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The government of India signed the concession agreement with the Bangalore International Airport Limited.

The agreement grants the rights to build own and operate the greenfield airport at Devanahalli, 30 km north of Bangalore. The initial tenure would be 30 years with an option of renewal for another 30 years.

It also provides for rights and obligations of the government and the airport, O&M standards including monitoring thereof, airport charges, provisions for reserved activities like customs, immigration, security and resolution mechanism for disputes if any.

The partners in the Rs 1300 crore project include Siemens with 40 % and Zurich Airport and Larsen & Toubro with 17 % each. The Karnataka government and the Government of India also hold 13 % each in the venture.

Signing of the agreement paves the way for signing of other agreements including the financial closure. While the total debt of the project is Rs 600 crore, it has an equity of Rs 350 crore.

The Karnataka government has issued a soft loan of Rs 350 crore. The construction is expected to begin by September and would be completed by the summer of 2007, company officials said.

Signing of the concession agreement is a historic step in the civil aviation sector as it would pave the way for setting up of more such greenfield airports, the civil aviation minister, Mr Praful Patel, said at the signing ceremony.

"The aviation sector would now no longer be restricted to flying but developing airport infrastructure too", Patel said and added that it would usher in a new era of infrastructure development.

He also wished there would be healthy competition between the developers of the Hyderabad and Bangalore airports over completion of their respective projects. The concession agreement for the Hyderabad airport, however, is yet to be signed.

Among the dignitaries present at the signing ceremony included the Karnataka chief minister, Dharam Singh, Union minister of state for statistics and programme implementation, Oscar Fernandes and senior officials of the Union civil aviation ministry and the Karnataka government.

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