After a ten-year battle to ease the congestion of Mumbai Airport, the hotly-contested Navi Mumbai Airport construction is ready to commence with an ambitious delivery date that some say is unrealistic.
Hyderabad based conglomerate, GVK has won the bid to develop Mumbai’s second airport located at Navi Mumbai out bidding GMR Infrastructure, which operates New Delhi airport.
GVK currently operates Mumbai International Airport, and will be building the Navi Mumbai International Airport (NMIA), which was first proposed in 1997 and approved after ten years of stalling due to problems relating to land acquisition and securing environmental clearances.
Navi Mumbai is Asia’s largest public-private partnership airport project, expecting to cost around AUD 3.3 billion. This second airport has been given the ambitious target to be operational by December 2019. A GVK official, speaking on the condition of anonymity says, “While the winning bidder was announced in February we have yet not received the Letter of Acceptance. Work will commence immediately to meet the delivery date. GVK will sign the agreement with City and Industrial Development Corporation (CIDCO) to commence works”.
Critical of the ambitious timeframe for the design and construction of the project, Tata Realty-MIA Infrastructure and Zurich Airport-Hiranandani Group also participated in the bidding process, but later withdrew their participation from the project citing various reasons including an incomplete resettlement project of the families affected by land acquisitions to 42-months being an unrealistic time frame to deliver a project of this scale. The Navi Mumbai project, being a greenfield airport, comprises greater logistical challenges including acquisition and lack of real estate opportunities making it a more complex build than the Delhi and Mumbai airport builds.
To develop the Navi Mumbai airport, a special purpose vehicle (SPV) will be formed in which CIDCO will hold 26 percent equity while the remaining 74 percent equity will be owned by the developer.
GVK says it will seek funding for this project. GVK says it will pursue funds from equity markets in the form of stake sales and debt instruments. GVK had quoted the highest revenue share of 12.60 percent, whereas, GMR Infrastructure quoted 10.44 percent of revenue share starting from December 2019.
The ownership structure of the Navi Mumbai airport, means the Government will only have a 12.6 percent stake – a stark contrast to its 45.99 percent stake in the Delhi airport via a public private partnership (PPP) model. The Government has a 38.7 per cent stake in the Mumbai international airport.
In the interim, GVK is working on governance, policy and logistical issues of the project and says it is proud to be delivering a landmark project for the country.
“It is a matter of immense pride for MIAL and GVK to have won the bid for design, construction and operation of the greenfield Navi Mumbai International Airport project,” says Executive Chairman of Mumbai International Airport and MD of GVK Gunupati Reddy.
Once fully operational, the airport is expected to cater for 10 million passengers and gradually increase its handling capacity to 60 million passengers annually.
The new airport will substantially help ease congestion to Mumbai airport, which is already at peak capacity with 40 million passengers per year.