New Delhi, December 04, 2014 (Online News India): Air India signed a MoU with National Buildings Construction Corporation Ltd. (NBCC) here today for monetization of surplus land assets of the national carrier. It will be a non-binding, non-exclusive agreement and each land asset will be individually evaluated for a particular mode of monetization process. This MoU is intended to blend together NBCC’s huge expertise in successful completion of several prestigious projects and Air India’s vast surplus land assets.
Speaking on the occasion the Minister for Civil Aviation, Ashok Gajapathi Raju Pusapati said that team work was the key to success and together, Air India and NBCC should synergise for the growth of the country. He also said that outdated regulations held back further progress of the aviation sector.
The Minister for Urban Development and Parliamentary Affairs, Venkaiah Naidu who was also present on the occasion said that, development of smart cities was one of the important goals of the present government and this agreement was a small step in that direction. Air India should take urgent steps towards profit making and the recent trend of running into losses is not acceptable, he added.
The Minister of State for Civil Aviation, Dr. Mahesh Sharma stated that the Ministry of Civil Aviation would set a target of six months to set the house in order especially the problems facing Air India. The Minister of State for Urban Development, Babul Supriyo was appreciative of Air India’s on-board services.
Air India CMD, Rohit Nandan said that Air India had 106 properties in the country out of which some were on lease basis and many were lying idle .Therefore this agreement to develop and redevelop some Air India properties is an attempt to monetize to the tune of 5000 crore rupees over a period of 10 years.
The MoU has provided for three models of development of properties. In Model 1 the land value will be the Air India interest in the partnership. Money on development of the project shall be the interest of the NBCC. The sale proceeds will be shared by NBCC and Air India in the ratio of partnership interest.
In Model 2 NBCC shall pay Air India a portion of the value of the land as upfront money. NBCC interest in the project would be the project cost and upfront money paid to Air India. The sale proceeds are shared by NBCC and Air India in the ratio of partnership interest.
In Model 3 NBCC shall construct the project on behalf of Air India and development cost will be invested by NBCC and will charge fixed internal rate of return (IRR) on the project on its investment on mutually acceptable terms. This will help Air India in realizing full potential of its surplus land assets in partnership with NBCC.