Eight banks have declined to lend Rs 960 crores to Hyderabd International Airport Ltd, the company mandated by the Andhra Pradesh government to build a greenfield international airport in Hyderabad, completing the achieved financial closure for the Rs 1,760 crore project. The Deccan Chronicle had reported on Tuesday about HIAL completing the achieving closure.

Mr.Kiran Kumar Grandhi, managing director of HIAL, told reporters here on Tuesday that the project is estimated to cost Rs 1,663 crores, with an additional contingency of Rs 97 crores. The Project is being funded with debt-equity ratio of 1.2:1 The equity component was Rs 378 crores, Mr.Grandhi said. The Bangalore- based GMR business group has 63% stake while Malaysia Airports Holding Berhard of Malaysia has a 11% stake, and Airports Authority of India an the Andhra Pradesh government have a 13% stake each. Mr.Grandhi said the debt component was Rs 960 crores. The eight banks, led by the Infrastructure Development Finance Company ahs agreed to provide rupee term loans for the project. IDFC has sanctioned Rs 200 crores. While Allahabad Bank and State Bank of Hyderabad had approved term loans of Rs 120crore each, Bank of Baroda and Oriental Bank of Commerce had approved loans of Rs 110 crores. Canara Bank, IDBI and Vijaya Bank had approved loans of Rs 100 crores each. The Andhra Pradesh government on Monday released Rs 107 crores as a grant under the State Support Agreement it has with HIAL, Mr.Grandhi said. Shirish Navlekar, head of finance for the energy and transport business of the GMR group, said the loan repayment had a moratorium of two years. "We will only have to pay interest on the loans, which have an interest rate of 7.5-8%. The loans have a 16 year tenure form the end of the moratorium period." Mr. Navlekar said.

Mr.Navlekar said the debt syndication for the project was done by the GMR group's in-house finance team. Mr.Grandhi said the Andhra Pradesh government was also providing an interest-free loan of Rs 315 crores, which has to be repaid once the airport becomes operational.

The grant of Rs 107 crore has to repaid after 15 years, in five instalments, Mr Navlekar said. Mr Grandhi said the airport is expected to become operational in the first quarter of calendar year 2008. The airport is being designed to handle seven million passengers.

On August 17, HIAL had awarded major contracts for the airport to Larsen & Toubro and a Chinese company. The contracts' value totaled Rs 1,110 crore. He said the "Notice to Proceed" would be given to the contractors on September 1.