Dharam breasts red tape, clears airport take-off

Dharam breasts red tape, clears airport take-off
BIAL: Land reduced by 400 acres, no sales tax exemption; BIAL says it’s on
The Indian Express

Road is cleared, after years of delay NEW DELHI, DECEMBER 21: After dragging its feet for nearly seven months, the Dharam Singh government in Karnataka has finally given its official go-ahead to the country’s first greenfield airport at Bangalore. His Cabinet today put its stamp of approval to the state support and land-lease agreements but not without some tinkering.

Strangely, this is the second time that Bangalore International Airport Ltd. (BIAL) has had to receive these clearances. The S M Krishna Cabinet had in the beginning of the year cleared these agreements to avoid any delay because of the elections in April-May. But BIAL could not escape getting caught in a political tangle.

Last fortnight, The Indian Express had highlighted, in a series of reports, the abysmal state of infrastructure in the city and had focused on how the delay in clearing the airport was a key factor in it. That series prompted Chief Minister Dharam Singh and his team of officers to fly to New Delhi where he then announced that the airport would be cleared soon.

On December 11, his Cabinet gave an ‘‘in-principle’’ clearance.

In the approvals today, the land allotted to BIAL has been reduced by 400 acres. While the 4,050 acres which will now be available would not have any major impact on the project for the time being, the extra land in the nort-west corner of the plot had been earmarked for any future expansion.

The Cabinet has not given its nod to the sales-tax exemption that amounts to around Rs 30 crore. According to BIAL CEO Albert Brunner, this exemption was promised to private players at the time of bidding. ‘‘This was a promise as was the exemption on import duty because Bangalore airport is an infrastructure project. We will now have to work around these changes,’’ he told The Indian Express.

The financial support of Rs 350 crore has been cleared but only Rs 275 crore will be released and the remainder will be provided depending on the requirement. This apparently is in line with the financial flow pattern agreed earlier with BIAL and hence may not prove to be a major obstacle for the moment.

But the main concern for Brunner would be renewing the Engineering, Procument and Construction (EPC) contract.

In the midst of all the wavering by the Dharam Singh government over the past seven months, the EPC contract with Siemens and L&T expired sometime in September. Now that the clearances have been obtained, the EPC bids will be resubmitted.

It may be noted that both Siemens and L&T are part of the private consortium involved in the Bangalore project. While this would mean that the process can move quickly, sources say, the fear is that of a escalation in the project cost in the light of no sales tax or import duty exemptions.

Further, routine escalation on account of rise in prices will also have to be factored into the new EPC bid. Despite this, Brunner feels that the project could take off by March. This will be two months before construction is expected to start for the Hyderabad airport which was conceived eight years after the airport at Bangalore was first mooted.