Jul 12, 2024

Expert suggestion to operate airports on the 'PPP model'

Expert suggestion to operate airports on the 'PPP model'

KATHMANDU, April 18:Experts have said that it is too late to run Nepal's airports on a public-private partnership (PPP) model.

They suggested that if the airport is to be made profitable, apart from security and sensitive areas, marketing and operation should be given to the private sector.

The government has formed a committee to study the operation of Pokhara, Bhairahawa, and the proposed new international airport on the PPP model along with Tribhuvan International Airport.

In a discussion with experts organized by the said committee in the capital, the participants said that if Nepal's airports are to be run profitably in the long term, the participation of the private sector is mandatory.

Triratna Manandhar, the former director general of Nepal Civil Aviation Authority, said that there is no option to go for a PPP model to build an airport like Nijgarh with a huge investment. He mentioned that most of the airports in India are being built with private investment.

He said that Kathmandu Airport has reached beyond capacity, Bhairahawa and Pokhara are not full international-level airports, so there is no alternative to Nijgadh and now investment should be brought in with the participation of the private sector.

Ghanshyam Ojha, a member of the study committee and a PPP expert, said that the PPP model and privatization are not the same. He says that Nepal cannot go for privatization now but it can go for PPP.

He said that when going to PPP, there is no need to get involved in the process of full ownership by the government and it will be regulated by the state, so the work will be completed quickly without compromising on quality.

"The private sector tries to work in such a way that there is more return at a lower cost," he says, "at that time, the government regulates so that quality is not compromised." Because of this, quality work will be done quickly.

He said that examples from all over the world show that airports become profitable when the regional state takes over immigration, customs, security, and other commercial work, including during airport operations, and engages the private sector.

The PPP model has been successfully used in hydropower projects in Nepal. He informed that neighboring India is successfully using this model in the construction and operation of highways and airports.

Nepal needs to invest about 15 trillion annually in infrastructure to be upgraded to a developing country by 2030, and Nepal does not have that capacity, he said.

He also recalled that the private sector would not come to provide services in an area where there is no profit, and Zurich Airport has also proposed to operate Tribhuvan Airport along with its desire to build Nijgarh Airport.

He suggested that at a time when Nepal alone cannot build big infrastructure and investment in mandatory infrastructure is necessary for the future of the country, appropriate methods should be developed and the PPP model should be adopted.

Haribhakt Shrestha, another former director general of the authority, said that the country can run airports on the PPP model through the existing laws and suggested that the authority should start its practice from small airports.

Giving the example of India entrusting Adani Group to build five big airports, he said that Nepal should also be able to adopt good practices.

Ratish Chandra Lal Suman, another former director general of the authority, said that the revenue that comes only from flying planes to the airport is much less compared to other activities.

For this reason, it is necessary to have a lot of area, a big structure, and a lot of activities for the airport to be profitable, he said. Therefore, Nijgarh is needed as an alternative to Kathmandu, he says.

"Running an airport with only aeronautical revenue is expensive, and passengers have to pay for it," he says.

He said that if the ticket price can be reduced and other activities can be increased, then the economy will run and passengers will not have to pay more for the ticket.

In the discussion, Pradeep Adhikari, director general of the authority, said that there is no working environment for large infrastructure and suggested that the study committee should facilitate it.

He said that Bhaiharawa and Pokhara airports could not operate as expected due to the lack of support from all state agencies. He said that because everyone needs Kathmandu, the single effort of the authority could not take the airline companies to airports outside the valley.

For that reason, he said, the state is going to conduct a study to see what will happen if it is taken to the PPP model. Based on the suggestions given by the study committee, he said that the government and the authorities will not reach any conclusion without extensive discussion and consensus.