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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.
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