AAI's bond issue stuck, airport revamp to be hit

New Delhi: India's ambitious airport revamp plan has hit a serious financial roadblock and passengers may have to wait much longer for world class facilities in many cities. The Airports Authority of India (AAI) has deferred its upgrade plans at several airports as the government has not cleared its old request for raising Rs 5,500 crore by issuing tax free bonds.
Instead, the authority will now raise this money from banks at a much higher cost at nearly 8.5% instead of 7% associated with tax free bonds. With the cost of capital going up substantially and revenue subdued, AAI has now decided to take up several projects at a later date.
During the 11th five year plan, we were to spend Rs 12,500 crore. Initially we felt tax free bond route will be taken for raising Rs 2,500 crore. Later with resources expected to be raised from other places drying up, this amount was raised to Rs 5,500 crore Rs 1,500 crore from public and rest from banks, said a senior official. But with the government sitting on its request tax free bonds for over five months now, the AAI has tweaked its plans and has adopted a three-pronged strategy.
Among the projects that have been deferred are construction of a new international airport at Bhubaneswar; new terminals in Leh and Port Blair and extending runway at Jaipur.
31/10/09 Saurabh Sinha/Times of India

To Read the News in full at Source, Click the Headline

Categories: Airports Oct 2009