Association of Private Airport Operators(APAO - AERA

15 Appendix 1
Assoclation ofPrivate Airport Operators
Response to A ERA 's Consultatlon Paper No, 32/2011-12 lit, 03 Jail 2012011
determination ofAenmauticnl Taritt'in resoect of1G1Airoort, New Delhi
Comparison of returns to equity investors in Electricity and Airport
companies
15.1 Equity investment of INR 1000 crore In a power project is expected to yield the
following returns:
Parameter 1st yenr to \year 20 11 year 30 t ' year
Equity investment (1,000)
Y-o-y return 160 160 160
Depreciation on equity
component
35 35 35
Cash flows for equ ity (1000) 195 195 195
ElRR 19,33%
29th February 2012
15.2 In addition to the above, CERC provides additional incentives to the developer for
meeting certain set criteria. It has been observed that these set criteria are very nominal
and a concessionaire can easily avail.
15.3 Equity investment of INR 1000 crore in an airport project is expected to yield the
following returns:
Parameter r t yelll' 10 th year 20 th yell)' I 30 th year
Closing RAB for
equity contribution
1000 690 345 0
Y-o-y return 0 11 3 58 3
Depreciation on equity
component
Cash flow s for equity
35 35 35
(1000) 148 92 37
ElRR 15,65 c yo
15.4 It can be observed from the above calculation, that even though CERC allows ROE of
16% to equity investor, actual returns available to equity investor in power sector is
higher than 16%. Therefore, considering a benchmark of ROE of 16% from power
sector to set the ROE for airport sector will not be prudent.
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