India issued new guidelines for the privatisation of its two biggest airports on Wednesday which ensured majority control for domestic firms and said it aimed to complete the process within 10 months.
Civil Aviation Minister Praful Patel told a news conference the foreign equity cap in the two companies that will operate the New Delhi and Mumbai airports had been cut to 49 percent from 74 percent announced earlier.
Private Indian companies, including local financial institutions, will hold another 25 percent while state-owned Airports Authority of India, the umbrella body which operates the country's 125 airports, will hold the rest.
The new guidelines follow the installation of a new coalition government last month supported by Leftist parties, which has announced it will not privatise profit-making state firms and will retain at least a 51 percent stake in core sector firms.
"The government has decided that a minimum of 51 percent (equity in the operating companies) must remain with Indian promoters," Patel said.
India has had notable success in privatising state firms in the past two years, including giant oil, telecom and car firms, that has helped cut its fiscal deficit and boosted competition.
It threw open several state-dominated infrastructure industries to private companies over the last decade in a bid to supplement government investment and improve the quality of service in one of the world's fastest growing economies.
In September 2003, the previous government approved a plan to privatise the airports at New Delhi and Mumbai in a bid to upgrade them to world standards.
The two international airports, even though shabby by world standards, are the country's busiest and the most profitable with traffic growing at 5.0-5.5 percent annually.
The plan involved the setting up of two joint venture companies in which a private company or consortium would hold 74 percent while state-owned Airports Authority of India and other state-owned companies the rest.
Several global firms, including Singapore's Changi Airport and the Frankfurt Airport, have expressed interest in the privatisation.
The modernisation of the two airports, including the building of a new international terminal at New Delhi and a domestic terminal at Mumbai, is estimated to cost more than 35 billion rupees ($771 million).
Patel said the last date for submitting preliminary bids to pick up a stake in the two companies had also been extended to July 20 from June 4 and the government would work to complete the picking of winners before the end of March 2005.
The government will also ensure that workers are not retrenched and surplus staff absorbed by AAI.
Patel said the government could also take a "fresh look" at a multi-billion dollar plan by two Indian state-owned carriers to buy planes from Europe's Airbus SAS and rival Boeing Co which has been delayed.
"The global scenario has change, the prices have changed," Patel said.
In March 2002, the board of the mostly domestic Indian Airlines Ltd approved a plan to buy 43 planes from Airbus, but has been not been able to place orders for them because the purchase has still not received government approval.
International flag carrier Air-India Ltd too approved a plan in November 2003 to buy 10 Airbus A340s and 18 Boeing 737-800 jets. The two purchase plans together are estimated to cost over $4.0 billion.
Patel said the government would aim to approve the fleet acquisition plan of the two airlines before the end of 2004.
US plane maker Boeing Co on Tuesday had repeated its offer to shave 7.0 billion rupees from its initial offer price made to Indian Airlines in December 2001 in a bid to win the deal.
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