The decks have been cleared for the first private airport in India with the finalisation of a concession agreement between Bangalore International Airport Ltd and the Airports Authority of India Ltd.

According to senior finance ministry officials, the private operator will share 4 per cent of the gross annual revenue with the AAI every year of the concession period.

The concession agreement provides for a 30-year lease of the airport to a Siemens-led consortium. The lease is renewable for another 30 years after expiry.

Siemens Project Ventures GmbH of Germany holds a 40 per cent stake in BIAL, with Larsen & Toubro and Unique Zurich Airport holding 17 per cent each. The Karnataka State Industrial Investment and Development Corporation and the AAI hold 13 per cent each in the company.

Civil aviation ministry sources said the freezing of the concession agreement augured well for the financial closure of BIAL. Lenders to the project will be on board in the next 2-3 months. ICICI Bank was likely to be the lead lender for the Rs 1,300 crore (Rs 13 billion) project, they said.

The sources said the concession fee concept, as put in place for BIAL, would set a precedent for other private and greenfield airports being proposed in Hyderabad and Goa.

They said the agreement provided for a sunset clause, wherein the government would not compensate for certain breach of contracts after the initial 30-year lease.

Initial estimates made by AAI and BIAL suggest that in the first phase the greenfield airport would cater to 4 million passengers including one million international passengers.

The airport would handle about 100,000 tonnes of cargo a year.

The existing Hindustan Aeronautical Ltd airport in Bangalore caters to 2.5 million passengers and 25,000 tonnes of cargo. Once the greenfield airport is ready, the existing HAL airport would be used by HAL for defence purposes.