`Bangalore airport work may begin only in March 2005'

`Bangalore airport work may begin only in March 2005'

The Hindu Business Line

BANGALORE International Airport Ltd is preparing its explanations to the Karnataka Government's concerns and will respond to them "very fast" in the next couple of days, according to the BIAL CEO, Mr Albert Brunner.

However, the airport work cannot be taken up before March 2005 assuming that the project got all the due clearances this month and the remaining pacts were inked by January-end, he told Business Line.

That would push the project completion date to 2007-end, against the original plan of mid-2005. On Tuesday, the Chief Minister assured the company that the two pending agreements would be formally passed at the December 21 Cabinet meeting.

The BIAL board meeting earlier in the day, he said, was a routine quarterly one. The company received a list of queries today, a day after the board members met the Chief Minister and senior officials for the first time in six months.

As for the issues raised, he said the State was mainly worried about the overall project cost - up Rs 184 crore in nearly four years. The first estimate was Rs 1,150 crore and is now at Rs 1,334 crore.

"It is not that the promoters are interested in keeping it high. But you have to face the fact that the project cost was fixed four years ago and there has been 5-6 per cent inflation since then. It would be difficult in these days to bring it down as we have to absorb further escalation," Mr Brunner said.

For now, BIAL also stands to lose Rs 60-crore import duty exemption in addition to the Rs 30-crore sales tax relief that it expected from the State. Being a rupee project, only the equipment import from consortium leader Siemens would be paid in euro, which again has hardened 20 per cent against the rupee. The company has already spent Rs 80 crore in the past five years since the bids were called.

According to him, consortium partners Siemens with 40 per cent equity in the project, Unique Zurich Airport and L&T with 17 per cent each, have been patiently waiting through the various stages of clearances.

The contentiously high legal fee of Rs 17 crore, according to him, could have been less if the concession agreement signed this July and the still pending State support agreement had been cleared earlier. The mother pact on concession for the country's first private funded airport alone took over two years to come through.