Airports Authority eyes Rs 3,000-cr infra bond issue

Asks finance ministry for approval says this route would make borrowings cheaper

The Airports Authority of India (AAI) has asked the finance ministry to be allowed to float Rs 3,000 crore of tax-free infrastructure bonds, a fund-raising window opened in the recent Union Budget.

“We have asked the finance ministry to allocate us Rs 3,000 crore from the Rs 10,000-crore issue that has not been allocated to an authority. We have written a letter,” said a top AAI official, who did not want to be identified.

Allowing AAI, he said, to raise Rs 3,000 crore through bonds would help the authority raise cheaper loans. “Fund raising through bonds brings down the interest rate on our borrowings by around two percentage points,” the official added.

In the Budget, Finance Minister Pranab Mukherjee allowed companies to raise Rs 60,000 crore through tax-free infra bonds. AAI was not allotted any amount. National Highways Authority of India, Indian Railway Finance Corporation and India Infrastructure Finance Company can raise Rs 10,000 crore each. National Housing Bank, Housing and Urban Development Corporation and the Small Industries Development Bank of India have permission to raise Rs 5,000 crore each. The ports sector can raise Rs 10,000 crore.

AAI’s earlier requests to raise cash through bonds were turned down on the plea that buyers for these were limited and allowing AAI to access the route would affect the plans of other government agencies. The earlier AAI proposals were for raising Rs 5,000 crore.

AAI, which owns 128 airports across the country, has never raised money through tax-free bonds. It has always borrowed from the open market. The mini-ratna company, with 14 profit-making airports, registered a profit of Rs 846 crore in 2010-11, on revenue of Rs 5,139 crore. The airport operator has also seen annual earnings grow a little over Rs 100 crore through user development fee collection at airports.

The state-owned operator plans to upgrade airports. It upgraded around 20 airports in the 11th five-year Plan (2007-12). The upgrade of Kolkata and Chennai airports is underway.

AAI is also working on a proposal to develop the city side — commercial aspects — of Kolkata, Visakhapatnam, Bhubaneswar, Lucknow, Indore, Ahmedabad, Amritsar, Guwahati and Jaipur airports, through public-private partnerships.