State Govt. asks BIAL to bring down cost of airport

Bangalore airport promoters ‘happy’ at being asked to bring down project cost
Financial Express

BANGALORE, NOV 30: The Karnataka government has asked Bangalore International Airport Ltd (BIAL) to bring down the project cost and keep it “to the minimum possible”. The state government which holds 13% stake in the project is reportedly concerned about the high cost of the project which was earlier pegged at Rs 1,340 crore, well-placed sources said.

BIAL sees this as a positive step. It is an indication that “they are working on the project,” said BIAL chief executive officer Albert Brunner when contacted by FE. “Lets not talk about delays any more,” Mr Brunner told FE on an optimistic note. He said, “We are scrutinising the project costs as required by the state government. The costs will be finalised within the next few days.”

He, however, declined to comment on the magnitude of cost reduction demanded by the state. “The positive sign is that the state government has indicated they are working on the project. We expect things to move fast now,” he said.

On Monday, state government officials, along with Mr Brunner, met the Union ministry officials to discuss the project. Officials declined to reveal outcome of the meeting, only saying, “the signs are positive.”

The greenfield international airport project is awaiting the final state government clearance. Two more documents are required - the land lease agreement and the state support agreement- before the financial closure is achieved. Mr Brunner said that pending formalities too were expected to be completed in ‘a few days’, once a new project cost is arrived at.

However, achieving financial closure for the project by the year-end was ‘very very tight’, he said. This was due to festive season in Europe during December when not much official work was unlikely to happen (the project involves European stake holders, including Zurich Airport and Siemens). Karnataka has already acquired 4,300 acre of land for the project, near the outskirts of the city.

The Union government holds 13% in the project. The Karnataka government is expected to extend a soft loan of Rs 350 crore to fund the project. Siemens holds 40% stake, Zurich airport and L & T hold 17% each. ICICI Bank would lead a consortium of 11 banks to handle financial formalities in the project.