Bonds rejected, AAI may turn to FIs for Rs 1,200cr

New Delhi: Public sector airport operator Airports Authority of India (AAI) has plans of borrowing up to Rs 1,200 crore from financial institutions by the end of the fiscal as the government has turned down its proposal to raise tax-free bonds for funding airport modernisation projects. Faced with revenue shortfall of about Rs 2,000 crore during the current fiscal due to a dip in air traffic and an increase in capital expenditure, the AAI is finding it difficult to fund its airport modernisation plans.
“We would borrow Rs 1,000-1,200 crore by the end of March 2010,” a senior AAI official said.
The finance ministry recently rejected the airport developer’s plan to issue tax-free bonds in the market as alternative source of funding airport upgradation projects.
“The finance ministry turned down our proposal saying the government does not want to encourage issuance of tax-free bonds in the infrastructure sector,” the official said.
AAI, the country’s largest airport operator, is currently modernising 35 non-metro airports besides two metro airports in Kolkata and Chennai with an estimated investment of Rs 12,434 crore.
As the capital expenditure of the AAI has shot up over the last few years, the agency is facing a revenue shortfall of over Rs 5,100 crore for airport development during the Eleventh Five year Plan ending March 2012. A fall in air traffic due to several factors, including the global slow-down and the swine-flu scare, has also not helped matters.
14/11/09 Nirbhay Kumar/Economic Times

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Categories: Airports Nov 2009