GVK to partner Indonesian state firm for Java airport project

Indian infrastructure major GVK Power & Infrastructure is joining hands with Indonesia's state-owned infrastructure firm PT Angkasa Pura I in a project to build a second airport in the Javanese city of Yogyakarta.

GVK, the first foreign firm allowed to own a stake in an Indonesian airport, will have a major share in the $700 million project. 

GVK's share in the joint venture, however, will not be more than 49 per cent. The deal is yet to be finalised and must be approved by Angkasa Pura's shareholders.

Construction of the airport is expected to start in 2015, with operations starting as early as 2017.

Angkasa Pura will fund the project through loans or equity.

It was not clear if the new airport would complement or replace the existing airport.

The Indonesian company, which manages 13 airports, also plans to increase capacity at two other domestic airports next year for around $300 million each.

As part of its work to expand airport capacity and infrastructure, Angkasa Pura I increased the capacity set up a new international terminal at the airport I Gusti Ngurah Rai in Bali in September this year, with an investment of Rp2.8 trillion.

The expanded airport is capable of serving 25 million passengers per year, against the previous capacity of 7 million passengers per year.

Indonesia, meanwhile, announced plans for $35 billion investment in new infrastructure projects from next year in a bid to tackle infrastructure constraints.

The Indonesia's government is expected to announce by the end of this year new regulations that will open up foreign investment to the country's airports and ports.