Context: The Centre government has initiated the consultation process for leasing out (privatisation of) more than 10 airports under the public-private partnership (PPP) model.
Relevance of the Topic: Prelims: Key facts about National Monetisation Pipeline.
Airport Privatisation
- The Cabinet will decide which airports will be leased out and if any new terms and conditions should be added in the concession agreement for the upcoming round.
- The initiative falls under the National Monetisation Pipeline (NMP).
- Under the NMP, 25 airports belonging to the Airports Authority of India (AAI) were earmarked for leasing out between 2022 and 2025.
- These included airports in Bhubaneswar, Varanasi, Amritsar, Tiruchi, Indore, Raipur, Kozhikode, Coimbatore, Nagpur, Patna, Madurai, Surat, Ranchi, Jodhpur, Chennai, Vijayawada, Vadodara, Bhopal, Tirupati, Hubli, Imphal, Agartala, Udaipur, Dehradun and Rajahmundry.
- The government is planning to lease out the airports to improve their management by utilising private sector efficiency and investment.
- It is being planned to bundle profitable and non-profitable airports for the bidding process to attract a variety of bidders.
Note:
- Since 2014, Airports Authority of India (AAI) has leased out six of its airports for better operations, management, and development under the PPP model.
- These airports have been leased out for 50 years, with AAl remaining the owner of the airport land throughout the lease period. The land and other assets would revert to AAl on expiry of the lease period.
National Monetisation Pipeline (NMP)
- Aim of NMP: Envisages an aggregate monetisation potential of Rs 6 lakh crore through the leasing of core assets of the Central government. NMP does not include monetisation of non-core assets (such as land, buildings etc).
- Core Assets: Roads, railways, power, oil and gas pipelines, telecom, civil aviation, shipping ports and waterways, mining, warehouses, stadiums and sports complexes.
- Sector accounting for highest share: Roads (27%), Railways (25%), Power, Oil & Gas Pipelines and Telecom. Roads and Railways together account for 52% of the share.
- Duration: Four-year period (FY 2022 to FY 2025)
Imperatives for Core Asset Monetisation
- Monetisation of 'Rights' not 'Ownership': Assets will be handed back to the government at the end of transaction life.
- Selection of de-risked and brownfield assets with stable revenue streams.
- Structured partnerships under defined contractual frameworks with strict key performance indicators (KPIs) & performance standards.