GMR’s fund gap may hit Delhi airport
Delhi International Airport Pvt. Ltd (DIAL), the operator of New Delhi’s Indira Gandhi International Airport, has warned the civil aviation ministry that work on the modernisation of the country’s second-busiest airport may come to a halt soon if the consortium is unable to raise funds.
This is the first time that DIAL, a GMR Infrastructure Ltd-led consortium managing the airport modernisation since the summer of 2006, has warned of a financial crunch that could affect the Rs8,890 crore project.
DIAL has not been able to raise the required funds it had expected by leveraging real estate, and the problem has worsened with banks backing off from releasing agreed-to amounts. Amid the downturn, the Delhi airport has seen a drop of 16% in domestic passenger traffic coupled with a 2% drop in international traffic.
It is understood that GMR had told the ministry that the firm has some Rs200 crore for the project that “will last about 45 days”.
This means that DIAL might miss the critical 31 March 2010 deadline for completion of the first phase of modernisation and expansion of the airport, ahead of the high-profile Commonwealth Games in the capital later that year. A key part of the project’s first phase is completion of a new terminal building, work on which is under way even as a new runway, also part of the first phase, is already complete and operational.
In May 2007, the airport operator had sought a land-lease proposal for a 45-acre land parcel, to raise at least Rs2,835 crore in refundable deposits that would fund modernisation of the airport. That proposal ran into regulatory hurdles with the ministry opposing the fund-raising plan as it was seen as a means to bypass some nearly 46% revenues that have to be shared with Airports Authority of India, or AAI, which holds 26% in the Delhi airport project.
After several rounds of discussions, DIAL was allowed to partially raise deposits for the same land-lease and it was believed that DIAL would be able to raise Rs1,500 crore, some Rs1,300 crore less than the original estimate.
DIAL has been asked to come back with other suggestions to help with the funding gap. A user-development fee, or UDF, such as the one charged at Hyderabad’s new airport, also run by a GMR-led consortium, could be one of the options.