The Hindu Business Line : Karnataka to clear pending issues on airport project : CM

The State Government will not go back on its commitments on the airport and will clear the pending issues including the Rs 350-crore fiscal support to the project next week, the Chief Minister, Mr Dharam Singh, said today.

The two crucial but delayed agreements will be taken up at the next Cabinet meeting on December 21.

The State has to approve its fiscal support by way of concessions and the land lease before the project can go for a financial closure. However, the project will have to do without sales tax benefits of Rs 30 crore, as the State will have no say in it under the VAT regime of April 2005.

The land for the airport will be leased at a concessional rate while non-aviation activities will attract a higher rent from the holding company Bangalore International Airport Ltd (BIAL.)

Meanwhile, the State has sought technical details from the Infrastructure Development, Finance and Revenue Departments. The BIAL board is meeting here on Wednesday.

The State's dithering over approvals in recent months had raised questions over the fate of the project. Setting them at rest, Mr Singh said, "We want the airport. There should not be any doubt that this Government will not go ahead with it."

According to him, the project work will begin in the middle of January 2005. His reassurance comes three days after the State Cabinet gave an in-principle accord to the project.

Earlier in the day, Mr Singh and four ministers of the concerned departments met the BIAL board members (among them were the company CEO, Mr Albert Brunner and Siemens' VP-Project Development, Mr Klaus Kolof) to clarify a few contended issues such as project cost escalation and legal fee.

The airport project proposed at Devanahalli has swung back and forth since it was conceived in 1996. It cleared a major hurdle in July this year when the Siemens-L&T-Unique Zurich Airport combine signed a concession agreement with the Centre.

The concession pact was signed by the Ministry of Civil Aviation, the Government of Karnataka and a consortium.

BIAL has been awaiting the transfer of 4,000 acres and formalisation of State concessions since then.

The State had reservations over the cost of three aspects, according to Mr Dharam Singh: the development cost has increased from Rs 15 crore to Rs 63.6 crore; the legal fee to a British consultant has increased from Rs 7 crore to Rs 17 crore; and the overall project cost is up from Rs 1,150 crore in 2001 to Rs 1,334 crore in August 2003.

The State support includes a 30-year soft loan of Rs 275 crore, a contingency grant of Rs 75 crore and a stamp duty exemption of Rs 42 crore.