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GVK wins rights to build Navi Mumbai airport

Livemint:  February 14, 2017

Bengaluru: GVK Power & Infrastructure Ltd, which runs the Mumbai and Bengaluru airports, has won the right to build Mumbai’s second airport in Navi Mumbai, beating arch rival GMR Infrastructure Ltd.

GVK, through Mumbai International Airport Ltd, which runs the Mumbai airport, offered to share 12.60% of the revenue of the new airport with City and Industrial Development Corp. of Maharashtra (CIDCO).

That was higher than the 10.44% offered by GMR Infrastructure, which runs the Delhi and Hyderabad airports.

GVK and GMR were the only bidders in the race for the right to build the Rs16,000 crore Navi Mumbai airport project that will reduce the burden on Mumbai’s congested airport.

Tata Realty and Infrastructure Ltd and Hiranandani Developers Pvt. Ltd had satisfied the technical criteria required to submit a financial bid, but did not do so.

State-owned CIDCO, which is bidding out the project, had to defer the process twice after the project attracted only one bidder—GVK.

ALSO READ | GVK sole bidder for Navi Mumbai airport

“We remain committed towards creating, designing and managing yet another state-of-the-art airport, and deliver a world class gateway from Navi Mumbai to the world. We look forward to working with the State government, CIDCO and all other stakeholders for the successful implementation of this exciting and challenging project.” said G.V.K. Reddy, chairman and managing director of GVK.

CIDCO expects the first phase of the airport to be operational by 2019; this will handle 10 million passengers annually.

The airport will handle 60 million passengers a year by 2030, when it will reach full capacity.

Analysts say the 2019 deadline is a fanciful one; it will take at least four-five years for the first flight to land in (or take off from) the new airport, they said.

ALSO READ | Navi Mumbai airport to be ready by 2019: Devendra Fadnavis

Navi Mumbai is Asia’s largest public-private partnership airport project. The new airport, first proposed in 1997 and approved by the government in 2007, has been delayed by problems related to land acquisition and securing environmental clearances.

CIDCO itself, in recent weeks, relaxed several of the original conditions it had attached to the project.

“In the past six weeks CIDCO had relaxed several execution challenges because of which people were not applying earlier,” said an analyst who asked not to be identified. Had CIDCO done this earlier, it may have attracted even more bidders, added this person.

The project requires around 2,268 hectares, out of which 1,160 hectares will be utilized for aeronautical purposes.

Mumbai’s existing airport is crowded, in terms of both passengers and planes. Many airlines are finding it difficult to get slots at the airport.

Domestic air traffic is growing at over 20% annually and touched 100 million passengers in 2016. The Mumbai airport handles about 40 million passengers annually.

The analyst cited above described GVK’s win as a “windfall” for the company.

“It’s just like building a new terminal for it; not a new airport. It will significantly improve its portfolio,” the analyst added.

GVK shares nearly 38% of revenue from the primary airport with the government.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.