Coming to Fruition: Greenfield airport development makes significant headway despite glitches

Greenfield airport development makes significant headway despite glitches

The central government has taken several initiatives towards greenfield airport infrastructure development. The past two to three years have seen big-ticket greenfield projects making significant headway. Besides, requisite measures to ensure speedy implementation of airport projects are being taken. Despite the tremendous progress seen in terms of development of such airports, a number of issues pertaining to complex administrative procedures and costly land acquisition still need to be addressed.

Indian Infrastructure provides an update on key upcoming and ongoing greenfield airport projects…

Navi Mumbai international airport

After a delay of almost 10 years, the Navi Mumbai international airport was finally awarded to GVK Power and Infrastructure Limited in October 2017. The project is proposed to be implemented in four phases at an estimated cost of Rs 167 billion with a passenger handling capacity of 60 million passengers per annum (mppa). In January 2018, Navi Mumbai International Airport

Private Limited (NMIAPL), the project’s special purpose vehicle (SPV) and the City and Industrial Development Corporation of Maharashtra (CIDCO) signed the concession agreement. The consortium of the GVK Group, the Bidvest

Group, ASCA Global and the Airports Authority of India (AAI) holds a 74 per cent stake in NMIAPL, while CIDCO holds the balance 26 per cent. The foundation stone for the project was laid in February 2018 and the project closed financially within six months of its award. In July 2018, NMIAPL secured a loan of Rs 103 billion from a consortium of banks with YES Bank as the lead manager. Under the project, two runways and a terminal building will be constructed on 2,268 hectares of land for which expressions of interest from contractors were invited in August 2018. Finally, L&T Construction won the engineering, procurement and construction (EPC) contract for the project in August 2019. The scope of work includes cut and fill works, terminal works including departure and arrival forecourts, airfield development works (a 3,700 metre south runway, apron systems, taxiway systems, airfield ground lighting and other facilities), landside facilities (roads, multilevel car parking), utilities and support facilities. The entire project is expected to be completed by 2030.

Jewar airport

After a delay of about a decade, the Jewar greenfield airport project in Greater Noida finally saw the light of day in May 2018, when the Ministry of Civil Aviation (MoCA) granted approval for the project. Thereafter, the Yamuna Expressway Industrial Development Authority (YEIDA) signed an MoU with the Uttar Pradesh government, the Noida Authority and the Greater Noida Industrial Development Authority (GNIDA) for setting up Noida International Airport Limited (NIAL), the joint venture for the project. It is the second airport to be developed in the National Capital Region and once operational will ease pressure off Delhi airport, which is on the verge of reaching saturation. The project is proposed to be developed on a public-private partnership (PPP) basis at an investment of around Rs 158 billion. Four runways are planned to be developed on 5,000 hectares of land under the project in a phased manner. The state government has allocated funds worth Rs 8 billion for the airport project under the 2019-20 state budget. In May 2019, NIAL issued bids for development of the project with a submission due date of October 30, 2019. Reportedly, 19 bidders have evinced interest in the project. Besides, the state cabinet approved the proposal for transfer of approximately 81 acres of land for the project in September 2019. Currently, the Uttar Pradesh government and YEIDA are in the process of acquiring land for the project. Construction work is expected to commence by January 2020 with completion expected by 2023. In May 2019, YEIDA also announced plans for developing an aerotropolis in the vicinity of the upcoming international airport at Jewar.

Mopa airport, Goa

The Goa government had been planning a second airport at Mopa for decades. Though the project received in-principle approval from the central government in March 2000, it was mired in land acquisition and local litigation issues. After a long delay, in October 2014, the state government invited bids for developing the airport on a PPP basis. Thereafter, in August 2016, GMR Airport Limited was selected as the concessionaire with a concession period of 40 years (extendable to 60 years). The SPV for the project, GMR Goa International Airport Limited will develop the airport in four phases with Phase I estimated to cost Rs 19 billion. However, the entire project is estimated to cost Rs 33 billion and will be funded entirely by the private developer. In July 2017, a rupee term loan agreement was signed between the concessionaire and Axis Bank. The phased development will involve continuous expansion of the terminal, commercial and cargo aprons, taxiways, and aviation facilities, along with the construction of a six-lane expressway linking the airport to National Highway-17. The airport will be able to handle 13.1 mppa upon completion of the fourth and final phase by 2045. In February 2018, GMR awarded the EPC contract to develop the project to a Philippines-based firm, Megawide Construction Company. However, project implementation hit a roadblock in March 2019, when the Supreme Court suspended the environmental clearance granted for the project. The expert appraisal committee has recommended grant of fresh environmental clearance for the project. Currently, the project has achieved physical progress of about 14.1 per cent. Due to the status quo order, the project is likely to miss the deadline and is expected to be completed in 2021.

Bhogapuram airport

In June 2015, the MoCA approved the development of the Bhogapuram greenfield international airport in Visakhapatnam. Andhra Pradesh Airports Development Corporation Limited (APADCL), the implementing agency, invited bids for project execution in June 2016. However, the state cabinet cancelled the tendering process in January 2018 and called for fresh tenders with new rules and regulations. Following this, APADCL issued fresh bids in June 2018 at a revised estimated investment of Rs 42.1 billion. Finally, GMR Infrastructure Limited was awarded the project contract and the foundation stone for the airport was laid in February 2019. The project is being implemented in two phases, with a total of 1,710 hectares of land being earmarked for the project. The construction work on Phase I of the project is expected to be completed by end 2020. Reportedly, the state government is likely to review the tendering process for the project, particularly the new clauses included in the latest tender. The proposed passenger terminal will have a capacity to handle 18 mppa.

Dholera airport

The Dholera international airport in Gujarat is another greenfield project that had been languishing since it received approval from the MoCA in January 2016. The project is being implemented in two phases by Dholera International Airport Company Limited (DIACL), an SPV formed by the Gujarat government, at an estimated investment of Rs 21.25 billion. All

requisite approvals for the project have now been obtained. In November 2018, AAI acquired a 51 per cent stake in the project, with the Gujarat government holding a 33 per cent stake and the National Industrial Corridor Development and Implementation Trust holding the remaining 16 per cent stake in DIACL. Finally, AAI signed an MoU with the Gujarat government in January 2019 for project development. About 1,426 hectares of land has been earmarked for the development of Phase I of the project. DIACL has decided to fast-track the project, as a result of which construction works are expected to start soon. The airport is expected to commence commercial operations by 2022 and will have an estimated capacity of 1.1-5.5 mppa. To speed up its implementation, the central government has given its consent to part-finance the project. Besides, DIACL has proposed the use of the mud and construction debris collected from the Pirana landfill to level the airport site. In this regard, the company has asked the Indian Institute of Technology Gandhinagar to present a feasibility report for the proposed plan.

Dagardarthi airport

The project is being implemented by APADCL, the SPV formed in 2015 by the Andhra Pradesh government, to undertake all activities related to the development and speedy implementation of the project. The project is being developed on 547 acres of land at an expected investment of Rs 3.68 billion. In September 2017, the state cabinet approved the award of the project contract to Nellore International Airport Private Limited, an SPV incorporated by a consortium of SCL Infratech Limited and TurboJet Partners, Inc. A concession agreement for the same was signed in June 2018. The Andhra Pradesh government laid the foundation stone for the airport in January 2019. Construction works are expected to commence soon and the project is expected to be completed by 2020.

New Pune (Purandar) international airport

The airport is proposed to be developed as a full-fledged international airport with Code-F standards over a period of 30 years. The project is being implemented by Maharashtra Airport Development Company [MADC] Limited at an estimated cost of Rs 120 billion. About 971 hectares of land has been earmarked for the development of two parallel runways under the project, which had received in-principle approval from AAI in September 2016. Further, MADC signed an MoU with Changi Airport International Limited in September 2017 to expedite investment proposals for the project. The Maharashtra government accorded administrative and financial approvals to the project in May 2018, following which the state cabinet approved the formation of an SPV in March 2019. CIDCO will hold a 51 per cent stake in the SPV, while MADC’s stake will be around 19 per cent. The remaining 30 per cent will be divided between the the Maharashtra Industrial Development Corporation and the Pune Metropolitan Region Development Authority. Currently, land acquisition for the project is facing serious opposition from locals. However, the project is expected to be completed by 2025-26.

Other key upcoming airports

The other key upcoming airports include New Rajkot airport, Kushinagar airport and Sriperumbudur airport. Rajkot airport is being implemented by AAI at an estimated investment of Rs 6.48 billion. The Gujarat government signed an MoU with AAI for the development of the project in January 2019. In March 2019, AAI awarded the contract to Reliance Infrastructure Limited for detailed designing and conducting EPC works for the project. The project is scheduled to be operational by 2022. Besides, AAI has signed an MoU with the Uttar Pradesh government to take over the development and operations of the upcoming Kushinagar airport. The entire project is scheduled to be completed in 2019. Meanwhile, bids have been received for the operation of flights to Lucknow and Gaya from Kushinagar under UDAN 3. With respect to Sriperumbudur airport, the government is yet to finalise the location of the project. Further, bids have been issued for the appointment of a consultant for a techno-economic feasibility survey, site selection and preparation of a project report. Besides these projects, a number of greenfield airport projects have been proposed in cities/districts including Hassan, Bijapur and Shimoga in Karnataka, Deogarh in Jharkhand, Dabra in Madhya Pradesh, Karaikal in Puducherry and Hollongi in Arunachal Pradesh.

Future outlook and the way forward

With the country’s growing middle-class base, the demand for air transport has been increasing at a rapid pace. However, air traffic is still concentrated in a few airports. In 2018, the top 15 airports contributed to around 83 per cent of country’s total throughput. To ease the increasing burden on the existing airports, the government needs to focus on upscaling capacity through the development of more greenfield airports. To achieve this, the processes related to obtaining approvals and clearances and acquiring land, that have slowed down project execution for greenfield airports, need to be fast-tracked. Financial incentives too, play an important role in ensuring greenfield project development. In the absence of adequate financial support and incentives from the government, private players may not be willing to invest since such projects often incur losses for a number of years before yielding any revenue streams for the developer. In a step towards addressing these issues, the government has come up with its Vision 2040, under which it has planned to set up new greenfield airports by 2040.