Lease pact delay may hit airport work

Lease pact delay may hit airport work
Vijay Times News

Concerns have been expressed that the Devanahalli airport project may hit a roadblock if the signing of the State support and land lease agreements is delayed.

The Bangalore International Airport Ltd (BIAL) was suppose to begin construction at least three months before the concession agreement expires on December 31. But the construction has not started as the various agreements are yet to be signed, BIAL Chief Executive Officer, Albert Brunner said on Friday.

The three-month advance period for construction was required to finalise other agreements between Air Traffic Control and the Airport Authority of India, Engineers Procurement Contract (EPC) for Rs 823 crore (of the Rs 1,300 crore project) with Larsen and Toubro and Siemens, and the financial closure with ICICI bank, Brunner said.

The State support agreement is for Rs 350 crore, while the land lease agreement is for 4,300 acre land acquired for the project. BIAL also has to re-work the EPC which expired in September and was extended twice before that. "If the State government fails to clear the agreements by the month end, it would be difficult for us to complete the project by 2007," Brunner said.
The concession agreement was signed on July 5 between the State and Central governments and BIAL, which is a Siemens-led consortium. Brunner, however, said he was "hopeful of getting the pending agreements from the State government within two weeks."

According to BIAL sources, the consortium had met State government officials including Deputy Chief Minster Sidharamaiah and discussed all outstanding issues. Referring to the ATC agreement, Brunner said, they have concluded negotiations with the AAI, and 'virtually' settled the issue of air traffic and navigation. "We will sign the agreement soon," he said. The airport will have 37 check-in counters and will accommodate 80 aircraft at a time. It will handle 5 crore passengers annually, Brunner said.

The State and Central government hold 13 per cent equity in the project, while Unique Zurich Airport and L&T hold 17 per cent and Siemens 40 per cent. Brunner said, the total project cost includes Rs 315 crore as equity, Rs 675 crore debt from ICICI and a Rs 350 crore soft loan from the State government

Project to fall through if two major hurdles not crossed soon: The Hindu Business Line