Thursday, March 08, 2018

Airports Authority bidding for PPP projects makes no sense: Vinayak Chatterjee, Feedback Infra

Talking to ET Now, Vinayak Chatterjee, Chairman, Feedback Infra, questions whether the Airport Authority is a facilitator of PPP or a participant bidding for airports?

Edited excerpts:

The aviation sector in India is growing at a very impressive and a solid run rate of 20% plus which means in every two and a half or three years or less than three years, the sector is actually doubling but the challenge could be the underlying infrastructure management, availability of land and also availability of capital. We always tend to talk about road building and construction but we never focus on the airport infra?

Yes, you have zeroed on the A category item for discussion. Much of the concern in the aviation sector is about airport infrastructure. Now that the government’s Udan Policy of getting people wearing hawai chappals (slippers) to fly in hawai jahaj (aero-planes) has gained traction, I have to complement the civil aviation ministry for giving this push for regional connectivity.

It adds further pressure any way to the normal growth of 20 to 23% and the very stressed airport infrastructure. Today the major hubs are Bombay and Delhi. Certain other tier one cities are crying out for attention. If I give you the macro picture, first there is a report by the centre for Asia Pacific Aviation (CAPA) who are one of the thought leaders in the sector and they say that in the next seven years, India requires $40 billion of investment to create fresh airport capacity. The visible pipeline now is a little short of $5 billion. We are way behind in terms of both strategic plans as well as the capex to reach that $40 billion. So, it is a very serious issue.

I would just want to add another point. It appears from this year’s budget speech and last year’s budget that the government very clearly wants to follow an off-budget method financing through asset recycling which means you sell government-owned operating Brownfield assets and get capitalfrom such operating utilities which government need not operate like airport authority. They own the assets, they can sell it and they can recycle the capital back into fresh capacity.
So, the two issues facing the airport authority right now is what is the stand on an asset recycling strategy? Do we have a roadmap for an asset recycling strategy like Mr Gadkari is doing on toll operator transfer for roads? The first bids have come in happily beyond the expectation of NHAI at some Rs 9000 crore from Macquarie. Does airport authority have any asset recycling strategy and secondly this business of PPP in existing airports. Look at Jaipur, Lucknow, Ahmedabad, Kolkata, Chennai. Can we have a definitive situation as to what exactly the airport authority wants to do on this? Many PPP documents have been floated and revised and bids have been called and cancelled. There is a certain feeling in Indian industry about the investors that airport authority is not clear in its own mind how it wishes to proceed on PPP of existing and future airports.
The last point is that in some of the recent bids on airport privatisation, we are a little surprised to see airport authority itself is bidding. If I am not mistaken, it bid for a new airport which is today on the backburner but it did bid for a new airport in Andhra. It also put in a bid for a new airport at Goa, So, is the Airport Authority an authority that facilitates PPP or is it itself a participant bidding for airports? There is a fair amount of lack of clarity and confusion in these areas.
08/03/18 ET Now/Economic Times