The Hindu Business Line : `Bangalore airport project must clear 2 major hurdles'

Mr Albert Brunner, Chief Executive Officer, Bangalore International Airport Ltd, and Mr S. Chandrasekhar, President, GMCI, at a press conference in Bangalore on Friday. - G.R.N. Somashekar

Bangalore , Oct. 8

THE Bangalore international airport project may hit a major air pocket if it does not clear two crucial milestones this month and complete the financial and other agreements by New Year.

If all the pending six agreements are not tied up and the construction does not get going by the year-end, the Rs 1,340-crore project faces the hassle of renewing the concession agreement with the Centre all over again.

The agreement, signed in July this year after two-year-long negotiations, is valid for six months.

Mr Albert Brunner, Chief Executive Officer of Bangalore International Airport Ltd (BIAL), the holding company, on Friday said that two crucial requirements were the State Support Agreement for the Karnataka Government's soft loan of Rs 350 crore and the land lease agreement for some 4,400 acres at Devanahalli.

Negotiations for these were completed. Mr Brunner hoped that these would be signed with the State Government in the next couple of weeks.

According to him, the project is two years behind schedule and is now slated for operations in September 2007, 30 months from undertaking of construction.

After weeks and months of pondering over the State support, he said that there was no room for questions on the amount.

The project now needs to acquire 100 acres for its future runway expansion and the process is on, he said.

BIAL also has to sign a CNS/ATM agreement with the Airports Authority of India, an O&MS agreement with partner Unique Zurich airport, and renew the EPC contract for the third time with equity partners L&T and Siemens.

As for the debt component of Rs 675 crore that has to be raised through ICICI Bank consortium, the due diligence is over, Mr Brunner said. The equity portion amounts to Rs 315 crore or 25 per cent of the project cost.

Mr Brunner, who was speaking at an interaction organised by GMCI with airlines, said that major operations such as cargo, ground handling, fuelling, leisure and business centres would be outsourced to concessionaires.

BIAL is waiting for the construction to begin so that bids for these would be called and the airport would be marketed.

The GMCI President, Mr S. Chandrashekhar, said that Bangalore's international air traffic has seen phenomenal growth since 2001, growing 2.5 times between 2001-02 and 2003-04 to some 4.7 lakh passengers.

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