengers per annum) Phase 1 to have capacity of 37 mppa by 31 March 2010 for Commonwealth Games
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Type of PPP LDOT Type of Nodal Department
Centre
Contracting Authority
Airports Authority of India (AAI)
Contract Period
30 yrs. Additional Information : : Brownfield (Lease Develop Operate Transfer (LDOT)) The OMDA agreement shall continue from the Effective Date (date on which Conditions Precedent are satisfied) until the 30th anniversary of the Effective Date. The JVC shall have a right to extend the term for an additional term of 30 years, provided there has been no JVC Event of Default during the preceding 5 years of the 25th year from the Effective Date and that such right is exercised prior to 25th anniversary from the Effective Date, but not earlier than 6 months from the 25th anniversary from the Effective Date.
Project Status Construction Project Proponent
Delhi International Airport Limited (DIAL) -
Project Company/Developer /Operator
GMR-Fraport Consortium Legal Status of Project Company Joint Venture Company (JVC)
Larsen & Toubro (L&T) Limited EPC Contractor BL Kashyap Private Limited Fraport AG Frankfurt Airport Services Worldwide
O&M Contractor
Alpha-Pantaloon Contract Award Method
International Competitive Bidding
Investments in Facilities/Govt. Assets
Estimated Project Cost Rs. 86 billion (Phase 1) Total land area available at IGI airport is 5106 acres (current operational area constitutes of about 1907 acres). Besidesa six-lane highway connecting the Airport to Delhi-Gurgaon (NH8) Highway, DIAL is also working with Delhi Metro for a high speed metro link between the Airport and Connaught Place in Delhi
Amount of Government Support - (VGF)
Amount : Rs. 0 Cr. Description : Not Applicable Support Payment Compliance : Not Applicable
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Project Benefits and Outcomes
Phase 1 includes renovation of Terminals 1A, 1B, 1C and Terminal 2, construction of 4.43km CAT IIIB and Code F compliant runway, construction of new domestic terminal and construction of an integrated passenger terminal (Terminal 3) catering to domestic and international passengers and spread over 480,000 sq.m. DIAL has also commissioned 4 new rapid exit taxiways, and a parallel taxiway to the secondary runway to reduce waiting time.
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Performance Monitoring
For the duration of the Transition Phase (3 months from Effective Date), a joint committee consisting of representatives each of AAI and the JVC shall be responsible for the overall supervision of the Airport operations. At the end of the Transition Phase, JVC would operate and maintain the Airport independently. JVC shall at all times comply with Applicable Law and operate, maintain, develop, design, construct, upgrade, modernize, manage, and keep in good operating repair and condition the Airport, in order to ensure that the Airport at all times meets the requirements of an international world class airport, in accordance with Good Industry Practice, Development Standards and Requirements, Operation and Maintenance Standards and Requirements, in such a way as to minimize inconvenience to users of the Airport The JVC shall develop the Airport in accordance with the Master Plan. Independent Engineer shall be appointed for the purpose of determining and ensuring compliance with planning approvals and standards with respect to Airport development and performing the Duties as specified under the Agreement. The OMDA Implementation Oversight Committee (OIOC), formed under the Chairmanship of Secretary, Ministry of Civil Aviation, will be the ‘single point of contact’ for the JVC for all matters concerning the OMDA Agreement, and will be responsible for ensuring that the Conditions Precedent are duly fulfilled. The OIOC would conduct a joint review of emerging issues and concerns and keep an oversight of the development of the Airport. The JVC shall review annually, progress under the Environmental Management Strategy, report it to AAI, and update it from time to time. JVC shall ensure that at termination the environmental condition of the Airport meets all statutory and regulatory requirements. To establish mechanisms to review and assess performance in respect to service delivery and management systems, JVC shall undertake ISO 9001:2000 Certification, achieve Objective and Subjective Service Quality Requirements, and comply with specified Development Standards and Requirements. The JVC shall submit monitoring and information reports to AAI on a regular basis.
Legal Instrument
LDOT
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Market Structure and Competition
The JVC has exclusive right and authority during the Term to undertake the functions of operation, maintenance, development, design, construction, upgradation, modernization, finance and management of the Airport and to perform Aeronautical Services, and Non-Aeronautical Services (but excluding Reserved Activities) at the Airport.
Regulatory Framework
At present there is no Independent Regulatory Authority for airports to perform key regulatory functions including tariff setting, licensing, compliance oversight, ensuring fair competition, etc. Most of these functions shall be governed by the OMDA Agreement. Airports Authority of India (AAI) is administering the OMDA Agreement.
Tariffs The Aeronautical Charges (the charges to be levied at the Airport by the JVC for the provision of Aeronautical Services and consequent recovery of costs relating to Aeronautical Assets) levied at the Airport shall be as determined as per the provisions of the State Support Agreement. The JVC shall be free to fix the charges for Non-Aeronautical Services, subject to the applicable law and provisions of the existing contracts and other agreements. The Essential Services shall be provided free of charge to passengers. The Passenger Service Fees shall be collected and disbursed in accordance with the provisions of the State Support Agreement. The JVC shall pay to the AAI an upfront fee of Rs 150 Crore by the Effective Date. The JVC shall also pay to the AAI an annual fee for each Year during the Term of the Agreement, equivalent to 45.99% of the projected revenue for the year.
Dispute Resolution Mechanism
The Parties shall use their respective reasonable endeavors to settle any Dispute amicably. If a Dispute is not resolved within sixty (60) days after written notice of a Dispute by one Party to the other Party then it shall be referred to arbitration, as under. All disputed referred to arbitration shall be referred to a tribunal comprising three (3) arbitrators under the (Indian) Arbitration and Conciliation Act, 1996. Each Party to the arbitration shall appoint one arbitrator and the two arbitrators thus appointed shall choose the third arbitrator who will act as a presiding arbitrator of the tribunal.
F I N A N C I A L I N F O R M A T I O N Equity :
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INVESTOR COUNTRY % HOLDING AMOUNT (Rs. Crore)
GMR Infrastructure Ltd. India 31.1 373.2 Airports Authority of India (AAI) India 26 312 Fraport AG Frankfurt Airport Services Worldwide
Germany 10 120
Eraman Malaysia (Malaysia Airports (Mauritius) Private Limited)
Malaysia 10 120
India Development Fund India 3.9 46.8 GVL Investments Pvt. Ltd. India 9 108 GMR Energy Ltd. India 10 120 Total Equity : Rs. 1200 Cr. Debt : INVESTOR TYPE OF
INSTRUMENT
AMOUNT TYPE
ICICI Bank as Lead Arranger None Rs. 4,400.00 Crore
3
Total Debt :Rs. 4400 Cr. Other Financial Instrument
Trade and Upfront Deposits for Land Bank Development
Total Others Rs. 3000 Cr. Debt : Equity 79 % : 21 % Government Equity : Private Equity
26 % : 74 %
Government Support
VGF by Sponsoring Authority : Rs. 0 Cr. VGF under VGF scheme of DEA : Rs. 0 Cr. Guarantee : Not Applicable
Project Cost (at Financial Close)
Rs. 8600 Cr.
Hyderabad International Airport Project Name Hyderabad International Airport State Andhra Pradesh Location Shamshabad in Ranga Reddy District of Andhra Pradesh About 20
km south of the present Hyderabad airport at Begumpet. Sector Airports
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Capacity / Size
Initial phase (1A) to have capacity of 5 mppa (million passengers per annum). Ultimate development as per Master Plan caters for 40 mppa.
Type of PPP BOOT Type of Nodal Department
Centre
Contracting Authority
Ministry of Civil Aviation, Government of India
Contract Period
30 yrs. Additional Information : : Greenfield Airport Concession Agreement shall continue from its commencement until the 30th anniversary of the Airport Opening Date whereupon the term of the Agreement shall at the option of HIAL be extended for a further period of 30 years. HIAL may at any time prior to the 27th anniversary of the Airport Opening Date, exercise the option of extending the term of the Concession Agreement by another 30 years. The 30 year period excludes Construction Period of 36 months from Financial Close Financial Close to be achieved within 12 months from the date of signing of Concession Agreement
Project Proponent
Project Company/Developer /Operator
Hyderabad International Airport Limited (HIAL)
Legal Status of Project Company
Joint Venture Company
China State Construction Engineering (Hong Kong) Ltd (CSCEHK)
EPC Contractor
Larsen & Toubro (L&T) Limited Menzies & Bobba Aviation and SATS Consortia Nuance-Shoppers Stop Indian Airlines and Air India Consortia Menzies Aviation Public Limited Company
O&M Contractor
LSG Sky Chef, Sky Gourmet
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Reliance Industries Accor Group
Contract Award Method
International Competitive Bidding
Investments in Facilities/Govt. Assets
The proposed outer ring road for Hyderabad will provide an alternate means of connectivity to major suburbs like the Hitech City. Rail connectivity from the city centre is expected to be ready by the time the airport is operational.
Estimated Project Cost
Rs. 2478 Cr.
Amount of Government Support - (VGF)
Amount : Rs. 107 Cr. Description : Cash Grant by Government of Andhra Pradesh
Project Benefits and Outcomes
The new airport will leverage the multiple advantages of Hyderabad city. The airport’s strategic location will help significantly reduce travel time on domestic and international routes and therefore, dramatically cut down fuel costs. First Phase- 105,300 sq.m passenger terminal Terminal building with 10 contact and 20 remote stands for aircraft parking Combined area of 35000 sq. m including- ATC, Technical section building, Cargo (100000 tonne capacity), Aircraft maintenance, Airport maintenance, CFR station, Utilities Construction of subsequent phases to be determined by actual traffic volume
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Performance Monitoring
Phase, and remedy any defects in respect thereof, in accordance with the Master Plan, Good Industry Practice and Applicable Law. HIAL shall ensure that the Works shall conform with the Specifications and Good Industry Practice. In order to assist HIAL and Government of India (GoI) achieve their objectives under this Agreement a joint coordination committee shall be formed comprising HIAL, Government of India (GoI), Government of Andhra Pradesh (GoAP) and the other Relevant Authorities providing the Reserved Activities. The joint coordination committee shall meet at least once in three months commencing with the first month following the Effective Date. HIAL shall at all times comply with Applicable Law in the operation and maintenance of the Airport and will operate, maintain, keep in good operating repair and condition in accordance with Good Industry Practice and, in accordance with the Standards and renew, replace and upgrade to the extent reasonably necessary, the Airport. Throughout the term of this Agreement the Airports performance shall be monitored by passenger surveys. The criteria used to measure the Airports performance shall be the IATA Global Airport Monitor service standards or such criteria as may be mutually agreed upon from time to time (the "Standards"). The first such survey shall be conducted during the third (3rd) year after Airport Opening. From the date the Independent Regulatory Authority (IRA) has power to review, monitor and set standards and penalties and regulate any such related activities at the Airport, HIAL shall be required (instead of the above provisions) to comply with all such regulations framed by IRA.
Legal Instrument
BOOT
Market Structure and Competition
HIAL has the exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of the Airport (but excluding the right to carry out the Reserved Activities and to provide communication and navigation surveillance/air traffic management services which are required to be provided by AAI). No new or existing airport shall be permitted by Government of India (GoI) to be developed as, or improved or upgraded into, an International/Domestic Airport within an aerial distance of 150 kilometers of the Airport before the twenty-fifth anniversary of the Airport Opening Date.
Tariffs
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HIAL shall be entitled to levy and recover from airline operators, passengers and other users and in respect of both domestic and international aircraft and passenger movements, at rates consistent with ICAO Policies, the following Regulated Charges: Landing, Housing and Parking charges (domestic and international), Passenger Service Fee (domestic and international) The charges to be adopted by HIAL at the time of Airport Opening will be the higher of: (a) The AAI tariff effective 2001 duly increased with inflation index up to the Airport Opening Date, or (b) The then prevailing tariff at the other AAI airports. User Development Fee (UDF) (domestic and international): HIAL will be allowed to levy UDF with effect from Airport Opening Date, duly increased in the subsequent years with inflation index from embarking domestic and international passengers, for the provision of passenger amenities, services and facilities and the UDF will be used for the development, management, maintenance, operation and expansion of the facilities at the Airport. Route Navigation Facilities Charges and Terminal Navigational Landing Charges shall be levied and collected by AAI. HIAL shall, in consideration for the grant by Government of India (GoI) of the Concession, pay to GoI a fee amounting to four per cent (4%) of Gross Revenue annually as Concession Fee. The Concession Fee in respect of the first 10 Financial Years shall be payable in 20 equal half-yearly installments, while the Concession Fee in respect of the 11th Financial Year and each succeeding Financial Year shall be payable annually.
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Dispute Resolution Mechanism
1. Negotiation and Conciliation The Parties shall use their respective reasonable endeavors to settle any dispute, difference, claim, question or controversy between the Parties amicably between themselves through negotiation. 2. Reference to Arbitrator Subject to anything contained in the relevant Independent Regulatory Authority legislation regarding the settlement of disputes, any Dispute which the Parties are unable to resolve through negotiation and conciliation within sixty (60) days (or such longer period as the Parties may agree) of the written notification by one Party to the other of the existence of a Dispute shall be finally determined by arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996 and in accordance with the UNCITRAL rules (the "Rules") by three arbitrators appointed in accordance with the Rules. In case of conflict between Indian Arbitration and Conciliation Act, 1996 and the Rules, the provisions of the former will prevail.
Renegotiation and Disputes within Project
Initial Estimated Project Cost Rs. 17.6 Bn (USD 409.3 Mn) Project Cost revised to Rs. 24.78 billion on account of construction of additional facilities including a common fuel farm and business hotel.
F I N A N C I A L I N F O R M A T I O N Equity : INVESTOR COUNTRY %
HOLDING AMOUNT(Rs. Crore)
Airports Authority of India (AAI) India 13 49.14 Government of Andhra Pradesh India 13 49.14 GMR Group India 63 238.14 Malaysian Airport Holding Berhad (MAHB)
Malaysia 11 41.58
Total Equity : Rs. 378 Cr. Debt : INVESTOR AMOUNT TENOR
(YEAR) MORATORIUM (YEAR)
TYPE COMMENTS
State Support - Interest Free Loan
Rs. 315.00 Crore
5 16 1 Interest free loan refundable in 5 equal installments commencing from 16th year.
Allahabad Bank Rs. 120.00 Crore
16 3 Repayment of the loans Commence from the opening of the new airport.
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Bank of Baroda Rs. 110.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
Canara Bank Rs. 100.00 Crore
16 3 Repayment of the loans Commence from the opening of the new airport.
Industrial Development Bank of India (IDBI) Limited
Rs. 100.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
Infrastructure Development Finance Company (IDFC) Limited - Lead lender
Rs. 200.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
Oriental Bank of Commerce
Rs. 110.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
State Bank of Hyderabad
Rs. 120.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
Vijaya Bank Rs. 100.00 Crore
16 3 Repayment of the loans commence from the opening of the new airport.
Additional debt (on account of revision in project cost) from Abu Dhabi Commercial Bank, Andhra Bank and Vijaya Bank
Rs. 718.00 Crore
3
Total Debt : Rs. 1993 Cr. Debt : Equity 84 % : 16 % Government Equity : Private Equity
26 % : 74 %
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Government Support
VGF by Sponsoring Authority: Rs. 107 Cr. VGF under VGF scheme of DEA : Rs. 0 Cr. Guarantee : Not Applicable
Total VGF/ Government Support
Rs. 107 Cr.
Other Support AAIs equity investment is capped at Rs. 500 million Stamp Duty / Registration Fee waived off on transfer of land as well as all project agreements. Sales Tax waived off on all construction material. Land Lease – Approx 5490 acres of land co-terminus with State Support Agreement. Land was given to the developer on a nominal lease of 2 per cent of the total land cost of Rs 155 crore. Tax Benefits: Benefit has been assumed u/s 80IA of the Income-tax Act 1961 for tax exemption in respect of profits & gains from the business of development of an infrastructure facility viz., airport. A deduction of 100% of the profits & gains derived from such business has been assumed for any 10 consecutive assessment years out of 15 years beginning from the year in which HIAL begins to operate and maintain the infrastructure facility. Exemptions from Income Not Forming Part of Total Income: Withholding tax for technical fees payments to Malaysia will continue as per the Double Taxation Avoidance Agreements of India with Malaysia. No withholding tax on reimbursement of development costs/pre-SHA costs to foreign promoters. No R&D Cess payable on remittances on reimbursements made to foreign promoters and payments made under technical services agreement.
Project Cost (at Financial Close)
Rs. 2478 Cr.
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Modernization of Mumbai International Airport Project Name Modernization of Mumbai International Airport State Maharashtra Location Mumbai Sector Airports Capacity / Size The Master Plan incorporates passenger traffic
capacity of 40 mppa (million passengers per annum) and cargo traffic capacity of 1 Mn tonnes per year.
Type of PPP LDOT Type of Nodal Department
Centre
Contracting Authority Airports Authority of India Contract Period 30 yrs.
Additional Information : : Brownfield (Lease Develop Operate Transfer (LDOT)) The OMDA agreement shall continue from the Effective Date (date on which Conditions Precedent are satisfied) until the 30th anniversary of the Effective Date. The JVC shall have a right to extend the term for an additional term of 30 years, provided there has been no JVC Event of Default during the preceding 5 years of the 25th year from the Effective Date and that such right is exercised prior to 25th anniversary from the Effective Date, but not earlier than 6 months from the 25th anniversary from the Effective Date.
Project Proponent Mumbai International Airport Limited (MIAL) GVK-Airports Company of South Africa
Project Company/Developer /Operator (ACSA) Consortium Legal Status of Project Company
Joint Venture Company (JVC)
Larsen & Toubro (L&T) EPC Contractor HDIL ACSA Global Limited O&M Contractor Aldeasa-ITDC
Contract Award Method International Competitive Bidding Investments in Facilities/Govt. Assets
Estimated Capital Investment Rs. 70 billion (USD 1627.91 Mn) over 20 years, of which Rs. 5800 crore (USD 1348.84 Mn) will be invested in the first seven years.
Estimated Project Cost Rs. 5800 Cr.
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Amount of Government Support - (VGF)
Amount : Rs. 0 Cr. Description : Not Applicable Support Payment Compliance : Not Applicable
Project Benefits and Outcomes
The first phase (to be completed by 2008)includes incorporating new airline lounges, retail outlets and duty-free shops in Terminal 2B, upgrade and expand check-in counters and boarding bridges in Terminal 1A, setting up temporary cargo facilities, upgradation of air0side and city-side facilities such as construction of rapid exit taxiways and construction of multi-level car parks. The second phase (to be completed by 2010) involves construction of new terminal at Sahar-Terminal 2 for catering to domestic and international passengers, construction of road link from the western express to the new terminal, shifting of Air Traffic Control (ATC) Tower, construction of a parallel runway and new cargo facilities.
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For the duration of the Transition Phase (3 months from Effective Date), a joint committee consisting of 3 representatives each of AAI and the JVC shall be responsible for the overall supervision of the Airport operations. At the end of the Transition Phase, JVC would operate and maintain the Airport independently. JVC shall at all times comply with Applicable Law and operate, maintain, develop, design, construct, upgrade, modernize, manage, and keep in good operating repair and condition the Airport, in order to ensure that the Airport at all times meets the requirements of an international world class airport, in accordance with Good Industry Practice, Development Standards and Requirements, Operation and Maintenance Standards and Requirements, in such a way as to minimize inconvenience to users of the Airport The JVC shall develop the Airport in accordance with the Master Plan. Independent Engineer shall be appointed for the purpose of determining and ensuring compliance with planning approvals and standards with respect to Airport development and performing the Duties as specified under the Agreement. The OMDA Implementation Oversight Committee (OIOC), formed under the Chairmanship of Secretary, Ministry of Civil Aviation, will be the ‘single point of contact’ for the JVC for all matters concerning the OMDA Agreement, and will be responsible for ensuring that the Conditions Precedent are duly fulfilled. The OIOC would conduct a joint review of emerging issues and concerns and keep an oversight of the development of the Airport. The JVC shall review annually, progress under the Environmental Management Strategy, report it to AAI, and update it from time to time. JVC shall ensure that at termination the environmental condition of the Airport meets all statutory and regulatory requirements. To establish mechanisms to review and assess
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Legal Instrument LDOT Market Structure and Competition
The JVC has exclusive right and authority during the Term to undertake the functions of operation, maintenance, development, design, construction, upgradation, modernization, finance and management of the Airport and to perform Aeronautical Services, and Non-Aeronautical Services (but excluding Reserved Activities) at the Airport.
Regulatory Framework At present there is no Independent Regulatory Authority for airports to perform key regulatory functions including tariff setting, licensing, compliance oversight, ensuring fair competition, etc. Most of these functions shall be governed by the OMDA Agreement. Airports Authority of India (AAI) is administering the OMDA Agreement.
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Tariffs The Aeronautical Charges (the charges to be levied at the Airport by the JVC for the provision of Aeronautical Services and consequent recovery of costs relating to Aeronautical Assets) levied at the Airport shall be as determined as per the provisions of the State Support Agreement. The JVC shall be free to fix the charges for Non-Aeronautical Services, subject to the applicable law and provisions of the existing contracts and other agreements. The Essential Services shall be provided free of charge to passengers. The Passenger Service Fees shall be collected and disbursed in accordance with the provisions of the State Support Agreement. The JVC shall pay to the AAI an upfront fee of Rs 150 Crore by the Effective Date. The JVC shall also pay to the AAI an annual fee for each Year during the Term of the Agreement, equivalent to 38.7% of the projected revenue for the year.
Dispute Resolution Mechanism
The Parties shall use their respective reasonable endeavors to settle any Dispute amicably. If a Dispute is not resolved within sixty (60) days after written notice of a Dispute by one Party to the other Party then it shall be referred to arbitration, as under. All disputed referred to arbitration shall be referred to a tribunal comprising three (3) arbitrators under the (Indian) Arbitration and Conciliation Act, 1996. Each Party to the arbitration shall appoint one arbitrator and the two arbitrators thus appointed shall choose the third arbitrator who will act as a presiding arbitrator of the tribunal.
F I N A N C I A L I N F O R M A T I O N Equity :
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INVESTOR COUNTRY
% HOLDING
AMOUNT (Rs. Crore)
ACSA Global Limited (Airports Company South Africa Limited)
Mauritius 10 160
GVK Airport Holdings Pvt. Ltd. (GVK Industries Limited)
India 37 592
Bid Services Division (Mauritius) Ltd. (The Bidvest Group Limited)
Mauritius 27 432
Airports Authority of India (AAI) India 26 416 Total Equity : Rs. 1600 Cr. Debt :
INVESTOR
AMOUNT
TENOR (YEAR)
MORATORIUM (YEAR)
TYPE
COMMENTS
IDBI led consortium comprising of Andhra Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India,India Infrastructure Finance Company Ltd. (IIFC), Indian Bank, IDBI, Oriental Bank of Commerce, Punjab National Bank, Syndicate Bank, United Bank of India, UTI Bank Ltd. and Vijaya Bank
Rs. 4,200.00 Crore
17 7 1 The loan covers a seven-year drawl period. MIAL has procured an interest rate, which is benchmarked to three years Government Security plus a margin of 215 basis points. The loan will be repaid in 120 monthly payments. The loan is flexible and GVK could replace it with foreign currency borrowings.
Total Debt :Rs. 4200 Cr. Debt : Equity
72 % : 28 %
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Government Equity : Private Equity
26 % : 74 %
Government Support
VGF by Sponsoring Authority : Rs. 0 Cr. VGF under VGF scheme of DEA : Rs. 0 Cr. Guarantee : Not Applicable
Other Support
Equity contribution by AAI capped at Rs. 500 crore
Project Cost (at Financial Close)
Rs. 5800 Cr.
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