SA in massive Indian airport deal

14 February 2006

A South African consortium has struck a US$1.5-billion (R9.25-billion) deal to modernise India’s Mumbai airport.

The consortium, made up of Airports Company South Africa (Acsa), Bidvest Group Limited and Indian infrastructure company GVK, beat nine other bidders to win the tender.

Known as GVK-SA, the consortium will modernise, operate, develop and manage the airport for a concession period of 30 years, with the option of a further 30 years.

During that time the Indian government will retain a 26% shareholding in the venture, with GVK holding 37% and Acsa 10%.

South African Transport Minister Jeff Radebe welcomed the deal, saying it was “just the beginning” of Acsa’s global expansion. He said upgrading airports and other transport infrastructure to be efficient and well-managed was crucial for development.

“This deal is not only important because of the money involved, but also because transport is important for the realisation of the Nepad [New Partnership for Africa’s Development] goals and objectives,” Radebe said.

“As government we want to encourage Acsa to embark on more projects such as this, both in Africa and abroad.”

Airport know-how
Monhla Hlahla, managing director of Acsa, said the company would provide the project with know-how on policies and procedures, IT solutions, quality and environmental management, maintenance and engineering, safety, service standards, capacity planning and master plans, project management, route and traffic development, ands stakeholder management.

Acsa will also provide technical exchange programmes as part of its skills transfer initiatives within various functional areas.

“However, I must hasten to mention that the learning experience will be a two-way process for Acsa and the Mumbai International Airport employees,” Hlahla said.

“Through these initiatives the company will gain invaluable experience from exposure to the Indian environment. This transaction will enrich all employees and partners involved.”

The deal will also create jobs within Acsa, as seasoned professionals are to be regularly posted to Mumbai.

She added that Acsa could also earn money for the Indian government through other commercial activities, as the company was positioned to “realise an all-encompassing commercial transformation for Mumbai International Airport”.

The “remarkable” growth of commercial revenue has contributed significantly to Acsa’s financial success over the years.

It has grown by 364% in the last eight years at a rate nearly three times that of the company’s air-transport revenues, Hlahla said.

She explained that GVK had been chosen as a partner because of the company’s commitment to the deal and experience of various infrastructure projects in India, such as in the power sector, toll-roads and urban infrastructure.

GVK has also had successful partnerships with credible international partners such as the World Bank’s International Finance Corporation, its ability to raise debt finance in the Indian market, its approach of an equal partnership with the South African consortium and its shared values of corporate governance.

Source: BuaNews