Bengal Aerotropolis Pvt Ltd (BAPL), the SMIFS Capital promoted special purpose vehicle (SPV) set up build a private airport and connected township at Andal, 200km west of Kolkata, has revised the project plan in view of the economic downturn and subsequent reassessment of financials.
BAPL had initially worked on the basis of handling half million passengers a year following a survey conducted a year back but this estimate had now been revised to around 3.5 lakh passengers in the first year of operations after factoring in the impact of the downturn on air traffic.
"We had taken a conservative estimate of 3.5 lakh after we received the survey results that projected 5 lakh passengers in the first year, then revised to 4 lakh passengers. So we are well within our estimates.", said a senior official associated with the project.
In another major adjustment, the company now intended to phase out the project into three parts as against an original plan of executing it in two phases.
"The original plan had indicated a high level of internal accruals in the initial period after commencement of operations but now it has been reworked to reflect lower internal accruals in the initial period following execution of the first phase", the source added.
Plans for issue of shares at some point during the execution of the project was also expected to be reviewed.
More From This Section
All these steps would improve the viability of the project in changed times.
The project had a debt equity ratio of 1:2.25 to fund the initial requirement of Rs675 crore for the first phase, of which the airport would require an investment of around Rs230 crore.
The entire aerotropolis project planned over six years would cost nearly Rs10,000 crore and included the airport, industrial and commercial zones, residential areas, theme parks and allied social infrastructure.
The company planned to complete work on the airport within 18 months of commencement but needed to secure possession of 750 acres for the air strip.
Interestingly the project site had a obsolete runway constructed during the Second World War and now under the ministry of defence.
No development or construction could be planned over the two old defence runways of 1.6km each set like a cross and BAPL would have to give an undertaking that if the defence department needed it, it would provide access through the existing approach roads to the new airport for use by the defence ministry and services in times of need or emergency. The company said it needed to get the land first before starting work on the airport and connecting roads.
BAPL expected possession of the required area land by October 2009.
Changi Airports International, the Singapore government promoted airport operator which was expected to pick up a stake in the project after its commissioning, would at present act as the technical consultant and supervise the execution of the airport and manage it after commissioning. The Singapore based agency could re-evaluate its decision on holding equity stake in the project if it felt the project faced resistance from the local community, as it was sensitive to local opinion, said the source.
BAPL had a technical services arrangement with Singapore-based Changi Airports International (CAI) from February 2008, under which CAI would review the master plan of the proposed greenfield airport, supervise its execution after a detailed review of the proposed airport including a review of airport capacity, land use plan, passenger terminal layout and air and land side development of the airport the Indian Ministry of Civil Aviation granted in-principle nod to the Andal airport on December 11, 2008.
This is the first part of a three-part series on Bengal Aerotropolis airport & township project, promoted by a private sector investment group in West Bengal under a technical agreement with the Singapore government.