SBI takes over as lead financier of Navi Mumbai Airport project

Mumbai: State Bank of India (SBI) has taken over as the lead financier for India’s costliest airport project planned to be set up in Navi Mumbai, said multiple people aware of the development.SBI has agreed to disburse a term loan and facilitate the much-delayed financial closure of the Rs 16,000-crore Navi Mumbai International Airport, to be built by the GVK Power & Infra-led consortium that runs the commercial capital’s current airport, which is India’s second busiest and most congested.SBI would be the lead bank for two phases of the project. It will be contributing about Rs 4,000 crore-4,500 crore in the total loan funding of more than Rs 10,000 crore. A few additional domestic financiers could also participate.People in the know also said that China’s Asian Infrastructure Investment Bank (AIIB) has been approached for the funding. It couldn’t be ascertained whether AIIB has agreed to be one of the bankers.Yes Bank, which is facing considerable liquidity problems, was earlier the lead financier of the project. Emails sent to GVK and SBI remained unanswered. An AIIB spokesperson declined to comment.GVK Power & Infra has been trying various routes, including the bond market, to raise funds for the Navi Mumbai airport project. Arranging funds was also difficult as many lenders were unsure about the viability of the much-delayed project that has faced land acquisition issues. Besides, GVK that won the contract in 2017 also has sizeable debt on its balance sheet. While SBI’s participation gives a new lease of life to the project, the delay already caused will likely push the first take-off deadline by at least two years beyond 2021, said multiple people aware of the situation. Meanwhile Larsen & Toubro (L&T), the infra arm of which has been given the EPC contract for the airport, hasn’t been given a final letter of approval to start work. Construction was supposed to start in October.“L&T will take at least six months to start work after getting the final letter of approval. From then, the first phase will take two years to be completed,” said one of the people cited above.L&T did not respond to ET’s mailed queries.Earlier this year, GVK got into binding agreements to sell close to an 80% stake in its wholly owned airports business to ADIA, NIIF and PSP for Rs 7,614 crore.GVK plans to use the money to retire debt and also to buy additional stake in MIAL from its partners South African firm Bid Services Division Mauritius or Bidvest (13.5%) and the Airports Company of South Africa (10%), taking its stake to 74%. The remaining 26% is with state-run Airports Authority of India (AAI). Adani Group is also keen on the Bidvest stake. The Navi Mumbai airport, first approved by the Maharashtra government in July 2008, is seen as a critical alternative to the existing airport in India’s financial capital. The new airport will be built on 1,160 hectares of land in phases. The initial concession period is 30 years from the appointed date and is extendable for a further 10 years.

from Economic Times https://ift.tt/2u2p7LJ