Work on Bangalore airport lags

Despite the final clearance from the Union Cabinet last week, the construction of the Bangalore International Airport will take more than a month to start as most of the agreements will take some time to be fully finalised.

Speaking to the Business Standard on the sidelines of a ceremony to mark the commencement of site preparation, Albert Brunner, CEO, Bangalore International Airport Ltd, (BIAL) said, "It will take a few weeks before we actually get the concessional agreement in our hands. After receiving it, the board of BIAL need give a final clearance. Besides, the state support agreement and the land lease agreement are yet to reach us. The agreements for Air Traffic Control with the AAI, as well as the Operational and Management Service Agreement will soon be formalised.

The EPC contract will be ready in the next 2-3 weeks. It will take about 6 weeks for all these agreements to fall in place and declare a financial closure."

However, Brunner said that all other agreements will easily fall in place once the concessional agreement receives complete clearance.

Once the clearance is received , a financial closure will be reached, paving way for the beginning of construction.

The concession agreement involves payment of an upfront fee, a percentage of the revenue generated from the airport operations, including air traffic, landing rights and aircraft parking charges from domestic and international airlines, passenger fee, customs tariffs, cargo and other services. The concession agreement also seeks liquidated damages if the airport fails to commence operations on schedule.

Having once again missed his "final deadline" of "February 15, 2004," as the date for commencement of construction work, Chief Minister SM Krishna said, "We are now in a position where there is no looking back. We can now see the light at the end of the tunnel despite facing innumerable problems."

The first phase of the new airport is expected to handle around 4.5 million passengers and 1.4 lakh tonnes of cargo, annually.

It will initially have a single runway and a spacious terminal building and then be expanded to two runways with two more terminals. The master plan allows for permanent growth of the commercial and airport-related areas.

A consortium, comprising of Siemens Project Ventures, Unique Zurich Airport, the Airports Authority of India (AAI) and Karnataka State Industrial Investment &and Development Corporation (KSIIDC) has signed a memorandum of understanding (MOU) with ICICI Bank for the $100 million debt portion, which amounts to 43 per cent of the $245 million project.

With $65 million or 25 per cent of the project cost constituting equity, the Karnataka government will be chipping in $80 million or 32 per cent of the total cost, excluding the cost of leasing the land, measuring 4300 acres.

As the main consortium partner, Siemens will have 40 per cent of the equity stake, while its other two partners, Larson & Tubro and the Zurich airport will hold 17 per cent. The other two stakeholders, namely, the AAI and KSIIDC will hold the remaining 26 per cent at 13 per cent each.