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GMR Group is set to secure a substantial INR 4,000-crore loan for the construction of a greenfield international airport in Visakhapatnam (Vizag), a move that underscores the company's strategic expansion in the aviation sector. This financing initiative is led by a consortium headed by India Infrastructure Finance Company (IIFCL) and involves a 14-year loan at an estimated interest cost of 10%. The Vizag Airport project represents a key development for GMR, aiming to bolster its aviation infrastructure portfolio following the restructuring that led to the separation of its airport and non-airport revenue streams into distinct listed entities two years ago.
Situated in the coastal commercial hub of Vizag, known for its major port and steel unit, this new airport marks GMR's fourth major aviation venture in India, complementing its existing airports in Delhi, Hyderabad, and Goa. The IIFCL-led consortium is facilitating funding for GMR's latest airport endeavour, planned in three phases. The initial phase is designed to cater to 6 million passengers annually, with subsequent phases scaling up to accommodate a total of 40 million passengers per year.
PR Jaishankar, Managing Director of IIFCL, emphasized the organization's proactive role in supporting greenfield airport developments across the country. IIFCL's recent involvement in partially financing the Bhogapuram Airport in Andhra Pradesh underscores its commitment to fostering critical infrastructure projects.
The sanctioned 14-year loan, with an interest cost of around 10% per year, includes moratoriums on repayment during the airport's construction phase and extends until one year after the airport becomes operational. Additional financial support is anticipated from entities such as Rural Electrification Corporation (REC), Power Finance Corporation (PFC), and various public sector banks forming part of the banking consortium.
The Vizag Airport is strategically located in Bhogapuram on the outskirts of the city, spanning over 2,200 acres. While GMR did not respond to queries from ET, the airport's significance extends beyond addressing aviation needs. It is poised to play a pivotal role in the development of the state, fostering increased tourism in the northern Andhra region. Positioned as an alternative to the existing airport, which primarily serves the armed forces, the Vizag airport aligns with broader economic and regional development goals.
GMR's decision to split its airports and non-airports businesses in August 2020, with regulatory approvals obtained in December 2021, has set the stage for focused and specialized operations. The vertical stock split resulted in the creation of two distinct listed companies: GMR Airport Infrastructure, housing the airports business, and GMR Power and Urban Infra, encompassing power generation, roads, and SEZs.
Furthermore, GMR has a strategic joint venture with France's Groupe ADP, responsible for operating all three airports in Paris. This collaborative effort underscores GMR's global engagement in building and operating airports, leveraging international expertise.
In conclusion, GMR's ambitious venture to build the Vizag international airport is not just a testament to its aviation infrastructure prowess but also aligns with broader economic and developmental objectives. The robust financial backing from the IIFCL-led consortium, along with anticipated contributions from other financial entities, positions the project as a catalyst for regional growth and connectivity. As the aviation landscape evolves, GMR's strategic initiatives continue to shape India's infrastructure trajectory.
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