Patel moots 100% AAI arm to upgrade Kolkata airport

NEW DELHI: In A bid to untangle the political logjam over private sector participation in the modernisation of the Kolkata airport, civil aviation minister Praful Patel has mooted the idea of Airports Authority of India (AAI) setting up a fully-owned subsidiary to upgrade the airport.

The 100% subsidiary will be in the form of a special purpose vehicle (SPV), according to informal consultations in the civil aviation ministry to finalise a strategy for the modernisation of Kolkata and Chennai airports.

The move is expected to appease Left parties which have been opposing the involvement on private sector players in modernisation of the airport. At the same time, it will keep the door open for the flow of private sector investments into the airport at a later stage through the SPV.

If the idea finds approval at the highest level, it will be curtains for the proposal to develop a greenfield airport near Kolkata — a project in which many corporates were interested. Mr Patel’s view is that the Kolkata airport will be in a position to attract private investments at least at a later stage. This follows realisation within the government that the time is not ripe to overrule the Left’s objections to the adoption of the Delhi-Mumbai model to modernise the Kolkata airport.

Officials of AAI and Mr Patel have already met officials of the West Bengal government, sources in the civil aviation ministry said. A tentative expansion programme has been finalised at a cost of around Rs 300 crore and the final details would be worked out soon. The civil aviation minister has also consulted leaders of the Left parties to formulate a roadmap for the upgradation of the airport.

The final roadmap for Kolkata and Chennai is getting clearer now, sources said. While AAI will transfer all assets of the Kolkata airport to the proposed SPV and route all investments into the airport through this subsidiary, Mr Patel is working on the Delhi-Mumbai model for Chennai. The Tamil Nadu government has made it clear that it is in favour of the Delhi-Mumbai model where private sector players have been assigned the task of modernising and managing the two top airports of the country.

The strategy for Kolkata and Chennai would be finalised in the next couple of months so that work can begin by the end of ’06, sources said. Apart from opposition from Left parties to private sector participation in the development of the Kolkata airport, the government is also not rushing through now since the Supreme Court verdict in the Delhi-Mumbai case is awaited.

Selection of GMR and GVK as private sector partners for, respectively, the Delhi and Mumbai airports was challenged by the Anil Ambani Group first in the Delhi High Court and then in the Supreme Court. After the high court upheld the government’s decision, an appeal was made to the apex court and a verdict in the case is pending.