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In its first overseas foray into airport development, GVK Power and Infrastructure Ltd (GVKPIL) will be developing two greenfield international airports in Indonesia.
“We have signed two MoUs (Memorandum of Understanding) for the two airports, one in Yogyakarta, Java, and the other is the North Bali airport. These two projects will draw an investment of $3-$4 billion (Rs 13,650-Rs 18,200 crore),” the Chairman GVKPIL, Dr G.V. Krishna Reddy, told Business Line .
Mr Reddy did not give details on how the company will be funding these two projects, but said that the company has a healthy debt to equity ratio and “raising funds will not be a problem”.
The company, on Tuesday, signed MoUs with the Government of Indonesia to develop these airports.
“Both are greenfield airport projects. Bali has been growing (traffic) at 55 per cent for the last two years and the traffic is increasing. Even in Yogyakarta, Java there is going to be a lot of traffic with tourism and other infrastructure they (Government) are developing there,” said Mr Reddy, commenting on the potential the two airports hold for GVK.
Bali and Java are considered to be prime destinations in South East Asia for tourist traffic from both Europe and Asia.
The company will be soon begin feasibility studies to ascertain traffic growth in both the airports, he said.
“We will own and operate these two airports,” adding the duration for which the company will operate the two projects is still under negotiation.
“The scope of the agreements provides exclusivity to GVKPIL and includes planning, design and development, operations and management of the airports along with all associated infrastructure, land and commercial development,” said a statement from GVK.
The MoU for the Bali airport is a three-way agreement between Badan Koordinasi Penanaman Modal (BKPM), PT Pembangunan Bali Mandiri (PTPBM) and GVKPIL. BKPM is a board set up by the Government of Indonesia for the facilitation of domestic and foreign investment while PTPBM is a special purpose vehicle for airport development.
The MoU for the Java airport is an agreement between Angkasa Pura I, BKPM and GVKPIL. Angkasa Pura I is a Government of Indonesia-owned airport operations and management company. GVK operates the Chhatrapati Shivaji International Airport, Mumbai and the Bengaluru International Airport. The two airports together handled passenger traffic of 40 million in 2010.
> tandon.shubhra@thehindu.co.in
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