Work on Hyd intl airport to start on March 16

Sonia Gandhi to participate in the groundbreaking ceremony of Rs 1,400-crore project

The wait is finally over. On Wednesday, UPA chief Sonia Gandhi will participate in the groundbreaking ceremony of the Rs 1,400-crore greenfield international airport at Shamshabad to mark the commencement of the phase-1 construction. The airport is expected to become operational by August 2008.

The idea of having a first class international airport at Hyderabad to attract global investments was conceived in 1996-97 by the then N Chandrababu Naidu-led government. Passenger traffic at the Begumpet airport was hardly touching 1.2 million a year during that time.

Initially, the state government proposed to take over the Hakimpet Airport from the Defence wing as land was sufficient for the development of international airport and was also complying with the Airports Authority of India (AAI) guidelines.

As per the AAI guidelines, the minimum area required for the development of an international airport is about 1,800 acres of land of 6 km length in East-West direction and at least 1.2 km in width.

But the government's plans were received with stiff resistance from the Air Force authorities so much so that a team of officials who went to survey the place was refused permission to even enter the premises.

Another proposal mooted by the state to construct a similar airport at its own expenditure for the Air Force operations too was rejected by the defence ministry and it, in turn, suggested the state go towards south of Begumpet Airport for locating a new international facility.

In 1997-98, the state government began its exercise for identification of sites in the south, which ended with short-listing of three places namely Nadurgul, Bonguluru and Shamshabad.

As the location at Shamshabad had the advantage of being between the state highway of Srisailam-Hyderabad and the Hyderabad-Bangalore national highway (NH7) and a railway line passing through nearby, the site was finally zeroed in jointly by the state government, ministry of civil aviation and the director-general, civil aviation.

Though originally 2,000 acres of land was identified for the airport, the government subsequently decided to acquire over 5,000 acres to meet the future requirements.

Now, a total of 5,449 acres of land has been handed over to the developer to establish the facility.

The international airport, which is expected to play a key role in transforming the state economy, comes at a premium. Two bidders, namely GMR Malaysian Airport Holdings Berhad and Zurich Airport with Siemens and L&T India consortium submitted their bids in December 2000.

The former was selected as the preferred bidder in May 2001. Then for the anticipated viability gap, the developer asked for a state support of Rs 297 crore interest-free loan and a subsidy of Rs 107 crore in the form of advance development fund.

Finally, the government agreed to pay Rs 315 crore interest-free loan and the subsidy as requested besides according various exemptions such as exemption from stamp duty, exemption on levy of customs duty and exemption of income tax on the profit for a block period of 10 years. Land was given to the developer on a nominal lease of 2 per cent of the total land cost of Rs 155 crore.

A joint venture company, Hyderabad International Airport Limited (HIAL), was formed with the state government and the Airports Authority of India (AAI) holding a 13 per cent stake each while the remaining 74 per cent stake was held by the GMR-led consortium to take up the project and manage the airport.

It took almost two years to finalise the state support agreement in 2003 and another 15 months lapsed in the legal battle both in the High Court and the Supreme Court on account of a public interest litigation involving certain environmental concerns.

Again came a fresh set of Defence objections to the proposed airport as the premium defence research institutions like Research Centre Imarat stood in the funnel area of the aircraft movement causing security concerns.

Finally, the state convinced the defence establishment to relocate those facilities to safer areas by providing them alternate land.

The Tata Economic Consultancy Services (TECS) with the Speedwing, British Airways were appointed as consultants for the development of the new international airport in 1999.

They were entrusted with the preparation of the detailed feasibility report, tender process management for selection of suitable private developer and formulation of agreements between the state government and the developer.

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Chronology

February 2002: The Union Budget for 2002-03 provided the policy support for the new greenfield airport projects at Hyderabad and Bangalore through a package of concessions

December 2002: The State government incorporated Hyderabad International Airport Limited (HIAL) as a wholly-owned company till GMR and AAI were inducted

March 2003: Environmental clearance received

September 2003: State support, land lease and share holders' agreements signed by the state government with HIAL

August 2004: The government handed over 5,449 acres of land to HIAL

December 2004: Concession agreement signed between HIAL and the Government of India

February 2005: Defence clearance received