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Press Information Bureau
Government of India
Ministry of Civil Aviation
15-December-2004 19:0 IST
Cabinet approves Draft Concession Agreement for Hyderabad International Airport
The Union Cabinet today has approved the Draft Concession Agreement to be executed between the Government of India and the Hyderabad International Airports Limited (HIAL).

In December, 1997 the Ministry Civil Aviation announced its policy on Airport Infrastructure. Amongst others, the policy provided for private sector participation in airport infrastructure. This encouraged the State Government of Andhra Pradesh (GOAP) to promote a Greenfield airport at Shamshabad near Hyderabad under joint venture with private sector participation.

The Union Cabinet, on 13 April 2004, had accorded ‘in principle’ approval of the proposals of the Andhra Pradesh Government for the construction of Greenfield airport of international standards at Shamshabad near Hyderabad under joint venture with private sector participation.

To carry the airport project forward, on 23rd November 2000, a Memorandum of Understanding (MOU) was signed between Airports Authority of India (AAI) and Government of Andhra Pradesh. As per the MOU, Government of Andhra Pradesh and AAI together will hold 26% of equity of the project, while balance 74% would be held by the Joint Venture Partner (JVP).

Through a bidding process, the State Government of Andhra Pradesh has selected a consortium - led by GMR Infrastructure with Malaysian Airport Holding Berhard (MAHB) as the other member - as the JVP for implementation of the project. The JVP will hold the majority equity (74%) in the project. A new company namely Hyderabad International Airport Limited (HIAL) has been formed. On 30 September 2003, a Shareholders’ Agreement of the project was signed amongst the ‘State Promoters i.e. Government of Andhra Pradesh and Airports Authority of India’ and ‘Private Promoters e.g. GMR and MAHB’.

The project is proposed to be implemented on a Build, Operate and Transfer (BOT) basis with private sector participation and the total estimated cost of the project is INR 1385 crore including INR 422 crore (Rs. 107 crore Grant and Rs. 315 crore Interest Free Loan) of State Support to be provided by Government of Andhra Pradesh for making the project economically viable.

The Air Space Management Structure for the proposed airport has also been finalized in consultation with Indian Air Force, Airports Authority of India and Director General of Civil Aviation (DGCA) and forwarded to the Ministry of Defence. The Ministry of Defence has issued an NOC for the project as have the Ministry of Environment and Forest.

In order to provide a legal frame work for setting up of Greenfield airports, the AAI Act, 1994 has already been amended. The amended Act has come into being w.e.f. 1st July, 2004.

A series of meetings between the Ministry of Civil Aviation, Airports Authority of India and the HIAL Led to the formulation of a Draft Concession Agreement which was then circulated to the Ministries of Finance(Department of Economic Affairs), Law, Home Affairs, Defence and the Planning Commission. Their comments were received and incorporated in the Draft Agreement.