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Mumbai airport PPP model favoured private operator: CAG

18 July 2014

The public-private partnership (PPP) model for the Mumbai airport was heavily loaded in favour of the private airport operator and the aviation ministry failed to properly transfer risks to the private party as the project cost doubled and instead left it to be filled up through development levy on passengers, the Comptroller and Auditor General of India (CAG) stated in its report.

Also, the CAG said, instead of penalising the operator of the Mumbai International Airport Limited (MIAL) for the four-year delay in implementation, the civil aviation ministry granted extension to the project.

"Examination in the audit indicated that risks had not been appropriately transferred to the concessionaire in the development of the Chhatrapati Shivaji International Airport, Mumbai," a report of the Comptroller and Auditor General, tabled in Parliament, said.

It said the project cost "more than doubled from Rs5,826 crore to Rs12,380 crore" but was restricted to Rs11,647.46 crore till March this year by the Airports Economic Regulatory Authority (AERA).

Though the project cost had doubled, "the concessionaire did not appear to have faced financial vulnerability for the same, as the funding gap was being largely absorbed by the passengers through levy of development fee (DF), though such levy was not in the Operation, Management, Development Agreement (OMDA)," it said.

"No efforts were made to secure sources of financing for the project," it said.

Mumbai's Chhatrapati Shivaji International Airport (CSIA), which is the second-busiest airport in the country after Delhi's Indira Gandhi International Airport, handled a total 32.22 million passengers in the year that is 2.02 million more than that in the previous year, according to data from the ministry of civil aviation.

CSIA has recorded a 6.6-per cent growth in passenger traffic in fiscal 2013-14, reversing the slight dip in the previous year.

Data show that the increase in the number of passengers was complimented by more aircraft flying through Mumbai and that there was also a little increase in the volume of cargo handled at the airport.

Aviation experts explain that the growth reflects an improvement in the economy in the country and a change globally, besides better operations from superior infrastructure at the new terminal.

The new state-of-the art Terminal 2, which was opened in February, has the capacity to handle 40 million passengers annually and about 95 arrivals and a similar number of departures daily.

In 2012-13, 30.20 million passengers travelled through Mumbai, a little lower than the 30.75 in 2011-12.

Air traffic has registered a similar increase from 2,44,499 flights in 2012-13 to 2,60,666 flights in 2013-14. There were 2,51,512 flights in 2011-12.

The volume of cargo handled, specially to international destinations, has also increased. A total 6,48,744 metric tonnes (MT) was channelled through CSIA in 2013-14, up from 6,35,205 MT in the previous year. The figure in 2011-12 was 6,57,470 MT.

Airport officials expect these numbers to grow further after the positive signals from a new stable government that should see an improvement in the economy. A part of the airport development work is also scheduled to be completed shortly.

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