The Larsen and Toubro-Siemens-Unique Zurich Airport consortium,
the developer of the Bangalore International Airport,
and the Karnataka state government have forwarded a proposal
to the union government to convert the foreign travel
tax and inland air travel tax in favour of the developer.
The proposal comes with the rider that Karnataka will
provide land and rationalise the 23-per cent sales tax
it levies on air turbine fuel.
the development, a senior L&T official says: Currently,
the government is examining the viability of our proposal
and a favourable reply is expected soon. Such relief will
substantially reduce Karnatakas burden of supporting
the airlines are collecting these charges directly from
passengers, later distributing the respective shares to
organisations like the Airport Authority of India and
the International Association of Travel Agencies.
the proposal materialises, the L&T-Siemens consortium
will attract an FTT component of Rs 25 crore annually
(at Rs 500 apiece from the projected half-a-million outbound
passengers each year), and the project will benefit from
the 15-per cent surcharge from 3 million inland travellers,
besides any additional levy.
Bangalore International Airport is to be developed by
the L&T-Siemens-Unique Zurich Airport consortium.
While the consortium will hold 74 per cent of the equity,
the Karnataka State Industrial Development Corporation
will hold 14 per cent. The Airports Authority of India
will hold the remaining equity.
official says the total cost of the project is estimated
at Rs 1,500 crore. The Karnataka government has agreed
to put in around $80 million. Project developers will
infuse the remaining amount, and the debt-equity ratio
of this amount will be 70:30. Consortium members
will mobilise funds through a rupee-dollar combination,
and L&T is in talks with leading financial institutions
and banks to mobilise the rupee loan component of the
promoters are in talks with two international credit guarantee
agencies Multilateral Investment Guarantee Agency
and Hermes of Germany to extend political risk
and export credit risk cover to the proposed international
airport, the official adds.
a World Bank affiliate, covers investors and lenders against
a series of risks, including political, legal breach of
contract, war and civil disturbances, while Hermes, the
export credit guarantee agency, is providing equipment
credit cover to Germany-based companies. Siemens AG, the
Germany-based engineering major, is the equipment provider
for the airport project.