• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Madhumathi D.S.

"We will now be trying to achieve both, the CA and the financial closure, somewhat in parallel," Mr Krishna Kumar, who is on the board of Bangalore International Airport Ltd, said.

BANGALORE, Aug 23

THE financial closure for the proposed Bangalore international airport has now got pushed beyond the original deadline of September-end.

However, to make the major milestone achievable at least in the next few months, the State Government and the Ministry of Civil Aviation are taking steps to reassure and enable lenders to get in, the Principal Secretary, Infrastructure Development, Mr S. Krishna Kumar, told Business Line.

The financial closure planned for "September-end is now not feasible; for that, the lenders should have come on board by July," he said. The authorities are scheduling this now for probably November-December. This would be a small overrun and the overall target of starting operations in June 2005 was very much feasible, he said.

This financial milestone hinges on two crucial factors. For one, the Centre, the Siemens-led consortium and the State Government are yet to sign the concession agreement (CA), which itself is awaiting a couple of amendments to the AAI Act, 1994.

The AAI Act needs to have a few enabling provisions to allow a private funded and operated project, as well as the additional fee to be raised through the existing HAL airport, while keeping the other sovereign rights intact. Certain rules under the Aircraft Act, 1937, also need to be changed.

Mr Krishna Kumar said the amendments had been suggested and the Ministry of Civil Aviation was open to speeding up the changes through an Ordinance rather than wait until the winter session of Parliament.

"We will now be trying to achieve both, the CA and the financial closure, somewhat in parallel," Mr Krishna Kumar, who is on the board of Bangalore International Airport Ltd, said.

Based on discussions late last month in Delhi, BIAL has drafted a slightly revised CA. This is being presented to the MoCA next week.

"Though we may not sign the concession agreement yet, there would be a sort of an initial agreement to reassure the lenders that they can go ahead." Even here, a few clauses still need to be negotiated with the consortium but "all the promoters have substantially agreed upon a CA which will help bring the lenders on board."

The other pending measure is the State Support Agreement, which the State Government and the AAI are yet to sign. The draft is to be finalised in a few days.

As per the shareholders' pact, the project estimated at $200 million as a basic cost and an additional $30 million provision includes a 7.5 per cent provision for escalation and an equal contingency amount. The State Government is to provide a support of $60-75 million (around Rs 300-375 crore) including the extra provision.

The consortium will come in with $155 million in equity and debt, to be raised from a team of domestic and international FIs.

Meanwhile, the other support systems are being ensured. A trumpet flyover from the Bangalore-Hyderabad 6-lane way has been suggested to the National Highway Authority of India to provide direct access to the Devanahalli airport.

Rail connectivity is not needed yet and will not be viable until the air traffic touches 5-6 million.

The initial traffic was expected to be far less at 3.5 million a year, Mr Krishna Kumar said. However, for the long term, BIAL has plans for a high-speed rail line and is making suitable provisions for a link at the airport.

Send this article to Friends by E-Mail

Stories in this Section
Bangalore airport to miss date for financial closure — Changes in AAI Act awaited

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line