New Delhi: The civil aviation ministry proposes to set up an aviation finance company on the lines of Power Finance Corp after facing resistance from banks on financing at least 100 new regional airports. The proposal has to be approved by the finance ministry and the cabinet, said senior ministry officials.
They said the move was part of a plan to provide adequate resources during 12th plan, from 2012 to 2017. The Airports Authority of India’s 12th plan outlay is only Rs 15,000 crore or 19 per cent of the Rs 80,000 crore outlay for the aviation sector.
They said the move would allow higher leveraging of funds. Finance companies are allowed to leverage up to 10 times their net-owned funds. Even for operating airport companies, banks’ prudential norms seldom permit debt of 70 per cent.
Also, AAI’s balance sheet is unlikely to be sufficient to finance new airports and refurbish others. The authority has a net worth of Rs 7,000 crore, and at least Rs 4,000 crore is deployed in projects under development.
05/09/11 mydigitalfc.com
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