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Price negotiations to begin for Bangalore airport project

Imran Qureshi in Bangalore

Negotiations over price between the Karnataka government and a Seimens-led consortium, the preferred bidder, to construct the Bangalore international airport are expected to begin on August 13.

The government has named a nine-member panel headed by principal finance secretary C Gopal Reddy to negotiate the cost of building the airport at Devanahalli, about 25 km from Bangalore.

Other panel members include representatives of the Airports Authority of India, Nasser Munji of the Infrastructure Finance and Development Corporation and an international expert.

The Seimens-led consortium, consisting of Zurich Airport and L&T India, was chosen as the preferred bidder over the Hochteif-led consortium primarily due to cost considerations. Hochteif has been asked to stand by.

The two were among seven bidders short-listed from a field of 17. Siemens will hold 74 per cent equity in the joint venture project. The rest will rest with the state government and AAI.

"The negotiations are scheduled to begin August 13. It is difficult at this stage to say how the negotiations will progress," a senior official said. "As of now, we have no information from the consortium that the project is unviable."

But sources said the consortium might seek loan from the state government to begin work. The project, approved by New Delhi in 1994, has been bogged down by controversies.

Hochteif had put up a fresh proposal last month before the state cabinet met to pick the preferred bidder. The government hopes to leverage this to beat down the bidders on the pricing of the project.

Seimens had put the cost of the project at $251 million against Hochteif's $321 million based on their designs that projected annual traffic of 3.7 million and four million passengers, respectively.

Seimens outscored Hochteif in other areas as well: its cargo design capacity was 140,000 metric tons against Hochteif's 110,000 metric tons; its processing time for check in was 1.9 minutes and Hochteif's was three minutes and passport control was 0.3 minutes to Hochteif's 1.3 minutes.

Another reason that went in favor Seimens was that it wanted the state government to contribute Rs 4.3 billion or $85 to $95 million. Hochteif put the figure at $130 million or Rs 6.11 billion.

Indo-Asian News Service

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