GMR inks pact with Andhra govt to develop greenfield airport near Vizag

After two years of confusion, airport major GMR Infrastructure has signed an agreement with the Andhra Pradesh government to develop a greenfield airport at Bhogapuram, near the port city of Visakhapatnam. An agreement to this effect was inked on Friday in the presence of Chief Minister Y S Jagan Mohan Reddy and G B S Raju of GMR Group.
 

GMR won the bid by offering to pay Rs 303 per passenger fee; GVK had offered Rs 202. Reliance Airport Developers, Essel Infraprojects, Fairfast India Holdings, and National Investment and Infrastructure Fund had also participated in the bidding.
 

The project has been mired in allegations of financial kickbacks. In 2017, when the erstwhile government of Chandrababu Naidu called bids, the Airport Authority of India (AAI) had emerged the winner by offering a 30.2 per cent revenue share. GMR was the second-highest bidder. However, the state government cancelled the entire process in January 2018 and invited fresh bids with new rules and regulations.
 

A new clause was included under which companies wanting to construct the airport were required to have experience in real estate development. This made the AAI ineligible, raising allegations that the Naidu government brought in the rule to favour GMR.
 

Instead of the revenue-sharing method, the government asked the bidders to pay per passenger fee. After the Telugu Desam Party, led by Naidu, pulled out of the NDA government in 2018, things became more complex.

 

The AAI wrote to the state, saying it would not shut the neighbouring Vizag airport as it had already spent Rs 50 crore on its development. This put the entire project in uncertainty as Vizag Airport is just 40 km away from the proposed greenfield project. “Two airports in such close proximity would have made Bhogapuram entirely unviable. But by that time, we had already spent around Rs 800 crore in the project. The current state government’s relationship with the Centre helped things as more or less the AAI has agreed to shut Vizag airport from 2022. We will compensate the AAI for that,” said an official of the Andhra Pradesh Airports Development Corporation Limited, the nodal agency of Bhogapuram airport.
 

During the Cabinet meeting held on Friday, the Bhogapuram airport project was accorded approval. As against 2,700 acres, which was to be handed over for development of the airport, GMR will now get 2,200 acres. The rest 500 acres will be with the state government for development.
 

For GMR, it is the second greenfield airport project in its kitty in India. The group will also develop the new Mopa airport in Goa.

“Bhogapuram airport is a strategically located, high-potential airport. It will be a welcome addition to our growing portfolio of Indian and global airports,” said S G K Kishore, executive director (South), and chief innovation officer, GMR Airports.
 

The diversified infrastructure company, which has developed marquee projects, including the Hyderabad and Delhi airports, has assured the government that the new airport would serve as a landmark in the state.