Delhi’s success story

The redevelopment of Delhi airport offers insights into the structuring of public-private-partnerships in the infrastructure sector

Priyabrat Tripathy explains

India’s infrastructure sector is on the move. Nothing epitomizes its progress more than the privatization and redevelopment of Indira Gandhi International Airport (IGI). Along with Chhatrapati Shivaji International Airport in Mumbai, IGI was the country’s first experiment with the privatization of brown-field airports. The two projects established clear precedents for future revenue-sharing public-private-partnership (PPP) projects in India’s infrastructure sector. They also shaped many of the current regulations for the airport sector, including policies on passenger service fees, the airport development fund, the development of green-field airports and the establishment of the Airport Economic Regulatory Authority.

Bidding controversy

In April 2006, following a competitive bidding process, concessions were awarded to consortiums led by the GMR Group and the GVK Group for the operation and development of Delhi and Mumbai airports respectively. The awards triggered a legal challenge from one of the unsuccessful bidders, Anil Ambani-controlled Reliance Airport Developers, which alleged that there had been irregularities in the evaluation and award process. Delhi-based law firm Link Legal, which was a key adviser to GMR throughout the project, teamed up with Mumbai-based Wadia Ghandy & Co to advise GMR on bidding for the airport concession and on the subsequent litigation that resulted from Reliance’s challenge. The legal dispute created a great deal of uncertainty for all parties, but was subsequently resolved, first by Delhi High Court, and then in November 2006 by the Supreme Court, which upheld the validity of the bidding process and the awarding of concessions to GMR and GVK.

The draft concession agreements were prepared with the assistance of government-appointed legal, financial and technical consultants. The legal consultant was Amarchand Mangaldas, while ABN AMRO Asia Corporate Finance and Airport Planning were the financial and technical advisers respectively. These consultant firms also evaluated the bids, but with the stakes being so high their work was reviewed by an evaluation committee. The final agreement – the operation, management and development agreement (OMDA) – had input from Delhi-based law firm Hemant Sahai Associates, which was called upon to address concerns over the potential for unfettered real estate development on airport land and ensure that the deal met the government’s criteria (see Laying the foundations, below).

Priyabrat Tripathy was a member of the in-house legal team at Delhi International Airport Private Limited from May 2006 until January 2010. He is now the head of legal at Isolux Corsan India Engineering and Construction, part of the Spanish infrastructure company Grupo Isolux Corsan.