Cyberabad leaves Bangalore behind in airport sweepstakes

Cyberabad pips Bangalore to tarmac
The Economic Times

NEW DELHI: In what is seen as a major upset, Hyderabad is poised to pip Bangalore to the post in the race between the Big Two greenfield airports.

This is despite the fact that the IT capital had a headstart of several years and a major corporate personality like Mr N R Narayanamurthy of Infosys was batting for it.

Moreover, the key players behind the Bangalore airport are big names like Siemens, Zurich airports and L&T while the Cyberabad airport project is being handled by a not-so-high profile consortium of GMR group and Malaysian Airports Holding Berhad.

According to government sources, the law and finance ministries have okayed the concession agreement for the Hyderabad airport international project, paving the way for Cabinet clearance sometime next month.

On the other hand, the Bangalore airport project is stuck since land lease agreement and state support pact are yet to be cleared. While the official version of civil aviation minister Praful Patel is that the issues holding up the Bangalore project would be sorted out soon, civil aviation ministry officials told ET that the situation has become complicated due to politics in the state.

The Central government has granted all clearances for the project but the Karnataka government is still looking into a proposal for state-support of Rs 350 crore through interest-free loans. Indecision is the name of the game when it comes to the land lease agreement as well.

Andhra Pradesh, in contrast, has cleared state-support for the Hyderabad international airport to the tune of Rs 422 crore. Nearly 5,400 acres of land has been handed over to the GMR consortium and chief minister Y S Rajasekhara Reddy personally intervened to expedite defence clearance for the project which is to come up at Shamshabad near Hyderabad.

It is understood that Mr Narayanamurthy had taken up the issue of Bangalore airport’s stalled clearances with Prime Minister Manmohan Singh in view of the importance of better flight connectivity for the IT industry.

However, the efforts of Team Manmohan have not met with any success in convincing the Karnataka government to speed up the green signal for the Bangalore airport. According to civil aviation ministry officials, a dispute seems to be over the location of the project which, according to latest plans, is to come up at Devanhalli.

The Hyderabad project has already beaten Bangalore, which is supposed to serve as the model for greenfield airport development in India, in terms of investment.

The GMR-MAHB consortium is planning investment to the tune of Rs 1,394 crore in the first phase of the Shamshabad airport as compared to Rs 1,328 crore planned by the Siemens-Zurich-L&T consortium for the Bangalore project. While Hyderabad project will have an equity of Rs 389 crore in the first phase, Bangalore project’s capital base is put at Rs 315 crore.

In terms of debt, however, the Bangalore project’s promoters plan to raise Rs 663 crore, much higher than the Rs 583 crore planned for Hyderabad. The Airports Authority of India (AAI) and the concerned state government will hold 13% each in both projects.

Siemens is the lead player for the Bangalore project with 40% stake while GMR will hold a much larger stake of 63% in the Hyderabad project. L&T and Zurich airport hold 17% each in the Bangalore project while MAHB has a 11% stake in Hyderabad.