Friday, May 12, 2017

Airport privatization hinges on two lease deeds

After union home ministry last month, gave security clearance to five companies which had shown interest in bidding for the Nagpur airport privatization, a key formality remains to be done without which financial bids cannot be invited.
Two separate lease deeds remain to be signed between Mihan India Limited (MIL) — the current operator of the airport, Maharashtra Airport Development Company (MADC) and Airports Authority of India (AAI). This should have been done in 2009, when MIL was formed but the formality remained pending over the years.
Without the lease deeds, MIL cannot go ahead with calling of financial bids for airport privatization, despite having got the security clearance.
MIL was formed in 2009 to run the airport. It is a joint venture company (JVC) of state government's MADC, which is executing the Mihan project and AAI. Both have contributed equity in the form of land and infrastructure. The two partners were supposed to sign a lease deed with their own JVC for letting out the land and other assets to it.
This means AAI which gave the airport building and other freehold land has to sign a lease deed with MIL for it use. Even the MADC which has mainly contributed freehold land has to also sign a similar document. The formality should have been completed in 2009 itself, but remained pending over the years say sources.
Now, the concession agreement to be signed with the prospective private player investing in the airport depends on the lease deeds between MADC-AAI and MIL. Hectic efforts are under way to get the deeds signed, said sources.
It is being hoped that both the deeds will be signed soon so that the MIL can go ahead with calling financial bids under request for proposal (RFP). MIL has taken up the matter with both AAI and MADC.
12/05/17 Shishir Arya/The Times Of India