Nagpur: The union ministry of civil aviation has asked Mihan India Ltd (MIL) whether it is justified to lease out Nagpur airport to a private player as it would only reduce government’s income from current level. MIL is a joint venture between the state government’s Maharashtra Airport Development Company (MADC) and Airports Authority of India, a Central government body.
MIL is yet to send its reply to the query but it is learnt the agency will be contending that a private player will be needed to pump in required investment for developing the airport infrastructure as envisaged.
GMR Airports Ltd emerged as highest bidder for taking over Nagpur airport over a year ago. The private companies were supposed to bid on the basis of revenue share to be offered to MIL. Initially GMR had offered to pay 5.73% of the revenue generated from airport operations and was the highest bidder too. In March this year, the offer was hiked to 14.49% after which the MIL board approved the bid.
The final takeover will be subject to scrutiny by the project management implementation committee (PMIC) and Union cabinet. PMIC includes representatives of the union civil aviation ministry also. In a meeting held on August 30, the secretary civil aviation sought an explanation on financial justification behind privatization of Nagpur airport.
The secretary contended airport was being operated by the government undertaking and has earned a profit of Rs49 crore in 2019. It will continue to earn more profits as traffic is estimated to grow at 20% annually. At current level, revenue share offered by the private party will amount to Rs15 crore. “As the airport is already earning Rs49 crore, how is it justified to lease it out to a private party that will pay only Rs15 crore,” he has asked.
04/12/19 Shishir Arya/Times of India
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MIL is yet to send its reply to the query but it is learnt the agency will be contending that a private player will be needed to pump in required investment for developing the airport infrastructure as envisaged.
GMR Airports Ltd emerged as highest bidder for taking over Nagpur airport over a year ago. The private companies were supposed to bid on the basis of revenue share to be offered to MIL. Initially GMR had offered to pay 5.73% of the revenue generated from airport operations and was the highest bidder too. In March this year, the offer was hiked to 14.49% after which the MIL board approved the bid.
The final takeover will be subject to scrutiny by the project management implementation committee (PMIC) and Union cabinet. PMIC includes representatives of the union civil aviation ministry also. In a meeting held on August 30, the secretary civil aviation sought an explanation on financial justification behind privatization of Nagpur airport.
The secretary contended airport was being operated by the government undertaking and has earned a profit of Rs49 crore in 2019. It will continue to earn more profits as traffic is estimated to grow at 20% annually. At current level, revenue share offered by the private party will amount to Rs15 crore. “As the airport is already earning Rs49 crore, how is it justified to lease it out to a private party that will pay only Rs15 crore,” he has asked.
04/12/19 Shishir Arya/Times of India
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