GMR, one of India’s leading conglomerates, has secured a staggering Rs 4,000-crore loan to fund the construction of a state-of-the-art greenfield Vizag International Airport in the picturesque city of Vizag, as reported by The Economic Times (ET). This ambitious project is made possible through a consortium led by the India Infrastructure Finance Company (IIFCL), demonstrating the commitment to enhancing India’s aviation infrastructure.
The Vizag International Airport is set to become GMR’s fourth major airport in the country, joining the ranks of its prestigious counterparts in Delhi, Hyderabad, and Goa. This venture marks a significant milestone for GMR, reflecting their strategic focus on expanding their footprint in the aviation sector following a corporate reorganization that saw the conglomerate split into two distinct listed entities two years ago.
PR Jaishankar, the Managing Director of IIFCL, emphasized the organization’s role in spearheading financing initiatives for greenfield airport developments across India. In addition to the Vizag project, IIFCL has taken a leading position in partially funding the Bhogapuram airport in Andhra Pradesh, showcasing its pivotal role in advancing India’s aviation infrastructure.
The Vizag International Airport project is an expansive undertaking, covering more than 2,200 acres of land just outside the city of Bhogapuram. This location is strategically chosen to offer a compelling alternative to the existing airport, which primarily serves the requirements of the armed forces. The development of this new airport aligns with GMR’s vision for bolstering its aviation facilities business, catering to the growing demand for air travel in the region.
Upon completion of all three phases of the Vizag International Airport, it is expected to have the capacity to accommodate a remarkable 40 million passengers annually. This development will undoubtedly contribute to the economic growth and connectivity of the region, making it a critical piece of India’s infrastructure puzzle.
The financing for this massive project has been authorized as a 14-year loan with an interest cost of approximately 10 percent per annum. Importantly, the loan terms include moratoriums on repayments during the construction phase and extending until one year after the airport becomes fully operational. To further strengthen the financial backing for this project, it is anticipated that other prominent financial institutions like the Rural Electrification Corporation (REC), Power Finance Corporation (PFC), and various public sector banks will also be part of the banking consortium.
The Vizag International Airport project represents a significant leap forward in India’s aviation landscape. As the nation continues to experience robust economic growth and increased air travel, the demand for world-class airport facilities has never been more pronounced. GMR’s strategic decision to expand its aviation portfolio positions the conglomerate as a key player in meeting this demand and facilitating greater domestic and international connectivity.
GMR’s journey in the aviation sector has been a remarkable one. In August 2020, the company announced the division of its businesses into two distinct entities, a decision that received the necessary regulatory approvals in December 2021. The original firm, renamed GMR Airport Infrastructure, was entrusted with housing the airport-related business units. In contrast, the newly formed entity, GMR Power and Urban Infra took on a diversified portfolio, encompassing special economic zones (SEZ), power generation, and road infrastructure projects.
This strategic restructuring allowed GMR to channel its resources and expertise more effectively, focusing on the unique requirements of its diverse business segments. In the case of GMR Airport Infrastructure, this meant a concentrated effort on the development, operation, and management of airports, with an eye toward expanding their presence and influence in the aviation industry.
The Vizag International Airport project is a testament to GMR’s commitment to enhancing India’s aviation infrastructure, fostering economic growth, and facilitating seamless connectivity for travelers. As the demand for air travel continues to soar, investments in projects of this scale are pivotal in meeting the needs of a rapidly evolving nation. With IIFCL’s support and the participation of various financial institutions, this ambitious project is set to become a symbol of progress and prosperity for the region, marking a new era in India’s aviation landscape. Stay tuned for more updates as this exciting project takes shape and propels Vizag to new heights in the world of air travel.