Bangalore airport land lease, loan pacts signed

Bangalore airport land lease, loan pacts signed — Work may begin in March

The Hindu Business Line

TRUE to its word and almost a month to that date, the Dharam Singh Government today inked the two crucial agreements that now enable the international airport project at Devanahalli to get off the ground shortly.

It signed the land lease agreement for 4,050 acres and the State support agreement for a Rs 350-crore soft loan with the holding company Bangalore International Airport Ltd (BIAL).

"All the apprehensions that were there about the airport project have been cleared," the Industry and Infrastructure Minister, Mr P.G.R. Sindhia, said soon after the milestone event.

With these signed and two relatively smaller pacts to follow, it was a matter of 20-30 days before the company could reach the last milestone, the financial agreement, with lead creditor ICICI Bank.

The project is targeted for completion by end-2007 or 33 months from starting the works.

The project was originally meant to be completed by the middle of 2005 but the mother concession agreement alone took over two years before it was approved and signed by the Centre in July 2004.

The two drafts were cleared only on Wednesday night by the State Finance Minister from Delhi.

The State Cabinet had cleared their signing on December 21. The Principal Secretary for Infrastructure Development, Mr Vinay Kumar, signed the State support agreement with L&T's Mr A. Ramakrishna, and Unique Zurich Airport Director, Mr Herbert Meier. Mr I.M. Vittala Murthy, MD of land and equity holding agency for the State, KSIIDC, signed the land lease agreement with the two BIAL directors, both in the presence of the Chief Minister, Mr Dharam Singh.

The BIAL CEO, Mr Albert Brunner, said the CNS/ATM (communication, navigation systems and air traffic management) agreement with AAI and the O&MS (operations and maintenance services) agreement with consortium partner Unique Zurich airport were all but signed and were now a mere formality.

He expected to tie up the finances by the end of February this year and begin airport works by mid-March.

The Rs 1,334-crore project will have 25 per cent as equity from the Siemens-L&T-Unique Zurich Airport combine and the AAI-KSIIDC duo; 25 per cent as repayable State loan; and the rest as debt for which the company would now begin negotiations with ICICI Bank.

According to L&T's Mr Ramakrishna, the airport would be one of the best in Asia and make Bangalore a major hub for air traffic from Johannesburg to Beijing and from Europe to Singapore.

The project, conceived in 1994, was awarded in 1999 to the consortium of Siemens, L&T and Unique Zurich Airport as majority private sector partners who will hold equity in the ratio of 40:17:17. KSIIDC and AAI will each hold 13 per cent equity in the venture.