"Indian airport may fall through"

Thursday, October 28, 2004

International Airport may fall through
The Times of India


BANGALORE - The Karnataka government has decided to take its own time in
finalising agreements for the Bangalore International Airport (BIA) at
Devanahalli, as financial implications for the state are "serious."

Infrastructure minister P.G.R. Sindhia told The Times of India here on
Tuesday: "Neither the state government nor the Bangalore International
Airport Limited (BIAL) have been informed that consortia members are unhappy
about the pace we have set. We cannot react to what has been said in the
media. We want to rework the state support amount for the project and if
somebody is unhappy about it, we cannot help it."

The clock, however, is ticking fast for the BIA: if Karnataka does not clear
the twin hurdles of state support and land-lease agreements within this
year, the project may just fall through. And yet again, Hyderabad will be
the gainer, at the cost of the Silicon City.

A BIA senior representative said: "The Hyderabad private airport has signed
all agreements and is going full-steam. At this rate, it will be built first
and take away bilateral agreements with airlines, making BIA redundant."

With all three consortium partners Siemens, Larsen & Toubro and Unique
Zurich Airport - openly airing dissatisfaction, the situation for BIA is
deja vu: in 1998, the Tatas-Raytheon-Changi Airport consortium pulled out of
the project citing "political and bureaucratic" delays.

"The project is at an impasse, because the Karnataka government has reopened
the issue of state support and is trying to push the amount down by Rs 75
crore. We have firmly said this cannot be renegotiated," the consortium
representative explained.

There is severe time pressure on the project: the Unique Zurich airport has
told their partners that they cannot take the running expenses of the
project and will have to pull out, if it extends beyond March 2005. The
time-frame being given now is: agreements to be signed by November,
financial closure by December and full commencement of work by February. "If
this is not met and our partner pulls out, the clock will go back to 2000,"
the representative warned.

Infrastructure secretary Vinay Kumar said he was confident the the December
deadline would be met. "As per the concessions agreement, we have time till
December for financial closure. We spoke to all the consortium partners and
no one has indicated any problems. We are waiting for the concurrence of the
finance department to go ahead," he stated.


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