IndianOil mulls 10% stake in Aranmula Airport
Chennai   11-Mar-2013

Close on the heels of Kerala state government picking up 10% stake in the upcoming greenfield airport in Aranmula, PSU oil giant IndianOil is negotiating a 10% stake in the project.

The state government of Kerala has picked up 10% stake in the project and has also nominated one member to the board of the company. "We also had issues with respect to 55 acres of land in the land parcel which is part of the project site. That has also been given to us and we are now nearly ready to begin construction," said Gigi George, managing director, KGS Aranmula Airport, the company which is executing the project. He did not wish to comment on the stake dilution to IndianOil. It is learnt that the airport developer is seeking Rs 100 crore for a 10% stake and the transaction is pending valuation. The petroleum company will also set up a fuel farm in the airport.

The construction of the airport is expected to begin in few weeks time and airport operations may begin operations by 2014. Minor protests at the airport site is holding back construction. "There are minor protests. We want to take everybody into confidence and then proceed with construction. We will begin in the next couple of weeks," George said. "All approvals required for the airport from various ministries are ready with us."

The company has achieved financial closure for the project. The first phase, with an investment of Rs 550 crore, will be completed with debt equity of 1:1. KGS Aranmula has tied up a consortium of banks with State Bank of India as the lead member. The promoters will pitch in with Rs 275 crore as equity in the first phase while the rest will be debt funded. KGS Aranmula, when operational, will be Kerala's fourth after Tiruvananthapuram, Kochi and Kozhikode. The total land required -- 700 acres has been fully acquired. The terminal building will be designed to hold 1,000 passengers at a time. The airport complex will have an SEZ, a multi-specialty hospital, shopping mall (wither Lulu or Phoenix), a luxury hotel and an international school.

"The biggest draw for the airport in terms of traffic will be Sabarimala, the second largest pilgrim centre which is just an hour away," George said. Sabarimala draws nearly 60 million pilgrims a year. Air traffic in Kerala has multiplied 5 times in the past 8 years, he said.