Bangalore airport project -- MIGA likely to provide political risk cover

Our Bureau

BANGALORE, Nov. 12

THE Multilateral Investment Guarantee Agency (MIGA) has expressed its intention to extend political risk cover to the proposed Rs 1200-crore Bangalore International airport, the MIGA Executive Vice-President, Mr. Motomichi Ikawa, said.

MIGA, a World Bank affiliate, covers investors and lenders against a series of risks including political, legal breach of contract, war and civil disturbances.

MIGA provides cover on project basis, ranging from 0.3 per cent to one per cent of the total risk cover, but on special occassions the agency has charged 1.5 per cent. The agency covers up to 90 per cent of the equity investment and 95 per cent of principal debt. MIGA can cover single projects up to $200 million on its own. Post-September 11, there has been a sea-change in risk-perception, Mr Ikawa said. This is despite the fact that most private sector insurers have chosen to hike premia in a bid to cut underwriting losses. ``We have offered our willingness to the Karnataka Government to provide risk cover to the new airport," Mr Ikawa said. With a slowdown cramping down the global economy, traffic volumes also registered a drop in the existing airport of Bangalore, the technology capital of India. With a passenger load factor discounted in, MIGA's premium is likely to be in the ``normal'' band, a State finance official said.

The Bangalore International Airport is scheduled to be developed by the Siemens-Unique Zurich Airport-L&T consortium. While the consortium will hold 74 per cent of the equity, 13 per cent will be held by the Karnataka Government and the remaining by the Airports Authority of India.