In February 2017, a decade since it received in-principle approval, the Navi Mumbai International Airport (NMIA) project was finally awarded to GVK-led Mumbai International Airport Limited (MIAL), the company which had the right of first refusal. The airport has for long been the biggest pipelined greenfield project in terms of investment, and is crucial to decongesting the Mumbai international airport, which has already exhausted its operational capacity. The government had approved the construction of the airport as early as 2007; however, the project ran into delays due to environmental concerns and land acquisition problems.
Bidding and award
City and Industrial Development Corporation [CIDCO] of Maharashtra Limited, the nodal agency for the project, invited global tenders for requests for qualification in February 2014 and subsequently received nine bids. Of these, four consortiums were shortlisted by CIDCO for bidding – MIAL, GMR Infrastructure, MIA Infrastructure (a joint venture of Vinci Concessions and Tata Realty & Infrastructure) and the Hiranandani Group. However, after multiple postponements in bidding deadlines, three companies – GMR Infrastructure, MIA Infrastructure and the Hiranandani Group – pulled out of the project in December 2016, and did not submit financial bids, leaving MIAL as the only qualified bidder for the project.
The three companies cited long unresolved issues such as incomplete resettlement of people from the area, a lack of pre-development work and issues with the bid document as reasons for opting out. In addition, the firms also argued that the stipulated 42-month time given to complete the project was too short, given the conditions. The project is yet to receive Stage 2 clearance from the Ministry of Environment, Forest and Climate Change.
Thereafter, CIDCO extended the deadline for submitting bids for the project twice, in an attempt to attract more firms, though MIAL remained the sole bidder in these rounds. Finally, in the third round, GMR Infrastructure put in a financial bid for the project; however, the company lost out to MIAL as the latter offered a higher revenue share of 12.6 per cent share of revenue while GMR offered 10.44 per cent.
MIAL will develop the Rs 160 billion NMIA project on a design-build-finance-operate-transfer basis, and will hold 74 per cent equity in the airport with the Airports Authority of India and CIDCO holding 13 per cent each. The Maharashtra government is yet to approve the deal.
Project details
In terms of infrastructure, the NMIA project has been planned as a state-of-the-art greenfield airport. It will be constructed in four phases. Post the completion of Phase I, the airport will have an annual capacity of 10 million passengers per annum (mppa) and a 25,000 metric tonne cargo facility. Phase II will take the capacity of the airport to 25 mppa and 50,000 metric tonnes of cargo facility. With the completion of Phase III, the passenger capacity will reach 45 mppa and the cargo facility 75,000 metric tonnes. In the final phase, the project will attain 60 mppa capacity and a cargo facility of 100 metric tonnes.
MIAL is expecting to achieve financial closure for Phase I of the project by end-2017. The construction work for the first phase is to begin soon and is scheduled to be completed by 2020. However, the scheduled completion is rather ambitious, given that the Stage 2 clearance from the environment ministry is still awaited. The clearance is necessary for the Ulwe hill blasting and cutting and the Ulwe river diversion, as the forest patch is part of the hill and the river flows across the hill on a stretch located in the core aeronautical area of the project.
Conclusion
Although the final decision regarding the award is yet to be taken by the state government, the selection of MIAL has set the ball rolling at a rapid pace. The NMIA will provide the much-needed relief to the overcongested Mumbai airport, where the congestion leads to delayed operations and low on-time performance of most carriers.
However, with the NMIA realistically expected to be operational only by 2022, Mumbai will still have to function on a single-airport model for the next five years. Currently, MIAL has embarked on a Rs 35 billion expansion plan to increase the existing terminal capacity at Mumbai airport from 40 mppa to 50-52 mppa. Nonetheless, the problem with runway capacity will remain. It is therefore crucial to ensure that the NMIA is not delayed further, so as to unclog the gateway to the country’s financial capital.
