In a further setback to the controversial Bangalore international airport project, one of the partners of the Tata-led consortium has pulled out of the project.
Singapore-based Parameshwara Holdings, whose director S Dhanabalan is also the chairman of Singapore Airlines, has withdrawn from the project on the grounds that it is not financially viable on a Build-Own-Operate-Transfer (BOOT) basis.
The consortium had initially signed a memorandum of understanding (MoU) with the Karnataka government to construct the airport on a Build-Own-Operate (BOO) basis. However, the Union civil aviation ministry had objected to the MoU and insisted that all airport projects should follow the BOOT system.
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The ministry had subsequently constituted a 10-member committee headed by Airports Authority of India chairman and managing director Ranjan Chaterjee to resolve the contentious issues which have stalled the project.
A Tata Industries representative said Parameshwara Holdings' decision would not affect the commitment of the consortium to the project. Such realignments would continue to take place until all the plans are firmed up, he added.
The representative denied reports that the Karnataka government was planning to scrap the MoU and call for a fresh tender. ``They have been completely transparent in their dealings,'' he insisted.
The representative said the consortium members were willing to include a clause in the shareholders' agreement which would allow the Karnataka and Union governments to increase their stakes in the project whenever they wish to.
The contentious issue of the airport's transfer could be covered in this clause, he pointed out, adding that the shareholding pattern details could be specified when the memorandum of agreement (MoA) is drawn up.
``Hence there is no justification for retendering at all,'' said the representative. ``We would, in fact, welcome the government's help in the project,'' he added.
The consortium's representatives met new civil aviation secretary M K Kaw on May 2 to brief him about the status of the project.
Consortium members insist that the BOO model is the most appropriate method of attracting investors in the absence of any government guarantee. Even the Cochin international airport as well as many other power and telecom projects are being implemented on a BOO basis, the consortium has argued.
In contrast, the BOOT model is considered more suitable for projects where the scope of the project is clearly defined. The consortium has repeatedly emphasised that the BOOT system should be followed only when small expansions are proposed to existing infrastructure and market conditions during the life of the project do not necessitate any changes in infrastructure.