GVK Power & Infrastructure Ltd has won the Maharashtra State Cabinet approval for developing the INR 160 billion Navi Mumbai Airport project at Ulwe after having secured the mandate with the Project Monitoring Committee which approved its financial bid. With the Cabinet approval, the nodal agency for airport development, City & Industrial Development Corporation (CIDCO), will issue a letter of intent to GVK. GVK Power, which owns Mumbai International Airport Ltd (MIAL) together with the Airports Authority of India (AAI) and a GVK Industries Ltd-led consortium, won the contract in February 2017. The project will be built through public-private partnership (PPP) on a 'design, build, finance, operate, and transfer' (DBFOT) basis. GVK beat GMR Airports, which constructed the Delhi Airport, during bidding in February 2017 as MIAL offered a higher revenue share to CIDCO, the land-owner, for the project. GVK now has to secure the Government's approval, which is likely in early November 2017, following which CIDCO will issue the letter of intent allowing GVK to begin work on the project. As per the procedure, the Monitoring Committee will recommend the GVK bid to the Maharashtra government and the Cabinet will provide its stamp of final approval. The project has seen inordinate delays, first in the conception stage, when environmental roadblocks seemed to halt the project, and later at the bidding stage. Addressing GVK's Annual General Meeting in September 2017, GVK Chairman Reddy had said: “We are awaiting the LoI for quite some time. There has been quite some delay. However, we expect this to be issued by middle of October.” Meanwhile, pre-airport development works worth over INR 20 billion, including site levelling, removal of a major rock, reclamation of land, changing a water course, and rehabilitation of people living in three villages, have already been awarded. The rehabilitation of villagers is at an advanced stage and is expected to be completed once the monsoon season is over. Phase 1 of the project is expected to be ready by December 2019 (or within 36 months of the start of work). CIDCO will offer three plots of land in an auction in prime areas within a 15-km radius of the airport to hotel owners and developers in an effort to attract global hoteliers. Two of the plots are off an arterial highway that links to the Mumbai - Pune Expressway, while a third land parcel is in Belapur. The Maharashtra government sanctioned the project in 2007 but it got entangled in environmental concerns and land acquisition problems. CIDCO has now set a May 2020 deadline to get the airport ready. But experts believe that the project may face a few more hurdles. “The project is likely to see challenges in terms of funds. With the volatile nature of the aviation sector, a major surge in international crude prices could have an impact on the timeline. Since the project will be developed by MIAL, there would not be any need for a special-purpose vehicle. The project will also be relatively easier to develop as it is a greenfield airport. In the INR 160 billion PPP project, MIAL will have equity of 74% while the AAI and CIDCO will have 13% each. #1060.1

Not a member?
Take a look at our member benefits
Member benefits