GVK refuses to infuse more equity into MIAL

The GVK Power and Infrastructure today informed the Airports Economic Regulatory Authority that it is unable to put additional equity infusion into Mumbai International Airport Limited (MIAL).

Reacting to the development, the Airports Economic Regulatory Authority (AERA) said that it would consult the Airports Authority of India (AAI) on the matter, a CNBC-TV18 report said.

The AERA final order on the airport charges for MIAL is expected on 31 December.[caption id="attachment_541458" align="alignleft" width="380"] Planes parked at the Mumbai airport. Reuters[/caption]

The AAI had earlier proposed a Rs 239 crore equity into MIAL to abolish the airport development fee.

In October, Civil Aviation Minister Ajit Singh directed MIAL and Delhi International Airport Limited (DIAL) to abolish airport development fee from 1 January next year.

Currently, the ADF is charged at the rate of Rs 100 per domestic and Rs 600 per international passenger at the Mumbai airport. Once ADF is abolished, the expected financing gap for MIAL would be about Rs 4,200 crore. The minister had simultaneously asked AAI to infuse additional equity of approximately Rs 288 crore in MIAL, against its 26 percent share in the equity. GVK holds 50.5 percent in MIAL.

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Industry sources said that it would be difficult to do away with the airport development fee if GVK does not infuse equity. The sources said that it would be tough to change the equity structure even if GVK refuses to add more equity to its holding.

GMR Group, which holds holds 74 percent stake in DIAL, is likelihood to follow suit in saying no to the infusion, the sources said.

The AAI proposes to infuse Rs 113 crore additional equity in DIAL. GMR is yet to reply to the AAI proposal.