Large part of Rs 2K-cr borrowings to come from overseas for AAI

New Delhi: The Airports Authority of India (AAI) is set to tap capital from overseas in the next fiscal to fund its airport development projects, a top official told ET, in what is perhaps the first time it would raise money abroad. “We have approvals to raise over Rs 2,000 crore. Of this, a large fraction will be through foreign borrowings,” AAI chairman Arvind Singh told ET.

The authority is a debt-free company and has AAA ratings, which will ensure that it gets funds at competitive rates, he added. The total outlay for 2020-21 is likely to be more than Rs 5,000 crore, and AAI plans to fund about 40% of its outlay through debt. Of the rest, about Rs 500 crore will come from the government for developing smaller airports for regional flights, and internal accruals. The Narendra Modi government has insisted that profit-making entities such as the AAI tap funding through debt and other modes to finance capital expenditure instead of through profits and cash reserves, so as to maintain a healthy debt-equity balance.

As part of its outlay for airport projects, AAI is in the process of investing about Rs 25,000 crore for building new airports as well as upgrading existing infrastructure — building terminals, parking bays and other facilities — at multiple airports.

A substantial part of the total outlay — about Rs 14,000 crore will go towards expanding and building new terminals, followed by greenfield airports that will cost about Rs 4,300 crore. About Rs 2,050 crore will be used to upgrade new defence airports for commercial operations to meet demand growth and Rs 1,700 crore is to be invested in upgrading Air Traffic Control infrastructure, among others.

AAI has also decided to award six more airports to private parties for upgrade and management, Singh said. “We have recently recommended six airports… based on potential for privatisation. The matter is still under consideration by the government (civil aviation ministry),” he added. The airports that have been recommended for privatisation are Varanasi, Amritsar, Raipur, Bhubaneswar, Trichy and Indore.

The process follows AAI’s move to privatise six airports early last year — Lucknow, Ahmedabad, Mangaluru, Jaipur, Thiruvananthapuram and Guwahati. Final award of these projects to the winner, Adani Enterprises, is pending and may take a few months more. The Union Cabinet in July approved the award of three of the six airports – Lucknow, Ahmedabad and Mangaluru – to AEL, approval for the other three is pending before it. “Security clearances for the (above) three airports have come... but conditions specified in the concession agreement have yet to be fulfilled by us and AEL. The actual handing over of these three airports would take a few more months,” Singh said.