BIAL not consulted before final aiport clearance

The state government has announced with much fanfare that it has 'cleared' the Bangalore international airport project. But, it has not negotiated and obtained the agreement for the Bangalore International Airport Ltd (BIAL) on most of the key changes announced along with the clearance by chief minister N Dharam Singh.

With this twist, it remains to be seen how the state government deals with private promoters of the international airport in taking forward the project.

Sources close to BIAL told Business Standard that certain important decisions that were announced as part of the 'final clearance' to the international airport project were never discussed with the BIAL.

These sources said, "We have never negotiated on a few things. We were never really informed of the decisions taken by the state government. These include the withdrawal of sales tax exemption of Rs 30 crore as well as the land lease agreement. We would have preferred to negotiate before the Cabinet took the decision."

The source said that the sales tax exemption was part of the tender when the bidding for the airport took place. "We are upset it has been conveyed in this manner. The deal that has been made public has been presented to us as a fate accompli."

When asked if BIAL had negotiated the execution of the project on 4,000 acres instead of the 4,400 acre, the source said that BIAL had only indicated and not actually agreed on the matter. "About one-and-a-half years ago, we had indicated we will give up 400 acres. But there is increasing pressure on the viability of the project, especially due to long delays," the source said. Less land means less commercial development, affecting the commercial viability of the project.

Highlighting another unilateral decision on the part of the state government, the source said the government of Karnataka was yet to give a bank guarantee on the Rs 350 crore state support promised. In view of all this, the BIAL has merely passed on its decision to private promoters.

The Karnataka State Industrial Investment and Development Corporation and the Airports Authority of India have 13 per cent stake each in the project.

The Siemens consortium has a 74 per cent stake and is lead by the Siemens Project Ventures GmbH of Germany, Unique Zurich Airport and construction major L&T. ICICI Bank is the lender for the project.