Durgapur: The Pune of Kolkata

By early 2011, Durgapur, a small industrial town outside of Kolkata, hopes to have its own airport. The project is being set up by a joint venture between HUDCO (with a holding of 26 per cent) and a relatively unknown (and largely unproven) private developer Pragati 47 (it holds 74 per cent) over 2,300 acres.

At present, the total project cost for the airport is expected to be around Rs 550 crore (Rs 5.5 billion), with an equity of Rs 200 crore (Rs 2 billion) and a debt of around Rs 350 crore (Rs 3.5 billion), which is being syndicated by ILFS.

The initial planned capacity of the airport is at two-three million passengers annually.

However, at a later stage, the promoters feel, the airport can be expanded to include international operations and are providing for a second runway.

Changi, Singapore has been roped in by the promoters as a technical collaborator and an operator for the first 12 months of operation, but talks are on to convince Changi to convert into an equity commitment, which would then lend substantial weight to the venture.

An agreement has been signed with West Bengal Industrial Development Corporation, which will arrange the land for the project. The land will be purchased and then leased to the developer for roughly Rs 200 crore.

Water, power, drainage and other such facilities will be provided by the state government, which sees the whole project as a way to balance regional development.

On the face of it, the airport's location seems convincing. The closest airport to Durgapur is Kolkata -- at 170 km, a flight of around 30-40 minutes and a not-so-comfortable drive of around three hours by road. Kolkata currently handles over eight million passengers annually.

Durgapur and the district of Bardhaman have their own traffic catchment. There are rich agriculturists in the region which is as prosperous as parts of Punjab and Haryana, with high productivity of rice, potatoes and vegetables. The rice mill and cold storage owners can well afford to fly.

There are three steel plants, two cement plants, an engineering plant, a chemical plant and a carbon black plant - all in one district. A lot of mining is done in the area in the eastern coal fields of the same district.

Across the border in Jharkhand is Dhanbad which doesn't have it own airport. The closest airport to Dhanbad is Ranchi, 240 km away.

The city, however, is 80 km from the proposed facility. There's also Bokaro (which again doesn't have an airport) but has large steel plants and plenty of people who'd be happy to minimise their travel time by road. The region, according to its promoters, is the largest in India with an urban population of four million within a 50-km radius but without an airport.

A study by IMRB -- which says that the traffic potential will be around 4.6-5.6 million annually by 2010-11 - has sealed the promoter's convictions.

But as the promoters see it, Durgapur will not be just an airport, the formal commissioning of which is planned for this year end. The plan is to build a brand new city or what is popularly known these days in India as an 'aerotropolis'.

Along with the airport, a whole city is expected to come up with an industrial park, an information technology park, a special economic zone, a residential township (over 600 acres and able to house around 100,000 people), a logistics hub, schools and -- I'm sure, going by the current flavour of the season -- an MRO and an aviation academy.

All this will take the total investment to over Rs 10,000 crore (Rs 100 billion), which the promoters hope will be divided among various stakeholders.

Raj Shekhar Agrawal, one of the promoters of the new city who I met recently, says that the project is as much about developing a new city as it is about building an airport. He says that by 2020, of the country's estimated population of 1.25 billion, 40 per cent will be living in urban areas (500 million).

That's up from 330-350 million today. That means there will be 50 per cent additional people living in existing urban agglomerations. I couldn't help but agree that it does sound a bit difficult. So, reversing the logic, he says if you build a new city, why wouldn't one build an airport to go with it. The entire model is "dependent on exploiting the synergies between the two -- the airport and the new city."

The two will feed each other. He says Durgapur is what Pune was 15 years ago to Mumbai. A lot of industrial investment and activity was taking place, especially as it developed as an auto hub but the social infrastructure didn't really keep pace.

Durgapur, he believes, will be different in that respect. The development his company will do will ensure that Durgapur will not face the same hiccups that Pune did in its initial days.

I don't want to doubt the promoter's good intentions, but with projects like this, there is many a slip between the cup and the lip.

However, if things do go as planned, what we may be witnessing is the building of the Pune of Kolkata. And if it actually works, it could just be the beginning of a new era.