New Delhi: The civil aviation ministry on Tuesday proposed a new revenue model for awarding greenfield airport projects to builders that is simpler and is less prone to disputes about gold plating of expenses.
According to the proposed model concession agreement which will be fine-tuned in light of feedback from the industry, airport developers will compete to win contracts based on revenue per passenger to be shared with the authority that gives the contract, rather than profits from the venture, which raises questions about the expenditure incurred.
Profit sharing contracts are prone to disputes over costs and are no longer favoured in India. Already, the government has moved to auctions involving revenue sharing in sectors like oil and gas, replacing profit sharing contracts.
An official statement from the ministry said that reduction in controversies and litigation is likely to attract more investors and funding institutions into proposed greenfield projects in places such as Jewar, Bhogapuram and Pune. The exact number of greenfield airport projects that are envisaged is not immediately available but civil aviation minister Suresh Prabhu, who briefed reporters about the new model concession agreement said that it will soon be announced. “ A perspective plan about how many greenfield airports India will need to build over the next five years, will soon be brought out,” said Prabhu.
Ministers of state for civil aviation Jayant Sinha described the new revenue model as revolutionary as it will facilitate the goal of stepping up airport infrastructure to meet the goal of making air travel more accessible and affordable to people. India wants to achieve the target of one billion passengers a year in 15-20 years, nearly four times the 265 million recorded in 2016-17.