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Debt component of Nanguneri SEZ Phase I -- Promoter keen on funding from Indian FIs

G. Srinivasan

CHENNAI, Feb. 15

THE principal promoter of the country's first special economic zone (SEZ), the California-based ATMAC, is keen on Indian financial institutions to finance the debt component of the first-phase work of developing high-cost infrastructure for housing the hi-tech industries in the zone.

Disclosing this to Business Line here in an interview, the Managing Director and Chief Executive Officer (CEO) of ATMAC, Mr Charles V. Loucks, said that at the moment ``we are putting a lot of focus in trying to get Indian financial institutions such as IDFC, IDBI, ICICI and SBI investing in the project''. He said that the response from these financial institutions was quite positive.

Mr Loucks maintained that ``debt component is very critical to our financing.'' The international financing community including the private sector lending window of the World Bank, IFC and ADB is very much ``excited to get interested in the project as it s Indian counterpart is also keen on financing the project''.

He said that though the initial cost of the first-phase of the project completion in five-year's time would entail $46.5 billion for developing basic infrastructure including ``inground infrastructures'', the zone would eventually absorb $12 billion by w ay of complete development cost over its 15-year span.

Mr Loucks said that debt-equity ratio in the project is 1:1 and after its first-phase development ``we will not raise further funds because what the project is able to generate in terms of attracting hi-tech industry will finance its own growth''.

He said that after the placement of inground facilities within 24 months ``we will be co-developing the infrastructure''.

Asked why Tamil Nadu's backward area like Nanguneri was chosen for establishing the first hi-tech industrial park in the SEZ, Mr Loucks said that the area's clean environment, both water and air, and locational advantage in terms of access to both airpor t (Tuticorin) and sea-ports (Tuticorin and Kolachel) were the clinching factors.

To a query about how confident he was in seeing the initial phase completed as per schedule, Mr Loucks said that ``if we are not sure we will not spend our time and three years' energy besides money here''.

In response to a query as to why traditional export-industries such as textiles, gem and jewellery and other export-oriented units were not being planned here, Mr Loucks said the ``infrastructure we are putting here has to be recuperated in the amount of land and leasing charges. This is not to say that the initial cost is going to be slightly higher than to say after 15 years down the road when the project is successful and we would have other development work going on in this area''.

Traditional industries, if they are clean and pollution-free such as textiles, might figure later in this SEZ, he added.

Mr Loucks said that Intel was looking into the SEZ here as part of a series of sites it had pre-qualified for locating in India. He said that though the definition of SEZ remains broader in India, there is still scope for some refinements ``in order to a ccount for some of the financial benefits that SEZ will have. Intel has said this during our discussion focussing mainly on this.''

Since the SEZ concept introduced in India is analogous to the one already in vogue in the US, with both countries having common characteristics such as democracy, vibrant legal system and a large English-speaking population, Mr Loucks said that ATMAC opt ed to locate the hi-tech industrial park in Nanguneri. He said India's SEZ concept is also a departure from the previous schemes such as EPZ or FTZ, he noted.