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The final transaction documents for the modernization and restructuring of Delhi and Mumbai Airports were released to the Pre Qualified Bidders (PQBs) today The bidders have to give their technical and financial bids within two weeks with effect from 31.08.05
. The Transaction Documents have been finalized after several rounds of inter-Ministerial consultations. The documents were drafted in consultations with the intermediaries to the transaction namely, the Financial Consultations (ABN Amro); the Legal Consultations (AMSS); Global Technical consultants (Air Plan, Australia) and Accounting and Tax Consultations (TVA). Inputs from the PQBs were also invited in the draft transaction documents. The bidders were also given opportunity to put their views to the Government transaction team in the pre-bid conference.
The Transaction Documents consist of
· Operation Management and Development Agreement (OMDA)
· Lease Deed
· Shareholders Agreement (SHA)
· State Support Agreement (SSA)
· State Government Support Agreement (SGSA)
· Substitution Agreement (SA)
The OMDA is the mother document under which the AAI, in the interest of the better management of the Airport and the overall public interest, grants the right to undertake the functions of operating, maintaining developing, designing, constructing, upgrading, modernizing, financing and managing the Airport to the JVC. The OMDA is for an initial term of 30 years, and subject to certain conditions being fulfilled, is extendable by an additional period of 30 years. Airport development under the OMDA is governed by the Master Plan of the Airport – evolved by the JVC with inputs from the Ministry of Civil Aviation. The OMDA also contains the list of mandatory capital projects that the JVC has to undertake by 31 March 2010.
The OMDA contains a list of aeronautical and permitted non-aeronautical activities that the JVC shall undertake, and a list of ‘Reserved Activities’ (being governmental sovereign functions like customs, immigration etc.) that the JVC may not undertake. Standalone commercial activities also are not permitted. Non-aero activities are to be restricted to 5% of the total land in Delhi and 10% of total land in Mumbai provided that the activities are primarily meant for passengers or air transport industry.
The documents provides for a three month (extendable to 6) transition period during which Airport management will be transferred from AI to JVC during which the AAI will ‘hand – hold’ the JVC. The current employees of the AAI posted at the Airport would be retained thereon for a minimum period of three years as AAI employees during which period or at the expiry of which, the JVC shall make offers of employment to the employees on terms which are no less beneficial than the current arrangement. The employees shall have the option to accept the JVC offer.
The OMDA prescribes objective and subjective service quality standards and requirements that the JVC is required to achieve and maintain at the Airports, the timing for achieving this aim and liquidated damages for non-achievement.
The JVC is required to charge for aeronautical services at rates as specified by the GOI for first 3 years and thereafter determined by AERA / GoI as the case may be under the State Support Agreement. Non-Aeronautical Services shall be provided at rates fixed by the JVC in a competitive manner Essential services shall be provided free of charge.
Upon the expiry and termination of the OMDA the AAI shall take over all the access required for operating the Airport and shall have the option to take over all or any of the commercial, ancillary assets.
According to the Lease Deed the land shall be leased for a period of 30 years from the Effective Date and shall in the event the JVC renews the term of the OMDA, be renewed for an additional period of 30 years. The Lease is co-terminus with the OMDA. According to the shareholders agreement the AAI and government of India PSUs will hold 26% of the total share and the private participants will hold 74%. Foreign shareholding is restricted to 49%. Scheduled airlines equity cap is restricted at 10% of aggregate shareholding of all scheduled airlines. While foreign airlines cannot have any share holding. The JVC is to have an authorized share capital of Rs. 250 crores with an initial subscription of Rs. 200 crores.
The Government of India has agreed to use reasonable efforts to have the Airport Economic Regulatory Authority (AERA) established and operating within two years from the effective date. Till such time as the AERA commences regulating aeronautical charges, the same shall be approved by the Government of India in accordance with the broad principles set out in the Agreement.
With regard to a second Airport within a150 Km. radius of the Airports given to the JVC by following a competitive bidding process, in which the JVC can also participate if it wishes to exercise its ROFR. In the event, the JVC is not the successful bidder but its bid is within the range of ± 10% of the most competitive bid received, the JVC will have the ROFR by matching the first ranked bid in terms of the selection criteria for the second airport, provided the JVC has satisfactory performance without any material default under any project agreement at the time of exercising the ROFR.
The JVC is to submit first Master Plan before the expiry of six (6) months from the date of execution of the OMDA and thereafter update and resubmit the same periodically, every 10 years. Master Plan subject to ‘Review Process’ as compared to ‘Approval Process’.
The Government of India has agreed to furnish a guarantee in respect of the obligations of AAI to make payments to the JVC in respect of purchase of Transfer Assets and Non-Transfer Assets by AAI upon termination or expiry of the OMDA as set out therein.
The JVC will have to acknowledge that it shall be its sole responsibility and obligation to obtain all clearances which are required by the applicable laws. The Government of India intends to give the undertaking that it will establish single window clearance mechanism for providing assistance on a best endeavour basis to the JVC. There will be joint coordination committees to ensure smooth and efficient rendering of Government of India services. The over all liabilities of Government of India in respect of claims has been kept at Rs. 50 crores. The principles of tariff fixation have been enclosed in a schedule to the agreement.
The State Govt. Support Agreement (SGSA) will be between the respective State Governments e.g. Government of Maharashtra and Govt. of NCT of Delhi and the JVC. The State Governments intend to give undertaking that they shall make best efforts in providing support to the company and AAI on matters relating to encroachments, additional land for airport development, surface excess to airport, provision of utilities, safety and security requirement at airport etc.
MC/GK
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