Transfer of Dr. Ambedkar International Airport, Nagpur to the Joint Venture Company comprising AAI and Maharashtra Airport Development Company Ltd. For upgradation of the airport to a world class Multi Modal International Passenger and Cargo Hub
The Union
Cabinet today gave its ‘in-principle’ approval for transfer of Dr. Ambedkar International
Airport, Nagpur to the Joint Venture Company comprising AAI and Maharashtra Airport
Development Company Ltd. For upgradation of the airport to a world class Multi
Modal International Passenger and Cargo Hub (MIHAN). The Union Cabinet also gave its approval to
invest an amount of Rs. 4.90 crore by AAI in the equity of the Joint Venture Company.
Development
of Dr. Ambedkar International Airport, Nagpur to a World Class Multi Modal International
Passenger and Cargo Hub is expected to help in improving tourism and international
trade in the region as well as enable optimum utilization of the airport.
Development of MIHAN will also
fulfill the long cherished demand of the public of the Vidarbha region.
Background
Government of Maharashtra (GoM) had proposed to develop a world
class Multi Modal International Passenger and Cargo Hub airport at Nagpur (MIHAN)
integrated with the existing Nagpur airport. A high level Steering Committee was constituted for this project
wherein the Ministry of Civil Aviation (MoCA) and Airports Authority of India
(AAI) were also represented. The Maharashtra
State Road Development Corporation (MSRDC), the nodal agency for the project,
got a Techno-Economic Feasibility Study (TEFS) conducted for this project through
a consortium of Consultants led by M/s. L&T Ramboll Consulting Engineers Ltd.,
Chennai under the guidance of the Steering Committee.
Consultants were of the opinion that Nagpur has very
good potential for becoming an international hub airport.
Detailed study of traffic data and statistics carried
out for air traffic and road and railway etc. suggest that Nagpur could be developed
to handle passenger traffic of 18.9 m.p.a in 2035 as against 0.2 m.p.a in 2000.
Similarly, air cargo traffic forecasts suggest that as against 910 MTs
cargo traffic in 2000, the total cargo traffic in 2035could be of the order of
11,690,700 MTs.
Based on these
projections, the TEFS suggests a Master Plan for development of MIHAN at a total
capital cost of Rs. 2,581 crores till year 2035. As against the same corresponding revenue is
estimated to be Rs. 5,280 crores. Based
on these inputs, the project IRR for 30 years of operations has been determined
to be 14%.
The project
envisages expansion of the existing airport and development of new facilities
in and around the same for the multi-modal transfer of passengers and cargo.
Consultants have suggested formation of a special purpose vehicle with
the participation of State Government and other agencies for implementation of
this project.
Some of the other salient features
of the project as envisaged by the Consultants can be summarized as under:-
(i)
The airport will be backed up by many economic value addition
activities and all of them including the airport will be covered by a Special
Economic Zone spread over 2453 Ha of land.
(ii)
Some of the value addition activities include: Inland Container
Terminal, Truck Terminal, Financial Institutions within an international environment,
repackaging and similar activities, Convention and Exhibition Centres, etc.
(iii)
The total project cost is Rs. 2,581 crores over 30 years.
(iv)
The total investment required in various facilities in the
MIHAN Project are by other agencies is approximately Rs. 2,600 crores.
(v)
The Net Economic Value added to the region till 2035 would
be Rs. 522 billion apart from the creation of thousands of jobs.
(vi)
The Project is well viable with an IRR of 14.2% with the current
share of airport taxes.
Boeing Company
has announced its decision to establish a Maintenance, Repair and Overhaul (MRO)
facility for Boeing aircrafts at Nagpur airport with an initial investment of
about US$ 100 million for which the site has also been identified within the existing
airport.
International
airlines have been encouraged to operate from Nagpur and at present five international
flights per week are operating from this airport. Indian Air Force has 278 hectares of AAI’s
land in its possession, which they wish to shift to a new site conditional upon
the creation of infrastructure and a new runway. They have also requested for 400 hectares in lieu of 278 hectares
for their Gajraj project.
The Government
of Maharashtra has formed Maharashtra Airport Development Company (MADC) for implementing
MIHAN project as well as other airport projects in the State.
GoM has also requested MoCA to hand over Nagpur airport to MADC for the
development of MIHAN.
The request
of GoM to hand over Nagpur airport for development of MIHAN was examined.
It was observed that:
(i)
Nagpur is geographically centrally located and as such best
suited for development of hub airport. Its
location on the international flying routes is also conducive to such development.
(ii)
Vidarbha is a backward region. Government of India and GoM has been taking various steps for encouraging
industrial and infrastructural development in this region. Development of MIHAN at Nagpur is expected
to impart a greater thrust in achieving this socio-economic objective of the two
Governments.
(iii)
AAI has been maintaining and operating Nagpur airport. Despite various efforts to upgrade infrastructure
at the airport, it has not been possible to develop the same as a hub airport
on a stand alone basis. The proposal made
to develop the cargo hub alongwith the Special Economic Zone and other related
infrastructure may turn around this airport.
(iv)
Nagpur Airport is a consistently loss making airport. In 2003 it incurred a loss of Rs. 1524.00 lakhs,
in 2004-05 it incurred a loss of Rs. 2918.72 lakhs, in 2005-06, Rs. 2439.53
lakhs loss and 2006-07 the loss amounted to Rs. 1545.27 lakhs.
Since with comprehensive development, the composite project is likely to
generate an IRR of 14%. The proposal is
also economically justified.
Thus the Government has decided to transfer of Nagpur
Airport to the JVC comprising of MADC and AAI with equity participation of 51%
and 49% respectively. JVC will have subscribed
capital of Rs. 10 crores of which AAI’s subscription will be Rs. 4.90 crores.
A Memorandum of Understanding (MoU) has accordingly,
been signed on 18.12.2006 between MoCA/AAI and GoM/MADC. The MoU, inter-alia, proposes to transfer the
Nagpur airport along with all its lands and other assets to the JVC within a period
of 180 days. A Steering Committee has
also been constituted under the chairmanship of Chief Secretary, GoM with the
representation of Government of India, GoM, AAI and MADC.
The salient
features of the MoU are as under:
(i)
The airport will be transferred to JVC at an annual lease rent
of Rs. 1 for a period of 30 years. This
period can be extended on mutually agreed terms and conditions.
(ii)
All infrastructure facilities, present and future, related
to CNS/ATM operations shall remain with AAI, which will continue to provide these
services to the airport. Consequently,
all revenue from CNS/ATM, RNFC functions shall accrue to AAI.
(iii)
Security of the airport will be the responsibility of the Central
Government.
(iv)
All staff of the AAI working at Nagpur airport except CNS/ATM
staff will be transferred to the JVC and their salaries will be borne by the JVC.
The terms and conditions of their working with the JVC shall be same as
in the case of restructured Mumbai and Delhi airports.
These arrangements will continue for five years and at the end of this
period, the JVC shall absorb 100% of the staff.
(v)
The Chairman and Managing Director of the JVC shall be appointed
by the GoM and Vice Chairman and Joint Managing Director shall be appointed by
the AAI/Government of India. The equity
holders will have proportionate representation on the Board of Directors.
(vi)
Government of Maharashtra will waive stamp duty payable while
transferring the airport from AAI to JVC.
It is also contemplated that for implementation of MIHAN
project to world-class standards, the JVC may involve a strategic partner on BOT
basis. At the stage of handing over of
the project to the strategic partner, the investments made and the assets created
by AAI at Nagpur airport shall be duly accounted for.
The benefits of project development
of Dr. Ambedkar International Airport, Nagpur to a world class Multi Modal International
Passenger and Cargo Hub is expected to help in improving tourism and international
trade in the region as well as enable optimum utilization of the airport.
Development of MIHAN will also fulfill the long cherished demand of the
public of the Vidarbha region.
Following the receipt of the Government’s approval,
Dr. Ambedkar International Airport, Nagpur will be handed over to the Joint Venture
Company comprising of Airports Authority of India and Maharashtra Airport Development
Company Limited for upgradation of the airport to a world class Multi Modal International
Passenger and Cargo Hub.
****
RCJ/HS/LV
(Release ID :34702)