Deloitte new consultant for the privatization of airports | Nagpur News
Nagpur: Mihan India Limited (MIL), the state government agency operating Nagpur Airport, has appointed a financial advisory firm – Deloitte India – as the new transaction advisor for the privatization process.
Previously, Ernst and Young had been given the assignment. However, the whole process by which GMR Airports had emerged as the highest bidder was canceled last year.
Now under Deloitte, the privatization process will start again, a source told MIL. This development was also confirmed by the director of Abid Ruhi airport.
Deloitte will be paid around Rs75 lakh to provide the roadmap towards the privatization of the airport. Ernst and Young, who had the same assignment, received a slightly higher amount, a source said. Four other consultancies had tendered for the assignment. A decision to appoint Deloitte was made two days ago, a senior MIL officer said here.
Deloitte was recently appointed consultant for the privatization of six airports under the Airports Authority of India (AAI). In the previous model, the MIL was supposed to get a revenue share from the gross income of the private actor. Now there is a broad plan to have a revenue sharing model per passenger, a source said.
MIL is a joint venture of Maharashtra Airport Development Company (MADC) and AAI. As part of the Nagpur airport development plan under the Mihan project, MIL had launched a tender for the unloading of 74% of its stake. In turn, the private actor is supposed to invest in the airport to create infrastructure.
Now the whole process would start over and Deloitte would suggest the terms of privatization of the airport, on the basis of which new tenders would be launched. The consultant’s preliminary report should be submitted within 45 to 50 days.
GMR Airport’s tender was canceled last year because the percentage share of revenue it offered to MIL was less than what MIL was earning on its own. GMR had offered to share more than 14% of its revenue with MIL. This, in absolute terms, was far less than what MIL alone earned from airport operations.
Currently, Covid has taken a heavy toll on airport revenue. Passenger traffic has fallen to 2,000 per day, 25% of pre-Covid levels. Although traffic improved after the first wave, there was a sharp drop in the second wave, sources said.
In a word
Previously, Ernst and Young was the consultant
GMR Airports established itself as the highest bidder
Bidding canceled, GMR’s bid on revenue share was less than what MIL is currently earning
Deloitte will propose a new roadmap
The Covid has reduced passenger traffic to 20%