• PAGE ONE
• INDEX
• HOME

International airport project -- Karnataka for 40 pc equity from lead promoter

Janaki Murali

BANGALORE, July 3

KARNATAKA has insisted on a 40 per cent minimum equity holding from the lead promoter, to be locked in for a period of, at least three years during the construction phase of the Bangalore international airport.

Sources say that the RFP (Request for Proposal) document had included this clause, which stated that the 40 per cent equity should be locked in for a minimum of three years or as the lenders stipulate.

The clause had also stated that the operator of the project should hold five per cent of the equity also for a lock-in period of three years.

Last week, bids for the project were received from two consortia led by German majors Siemens and Hochtief. The selected consortium will hold 74 per cent equity.

Sources said that 40 per cent was fixed, so that the promoters ``did not feel intimidated. It could have been 51 per cent, but we felt, 40 per cent from the lead promoter and another five from the operator, would work out to 45 per cent and the rest of 2 9 per cent could then be split between the other partners of the consortium.''

These measures were proposed to guarantee that the lead promoter and the operator remained with the project and did not walk out mid-way.

Sources also said that the lender could always insist that the lead promoter hold 51 per cent for a lock-in period of seven years, or even insist that the whole consortium's equity of 74 per cent be locked-in for seven years.

Airport Authority of India and Karnataka State Industrial Investment and Development Corporation will hold 13 per cent each in the project.

Meanwhile Government sources do not believe that the clause insisting on a minimum equity holding had deterred the three other investors, namely ABB, Schipol and Bechtel, who had dropped out during the bidding process. ``Such clauses should not scare awa y serious investors. We do not want to find ourself in a situation where we have to deal with a new partner mid-way, about whom we know nothing,'' said Government sources.

According to sources, the two unresolved issues, on which the Tata consortium had walked out of the project last year, were non issues now. As for the HAL airport, the State Government has already received a GOI communication that the present internation al status awarded to the HAL airport would automatically transfer to the new international airport as soon as it became operational.

The HAL airport would then go back to utilising its airport for test flying of Indian airforce aircraft and for emergency landing.

The second issue of landing and parking charges, sources said, had been clarified by the draft aviation policy, that these would be linked to the profitability of the project.

Meanwhile the Government hopes to complete the whole process of evaluation and selection of the lead developer, within four months, well within the deadline imposed by the Chief Minister, who had announced some time ago, that the airport would break grou nd on November 1, the Rajyotsva day.