According to the latest government briefings, companies looking to participate in the next round of airport privatization will have to bid for both loss-making facilities along with profit-making ones. The government has decided to bundle seven airports that make losses with six profit-making airports.
According to the list released, the profit-making airports include Trichy, Bhubaneswar, Raipur, Amritsar and Indore. While the loss-making airports list include Salem, Jharsuguda, Jalgaon, Jabalpur and Kangda.
The government had previously announced that a maximum of 10 airports had to be privatized in the third round of airport privatization. Pradeep Singh, Ministry of Civil Aviation secretary had maintained that “In the third round (of airport privatization) six to 10 airports are going to be privatized,”.
During the presentation of Budget 2021-22, Finance Minister Nirmala Sitharaman had suggested that the next lot of airports would be privatized in tier 2 and 3 towns and cities. She had further added that the airports would be monetized for operations and management concessions.
“Seven port projects worth more than Rs 2,000 crore will be offered by major ports in a public-private partnership model, in financial year 2021-2022, to move to a model where private partners will manage operations of ports,” she had said.
Reportedly, the terms are likely to be similar to the terms for six airports that were put up for bidding in 2019, which were reportedly acquired by the Adani Group. The Adani Group won all six airports that were up for bidding in 2019 — Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram.
One of the offers will be for construction, operation and management for a period of 50 years. The winning bid will be decided on the basis of the highest fee per passenger.
A government official stated that “Required approvals are in place and the bidding for these projects is likely to begin during the next fiscal,”. He further added that “A loss-making airport would not otherwise have found takers but when it is combined with a profit-making airport in its vicinity there are chances of these airports being bid out too.”
The award of these airports, which will start in the next fiscal, is the part of the aviation ministry’s target to raise Rs 20,000 crore through monetization of assets. The government had announced privatization of assets in its recent budget as a means to finance its huge fiscal spending for the year 2021-22.
This remarkably also includes the sale of remaining stakes in strategic airports situated in Delhi, Mumbai, Bengaluru and Hyderabad. The central government has set a target of Rs 2.5 lakh crore from the sale of assets under various ministries.
As it has been reported, the government is also in the process of privatizing Air India, along with its subsidiary Air India Express. The stake sales in these companies, however, are not expected to fetch substantial amounts of money.