Government approves handing over of Nagpur Airport to JVC for setting up Multi Modal International Passenger and Cargo Hub

The Government today approved the handing over of Dr. Babasaheb Ambedkar International Airport, Nagpur to a Joint Venture Company (JVC) comprising of Airports Authority of India (AAI) and Maharashtra Airport Development Company (MADC) Ltd., with 49% and 51% equity respectively, for upgradation of the Airport to a world class Multi Modal International Passenger and Cargo Hub in accordance with the MoU signed on 18th December 2006. AAI has been permitted to invest an amount of Rs. 4.90 crores in the equity of the JVC.
AAI will hand over all assets to MADC by 28 February, 2009.
Government of Maharashtra (GoM) had proposed to develop a world class Multi Modal International Passenger and Cargo Hub airport at Nagpur (MIHAN) integrated with the existing Nagpur airport. A high level Steering Committee was constituted for this project wherein the Ministry of Civil Aviation (MoCA) and Airports Authority of India (AAI) were also represented. The Maharashtra State Road Development Corporation (MSRDC), the nodal agency for the project, got a Techno-Economic Feasibility Study (TEFS) conducted for this project through a consortium of Consultants led by M/s. L&T Ramboll Consulting Engineers Ltd., Chennai under the guidance of the Steering Committee.
Consultants were of the opinion that Nagpur has very good potential for becoming an international hub airport.
Some of the other salient features of the project as envisaged by the Consultants are:-
(i) The airport will be backed up by many economic value addition activities and all of them including the airport will be covered by a Special Economic Zone spread over 2453 Ha of land.
(ii) Some of the value addition activities include: Inland Container Terminal, Truck Terminal, Financial Institutions within an international environment, repackaging and similar activities, Convention and Exhibition Centres, etc.
Boeing Company has announced its decision to establish a Maintenance, Repair and Overhaul (MRO) facility for Boeing aircrafts at Nagpur airport with an initial investment of about US$ 100 million for which the site has also been identified within the existing airport.
International airlines have been encouraged to operate from Nagpur and at present five international flights per week are operating from this airport. Indian Air Force has 278 hectares of AAI’s land in its possession, which they wish to shift to a new site conditional upon the creation of infrastructure and a new runway. They have also requested for 400 hectares in lieu of 278 hectares for their Gajraj project.
The Government of Maharashtra has formed Maharashtra Airport Development Company (MADC) for implementing MIHAN project as well as other airport projects in the State. GoM has also requested MoCA to hand over Nagpur airport to MADC for the development of MIHAN.
The request of GoM to hand over Nagpur airport for development of MIHAN was examined. It was observed that:
(i) Nagpur is geographically centrally located and as such best suited for development of hub airport. Its location on the international flying routes is also conducive to such development.
(ii) Major national highways are crossing Nagpur such as highways between Delhi and Chennai and between Mumbai and Kolkata. Main railway lines are also crossed at Nagpur and, therefore, it is ideal for setting up of an International Airport hub. Such a multi-modal hub will ensure transshipment of passengers and cargo between different modes of transport, i.e. rail to road, road to rail, surface to air etc. Its integration with international passengers and cargo air facilities would make it advantageous and cost effective for development of transport.
(iii) Vidarbha region is lacking industrial development. Government of India and GoM has been taking various steps for encouraging industrial and infrastructural development in this region. Development of MIHAN at Nagpur is expected to impart a greater thrust in achieving this socio-economic objective of the two Governments.
(iv)The proposed international hub to emerge as a leading international tourist gateway for India. Opening up of a number of tourism circuits, specially for adventure, wild life and Buddhist tour circuits.
(v) Nagpur is located between Dubai and Bangkok. A five-hour fly zone between which no airport hub is located. Internationally, there are clusters of hub airports within one or two hours of fly zone. Many smaller countries around India have successfully set up major hubs are drawing huge transit traffic.
(vi) Nagpur Airport is a consistently loss making airport. In 2003 it incurred a loss of Rs. 1524.00 lakhs, in 2004-05 it incurred a loss of Rs. 2918.72 lakhs, in 2005-06, Rs. 2439.53 lakhs loss and 2006-07 the loss amounted to Rs. 1545.27 lakhs. Since with comprehensive development, the composite project is likely to generate an IRR of 14%. The proposal is also economically justified.
The Government had earlier considered this matter on 17 January, 2008 and accorded “in principle approval” to the proposal with the directions that:
* The Indian Air Force (IAF) will continue to use its existing facilities in Nagpur till appropriate alternative arrangements are put in place and any transfer of IAF land to the JV will take place only with the concurrence of the Ministry of Defence.
* Authority of a Committee comprising of Cabinet Secretary, Finance Secretary, Secretary, Ministry of Civil Aviation and Chief Secretary, Government of Maharashtra will examine the financial structure of the proposed JV and related issues.
The Committee in its meeting of 11 March, 2008 decided that a revised Techno Economic Feasibility Study Report (TEFS) be prepared on updated projects expenditure and revenue since the earlier report had been prepared in 2001. As per the new TEFS, the domestic air traffic at Nagpur Airport will grow at a rate of 18% p.a. between 2008-10, at the rate of 15% till 2015 and gradually taker off to 3% by 2035-40. The International air traffic which is currently is negligible, it is expected to increase very rapidly while the growth of cargo movement is expected to be around 12.5% p.a. over the next 30 years. It has also been proposed that the project shall be developed in three phases: first phase from December, 2008 to December, 2011, second phase: April 2021 to April 2023, third phase to April 2033 to April, 2035. Other significant revisions are; advancing the time of construction of a new 4 kilometer long runway from 3rd phase to 1st phase: postponement of construction of new terminal building to 2nd and 3rd phase due to recent expansion and modification of the existing terminal by AAI. The project cost estimates have been revised by applying a graded rate of escalation of 5%. The total capital cost of the project over the project period is, now estimated to be Rs.3327.50 crores. This also includes the cost of land acquisition, re-habilitation and shifting of IAF assets.
12/02/09 Press Information Bureau

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