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Pioneering airport-city project struggles to stay aloft

The project in Bengal, in which Singapore's Changi airport hold 26% stake, falls below expectations

Construction at the airport-city site
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The first ever in which ’s holds a 26 per cent stake was expected to be the pride of . Instead, a steady stream of pitfalls—from to allegations of corruption amongst promoters—has taken the sheen off the project.

It took only a few clicks of the mouse for developers of India’s first proposed airport- city project to zero in on Andal near the industrial belt of Asansol-Durgapur in West Bengal for the Rs 10,000-crore venture. “I was looking for abandoned airstrips in the region and spotted out the site through Google,” recalls , one of the founder promoter’s of Bengal Aerotropolis Projects Limited (), the special purpose vehicle developing the project.

Executing the project has been a whole different animal. The project, developed in 2006 and in which Singapore’s Changi Airport holds a 26 per cent stake, has been riddled with problems from inception and seems to have a habit of acquiring new ones. First, the project was dogged by an objection by Coal India who said that the plan infringed on valuable coal reserves. Then, there was the state government’s decision to develop another airport about 40 km away at Asansol. Both were not good news for a pioneering project—an airport-city that had an entire ecosystem built into it, from manufacturing units to business and residential complexes. And it’s not every day that you have a marquee name like Singapore’s airport authority interested in a project in India—that too in a state famous for agitations against industry.

The fog seemed to lift over the project when BAPL appeared to have settled things with Coal India by agreeing to underground mining with the entry being outside the project area. Plus, in a relief to developers, the state government had not yet gone ahead with its Asansol airport plan other than making the announcement. Things suddenly were looking up.

The bogey of land
Not for long. Of the total 2,300 acres required, West Bengal Industrial Development Corporation () acquired and handed over 1,818 acres of land to the BAPL for the project during Left regime, but that still left it short by a little under 500 acres. After the -led government took over, BAPL, in a pragmatic move, was quick to announce that it will reduce the project area by 144 acres (which needed to be freshly acquired) in keeping with the government policy of not acquiring land for industrial projects. The developers also made changes in the masterplan accordingly.

Partha ChatterjeeHowever, BAPL was hopeful of getting the other 338 acres, which BAPL CEO says, is “already under the process of acquisition.” Yet, that’s not what the government says. “Government will not proceed with acquisition of any further land. I have asked them to complete the airport first as they have more land than they require for that. This will bring confidence in the project,” West Bengal Industry Minister Partha Chatterjee recently said after meeting a delegation from Singapore’s Changi Airports International (CAI) led by its CEO Lim Liang Song.

Although there is no issue over the 650 acres on which airport will come up, the unavailability of this 338 acres may jeopardise the proposed city, if not the airport itself. “We envisaged the project as a whole, so the entire land is important for us. Of this, about 192 acres is owned by locals, while the rest is defence land. We are in talks with concerned parties and hopeful of getting the land,” Paul said. As per the original master plan, most of this land was demarcated for industrial and infrastructure development.

When asked about BAPL’s concern about the project, Chatterjee said, “We are interested in the airport only. Let them do it first, then we’ll see.”

‘Willing, but at a higher price’
Unlike Singur, where farmers’ unwillingness came in the way of Tata’s proposed Nano factory, landowners here, already exposed to the industrialisation at neighbouring Durgapur-Asansol area, were willing to avail of this opportunity. There was no major problem in acquisition of the first 1,818 acres. The stumbling block seems to be the land adjacent to National Highway-2 as landowners here are demanding higher prices for the prime location. “Most of this land is adjacent to Highway. When we gave land to DVC on the other side of the highway, we got 10.5 lakh per acre 2004. And now BAPL is offering 7.5 lakh, while the market price is about 45 lakh per acre. They should come to us personally and take the land on our terms” says Bidhan Chandra Roy, one of the landowners.

Locals are protesting under the banners of “Krishak Khetmajur committee” and “Krishak swartha raksha committe” backed by local units of Congress, Trinamool Congress and SUCI. “Industry Minister has already said no more land will be acquired. But the notifications have not been withdrawn. We are keeping faith in the government. We have been assured that the matter will be raised in state assembly soon,” said Naresh Chakrabarty, a local congress leader.

It is not only the ruling parties, even local CPI-M leaders, who, villagers say, once encouraged them to give land, have also now capitalised on the grievances of the locals. A week-long demonstration was organised by the local party members last month.

A ticking time bomb
Meanwhile, beneath the surface lurks a time bomb that could shatter whatever progress the project has made so far. Out of 1,818 acres which has already been acquired, according to locals there are about 450 land owners who have refused to take compensation. “Apart from the cash compensation there was proposal to offer a cottah for every bigha (20 cottahs make a bigha) as part of its land for land scheme. They have not kept their words,” says Tarun Gosh who is yet to take the compensation for his land, acquired years back.

Replying to a query on the same, Paul said, “For the 1,818 acres about 86 per cent people has taken the money. We expect the matters to be sorted out soon with the rest,” although he added that “We will be developing the land first which will take about six months. From then, the distribution will begin. We expect to give this land in a period of nine months to one year.”

Corporate power struggle
If this isn’t enough to complicate things, a criminal case has been filed by one of the promoters, RS Agarwal, against other shareholders. In his lawsuit, Agarwal, who holds over 23 per cent in Pragati 47, one of the promoters of BAPL, has alleged financial fraud in recent transfer of shares among the stake holders. According to the suit, the shares of Pragati Social Infrastructure & Development Limited (PSIDL), a joint venture between Pragati 47, a co-promoter of BAPL and Hudco, were transferred at a value of Rs 10 each to R R Modi-promoted Citystar in September 2010, while Singapore’s Changi had previously bought the shares for Rs 40.99 each in 2009. Besides, filing a criminal case against Citystar, Agarwal has also appealed to the state government to look into the alleged financial irregularities. “People in charge now seem to be more interested in anything but execution of the project,” he added.

Commenting on the allegation, Paul said, “There are some legal disputes among stakeholders. But this is not at all affecting the project.” However, BAPL refused to share the details of the present share-holding pattern in the SPV. “The share-holding pattern has changed from what it was in the beginning. It is difficult to share at this point of time,” a spokesperson said. Meanwhile, when asked for a comment on the situation, state industry minister said, “I am not aware of the details.”

A confidence game
Yet, BAPL seems to be staunchly confident about the project. “We are confident to complete the construction work by October 2012 and in another three months we will make it operational,” Paul said. Work is currently underway on all aspects of the airport—the runway, passenger buildings, ATC building. According to a company official, “About 60 per cent of the construction work of the first phase is yet to be completed. We have increased workforce recently. About 600 workers are at work now.”

The first phase of the work includes construction of airport and initial infrastructure for the proposed township. After the completion of the first phase, the BAPL has plans to come out with the ‘city’ part of the airport which will have an IT park, hospitals and a residential complex.

Representatives from Changi, which is providing technical services for the development of the airport, are also flying in every fortnight to keep a tab on the progress, although it may not be enough to ensure the realisation of their original dream of helping build the first airport-city in India.

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