Monday, March 31, 2014

Oil PSUs write to government to have joint venture for ATF refuelling facilities in soon to be privatised airports

IN A bid to check falling revenues of the airports, the government has already decided to privatise six airports and fearing that new operators will take over their ATF refuelling facilities, PSU oil majors have asked the government to follow joint operational model in these airports too like the model so far being followed in already privatized...
Delhi and Mumbai airports. Government has already privatized Delhi and Mumbai airports and the next in queue are Chennai, Kolkata, Guwahati, Ahmadabad, Jaipur and Lucknow.
Bids were already invited in September 2013. However, due to Lok Sabha elections, the proposed concession agreements for transfer of rights could not be signed so far.
Oil PSUs have been the owners and operators of aviation fuel facilities of these airports. They have built and upgraded ATF infrastructure at these airports, as well as back-end supply chain, to support jet fuel throughput of about one million kilolitres per annum.
Agency report says these PSUs are apprehensive about an imminent threat that new private operators would take over the existing fuel facilities built with public money over the years.
These fear that driven by profit motive, private operators may float tenders for building/operating new facilities, which could lead to assets built by PSUs redundant. Such a move will also add on to the cost of throughput charges resulting in an increase in fuel cost to airlines and ultimately to consumers.
The agency report says oil PSUs have written to the government saying subsequent to the privatisation of Delhi and Mumbai airports, new airport operators DIAL and MIAL had planned to call for tender for fuel farm facilities.
When Delhi and Mumbai airports were privatized following protest from oil PSUs, joint venture companies for fuel farm facilities were formed. This led to the formation of Delhi Aviation Fuel Facilities Pvt Ltd, where Indian Oil Corp (IOC) and Bharat Petroleum Corp Limited (BPCL) holding 37 percent each and DIAL 26 percent, was formed.
Mumbai Aviation Fuel Farm Facilities Ltd, a joint venture company of IOC, BPCL and Hindustan Petroleum Corp and MAIL with 25 per cent stake, each was formed for Mumbai Airport.
Delhi Aviation Fuel Facilities is being operated on 'Open Access' common user principle, wherein all suppliers, which includes private firms, can sell aviation turbine fuel (ATF). Mumbai Aviation Fuel Farm Facilities would be operated on same principle.
Now these oil PSUs have urged the government to have a similar mechanism for fuel infrastructure at soon-to-be privatised airports.
Such a mechanism, the PSUs claim, will avoid duplication of assets of oil PSUs assets built over years. So they are asking government to have joint venture company of IOC, HPCL and BPCL.

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