Nagpur: Mihan India Limited (MIL), state government agency operating Nagpur airport, has appointed financial consultancy — Deloitte India — as the new transaction advisor for privatization process.
Earlier, Ernst and Young was given the assignment.
However, the entire process under which GMR Airports had emerged as the highest bidder was cancelled last year.Now under Deloitte, the privatization process will start all over again, said a source in the MIL.
This development was also confirmed by airport director Abid Ruhi.Deloitte will be paid around Rs75 lakh for providing the roadmap towards privatization of the airport.
Ernst and Young, which had the similar assignment, was paid a slightly higher amount, a source said.
Four other consultancies had bid for the assignment.
A decision to appoint Deloitte was taken two days ago, said a senior officer in the MIL here.Deloitte has been lately appointed consultant for privatization of six airports under Airports Authority of India (AAI).
Under the earlier model, MIL was supposed to get revenue share from the gross earnings of the private player.
Now, there is a broad plan to have revenue-sharing model on per passenger basis, said a source.MIL is a joint venture of Maharashtra Airport Development Company (MADC) and AAI.
As a part of the plan to develop Nagpur airport under the Mihan project, MIL had invited bids for offloading 74% stake.
In turn, the private player is supposed to invest in the airport for creating infrastructure.Now, the whole process would start afresh and Deloitte would be suggesting the modalities of privatization of the airport, based on which fresh tenders will be called.
The preliminary report by the consultant is expected to be submitted within 45-50 days.GMR Airport’s tender was cancelled last year because the percentage share of the revenues it offered to MIL was less than what the latter earned on its own.
GMR had offered to share over 14% of its revenue with MIL.
This, in absolute terms, was much less than what MIL earned on its own from the airport operations.At present, Covid has taken a major toll on the airport’s earnings.
The passenger traffic has come down to 2,000 a day, which is 25% of the pre-Covid levels.
Even as the traffic had improved after the first wave, there was a sharp decline in the second wave, said sources.In a nutshellEarlier Ernst and Young was the consultantGMR Airports had emerged as the highest bidderThe tender was cancelled, GMR offer on revenue share was less than what MIL earns nowDeloitte to will suggest a fresh roadmapCovid has brought down passenger traffic to 20%