GMR wins deal to build, run new Maldives airport

Infrastructure major GMR has won a bid to construct up a new terminal and manage the Male International Airport in Maldives, beating two other contenders - a consortium of Aeroport De Paris, France and TAV of Turkey; a Zurich Airport-GVK Airport Developers consortium and the GMR - MAHB consortium GMR will take control of the airport in the first quarter of 2011 and will get 3 years to complete the project. The new terminal will replace the existing one.

GMR will then operate the airport for 25 years.

“We won the project after a tight contest. Our mandate is to expand the airport from the current capacity of 2.6 million to 3 million passengers in the first phase and then to 5 million in the second phase. In fact, this particular airport is a high-quality facility with tourists arriving from Europe and south east Asia.

The quality of passengers makes this project an attractive opportunity for us,” Sidharth Kapur, GMR group chief financial officer - airports, told DNA Money.

The airport is situated on Huhule Island in the politically stable archipelago of Maldives in the south-west of India.

While refusing to share the capital expenditure plans on the airport, Kapur said, “We have been working on this project for the last 10 months and we have done a detailed analysis. We have found to be attractive even in terms of enhancing shareholder value.”

The bidding for the airport was done on five parameters set by the Maldivian authorities.

Apart from upfront payment, four modes of revenue share were the bidding criteria. The bidding process was overseen by IFC, Wahington.

“TAV and French Airport were next to us coming close to our bidding,” Kapur said.

GMR has agreed to pay $78 million upfront, 1% of the total profit in the first year (until 2014) and 10% of the profit from 2015 to 2035.

The company also agreed to pay 15% of fuel trading revenues in the first four years and 27% from 2015 to 2035.

Turkey’s TAV Airports Holdings Company and French Airports De Paris Management together reportedly offered $7 million for upfront payment, 31% of the total profit until 2014 and 29.5% of the total profit for the remaining years. The companies offered 16.5% of profits from fuel trade.

GVK and Zurich reportedly offered $27 million as upfront payment, 27% of the total profit in the first four years and 9% of the profit from 2015 to 2035. The consortium agreed to pay 9% of fuel revenues.

“More than the upfront payment, revenue share was the key factor (behind the win),” Kapur said.