Stringent requirments delay Islamabad airport outsourcing

By Shahzad Paracha

ISLAMABAD: The outsourcing of Islamabad International Airport (IIA) has been delayed due to lack of interest from international bidders. Sources said that only four companies based in different countries have shown interest in running International Islamabad airport.

The reason for lack of interest from international bidders is the stringent criteria according to the sources, and that the companies want Pakistan to relax the conditions that are required to be met before participating in the bidding process.

Earlier, a UAE-based company had reportedly shown interest and had also written a letter to the Prime Minister’s Office (PMO)in that regard. However, on the recommendation of the Aviation division, the government floated an international tender instead of awarding the contract to a specific company, sources added.

As per the details, the civil aviation authority has now extended the date of submission of bids to March 15, 2024. There are reports that this extension has come on the written request of some prospective bidders. The previous deadline, as issued by the then PDM-government after approval of outsourcing plan, was November 8, 2023.

Background

On August 2023, on the summary of the Ministry of Planning Development and Reform, Executive Committee of the National Economic Council (ECNEC) had approved the outsourcing of the airport under Public Private Partnership (PPP) mode. The plan was to raise capital to modernise the existing infrastructure of the airport and allied facilities by attracting private sector participation.

Bangladeshi aircraft set for removal from Karachi airport after nine years

According to the planning commission, outsourcing of IIA project scope involves maintenance, operations and rehabilitation of IIA landside facilities (passenger terminal, cargo terminal/facilities, parking) and apron along with its associated facilities.

Management and operations of facilities and areas in addition to the project scope include Air Traffic control, runway, taxiway, fuel for, aircraft rescue and firefighting facilities will still be Civil Aviation Authority’s (CAA’s) responsibility.

The Planning commission had informed the ECNEC that the present value generated by the project under the proposed option-1 (PPP mode) is $434 million whereas in option-2 (traditional mode) the present value of the project is $409 million. Based upon the present value, option-1 generates additional net value of $25.65 million. The present value of project cash flows under both options have been estimated using a discount rate of 12 percent.

Planning commission had also informed that the total concession period is 15 years and the estimated project cost is $135 million out of which $100 million was to be paid to the Civil Aviation Authority upfront by the successful bidder.