Uncertainties deter foreign players; blow to the government ahead of Air India sale.
New Delhi: In a major setback to the government, its plans to hand out Ahmedabad and Jaipur airports to private parties on management contract has received a lukewarm response.With infrastructure major GVK being the sole company to submit physical documents for the two airports, the government may choose to scrap the tendering process.
The lukewarm response from private investors appears to be a blow to the government ahead of its mega disinvestment plan of national carrier Air India.
The development comes weeks after the civil aviation ministry's proposed move to sell 51 per cent stake in chopper operator Pawan Hans did not find many takers, prompting it to invite fresh bids.
"In case of Jaipur and Ahmedabad airports, companies were required to submit physical documents two days after the online bidding process closed. In both cases only GVK submitted the physical documents. There were 3-4 bidders online but eventually they seem to have backed out," said a person familiar with the development.
"Now, the ball is in aviation ministry's court. They have to decide the move forward," he added.
State-run Airports Authority of India (AAI) had invited the bids on behalf of the government to offer Jaipur and Ahmedabad airports to private parties for their management. While it received three online bids for Ahmedabad airport, four parties showed interest for the Jaipur airport. Apart from GVK, the other players are not very well known in the aviation sector.
The subdued response came even as AAI diluted some of the bid conditions after private firms raised the issues. Ever since Modi government came to power, the proposal to partially privatise the two airports has been under active consideration.
First, it mooted the plan to give the two airports to Singapore's Changi on nomination basis but later developed cold feet amid questions raised by opposition parties and aviation experts. Then it changed the scope of work and invited fresh bids but still found very few takers.
"In the latest bidding process we expected some foreign companies to participate in the bid but to our surprise none came. In fact, the cut-off date for physical submission of the bids were extended by a week or so but still the result remained the same," an official said.
The AAI had invited Request for Proposal (RFP) late last year for the two airports. The scope of work included operation and management of passenger terminal building and ground-handling operations through approved operators.
An expert with top infrastructure advisory blamed the government for poor interest in the airport projects saying it had not shown seriousness and had changed the bid conditions multiple times.
“Firstly, the scope of work in the two airports is very limited. Secondly, there have been a lot of uncertainties deterring foreign players who have anyway not participated in airport privatisation directly," he said on condition of anonymity.