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Andhra Pradesh Govt Ends Pact for Airport in Nellore District Owing to Financial Hurdles

A file photo of CM Jagan Mohan Reddy. (Image Source: PTI)

A file photo of CM Jagan Mohan Reddy. (Image Source: PTI)

The proposed airport was to be developed on 1,352 acres of land at a cost of Rs 368 crore with a capacity to handle 1.9 million passengers per year.

  • PTI Amaravati
  • Last Updated: July 31, 2020, 2:00 PM IST
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Andhra Pradesh government on Wednesday terminated the concession agreement signed with SCL-Turbo consortium for building a no-frills airport at Dagadarthi in Sri Potti Sriramulu (SPS) Nellore district. The agreement was terminated as the project could not be implemented as the consortium failed to achieve financial closure even though over two years have elapsed since the signing of the pact, said the Special Chief Secretary (industries and infrastructure) R Karikal Valaven in an order.

To develop the airport, the Andhra Pradesh Airports Development Corporation Limited and the Nellore International Airport Private Ltd, the SPV (special purpose vehicle), signed the concession agreement on June 21, 2018. The airport at Dagadarthi, 25 km from Nellore town, was proposed to be developed on 1,352 acres of land at a cost of Rs 368 crore with a capacity to handle 1.9 million passengers per annum and 55,000 metric tonnes of cargo when fully completed.

It was to have a runway length of 3,150 metres to handle wide-body passenger and cargo aircraft. The new airport was envisaged to be a catalyst for the development of tourism and industry in SPS Nellore district.

"It will be a cargo export and import hub for the many industrial units in the district. Commercial operations were expected to commence in January 2020 fromDagadarthi, the government had announced when the concession agreement was inked. All clearances and approvals from various agencies were received for the project but the developer could not achieve financial closure saying the government did not hand over the proposed site to the full extent.

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Since the land is not encumbrance-free, the lenders are not showing interest to fund the project. As such, financial closure cannot be achieved in these circumstances making it not possible to go ahead with the project, the consortium told the government in a letter on June 17. To this, the Special Chief Secretary said, Except for some portion, the remaining land was made available for the project." "As per the clauses of the concession agreement, financial closure is mandatory to be achieved within the period prescribed and this is an independent obligation cast upon the developer. It is not connected to handing over the land as per the agreement, he said.

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