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Krishna steps up effort to get international airport for Bangalore

Bangalore, aka the Silicon Valley of India, is witness to a business battle of the non-infotech variety these days. Global airport construction majors are fiercely competing to bid for the new Rs 12-billion ultra-modern international airport project at Devanahalli near Bangalore.

Ever since the Tata-Singapore Airlines consortium withdrew its joint venture proposal for the new Bangalore airport two years ago, the Karnataka government has been pressing for a world-class airport in the city.

Bangalore exports software worth Rs 50 billion every year.

Nearly for five years, the airport idea remained dormant as it hit project and technical snags under the then J H Patel government.

But after the Congress government headed by Chief Minister S M Krishna came to power last year, the airport idea was revived. However, what Krishna faced was a different 'problem' -- competition from Andhra Pradesh Chief Minister N Chandrababu Naidu who too has been pushing for an ultra-modern international airport at Shamhsabad near Hyderabad.

In fact, when the technical feasibility clearance by the Airport Authority of India for the Shamshabad airport coincided with Naidu's decision to support the National Democratic Alliance government led by Prime Minister Atal Bihari Vajpayee last year, Krishna pressed the panic button.

For, the AAI and aviation experts raised one moot point: South India has the potential for only one ultra-modern international airport and, therefore, it would not be financially viable for both Bangalore and Hyderabad to co-exist unless air traffic from the region shoots up dramatically.

Moreover, the international airport construction majors pitching in for both the airports are the same, thanks to the similarities in the airport project implementation patterns.

"But we have fought every battle to finally begin work on the Devanahalli airport. We have received all the necessary clearances for the project and the construction should start anytime in 2001," Karnataka Heavy and Large Industries Minister R V Deshpande told rediff.com.

Last week, the state government short-listed six international majors for setting up the country's first world-class and most prestigious airport in Bangalore. They are Siemens AG, Bectel Enterprises International, Reliance Industries, ABB Airport Technologies, Hochtief Airport GmbH and Schipol Asia SDN.

The six companies have proven track records of setting up major airports across the globe. For instance, Siemens constructed the Munich Airport, Bectel the DNATA Airport in Dubai, Reliance the Changi Airport at Singapore, ABB the Berlin Airport in Germany, Hochtief the Dusseldorf airport in Germany, and Schipol the Amsterdam airport.

According to Deshpande, the state government received 17 global bids, but short-listed only six as only they met the strict requirements. The foremost requirement is that only global consortia with an average annual turnover of Rs 10 billion-plus over the last five years would be eligible to bid for the venture.

The consortia representatives are getting ready to present their credentials before the hi-powered airport committee that is headed by B S Patil, principal secretary (commerce and industry). They will present before the committee the airport lay-out design, its development and business plan, and detailed technical and financial reports for the project.

The consortium that makes to the top bidding will walk away with a 74 per cent stake in the airport venture, while the remaining 26 per cent equity will be equally shared by the state-run Karnataka Industrial Development Board and the Airports Authority of India.

While the government is hoping to pick up the successful bidders by July and kick off the venture by January 2001 at the sprawling 4,200 hectares of land that it has already acquired at Devanahalli, Chief Minister Krishna has put forward a crucial demand before the Central government.

Officials in Krishna's office said that he has already written to Prime Minister Vajpayee demanding that the new airport project should be provided infrastructure status and customs duty waiver.

Officials said infrastructure status for the new airport is very crucial as it would provide the project a host of incentives including a tax holiday, smooth funding from financial institutions and banks for long gestation periods.

"But the catch is that according to the central government rules, no project with a government stake is granted infrastructure status. Therefore, we are pressing the Vajpayee government to award the airport project a tax holiday even though the government has a 26 per cent equity in it," a senior official told rediff.com.

He said the government has also sought customs duty relief for the airport project to ensure that the international consortia could import state-of-the-art construction machinery and equipment without any hurdles.

Krishna's demand for infrastructure status and customs duty clearance for the project is said to be under consideration before the Civil Aviation Ministry in New Delhi.

But whether the project gets infrastructure status or not, Krishna is now finalising a host of support infrastructure plans like uninterrupted power and water supply, and high-speed roads to the airport that the state government will provide.

From The Rediff Archives:

Devanahalli near Bangalore gets international airport status

UF leader demanded Rs 500 million bribe to clear Bangalore international airport: Hegde

Govt will build Bangalore airport if Tatas back out: Ibrahim

Karnataka CM urges Centre to clear world's first private sector airport project

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