BIAL knew well in time … and did nothing

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Two newspaper articles, published in Bangalore today, concerning BIAL, the company promoting Bengaluru International Airport, deeply saddened me, despite proving my claims right.

Readers will recall, for the past year, in public and on this blog, I have been claiming that the growth rate of aviation in Bangalore, was beyond the capacity of the new BIAL airport. My article “The case for keeping HAL airport open” highlights this.

The first article in The Times of India, quotes Mr. Albert Brunner, CEO of BIAL, “We started the process of planning for the Bangalore airport about two years before Hyderabad did. So we couldn’t anticipate the huge growth Bangalore was to see subsequently”

Thank you for making my point sir, after denying it for almost one year. But I would love to hear your corporation’s response to the contents of the Deccan Chronicle article, also published today, which claims “According to a highly placed official, who was part of key board meetings of BIA during 2005 and 2007, none of the (private) partners were ready to fork out the Rs 200 crore that was needed to make the airport better, if not the best in the country.”

The article clear contradicts BIAL’s claim in the Times of India, about the high growth rate being unanticipated. The article quotes source who claim that ALL the partners in BIAL, governments included, were fully aware of the massive growth rate in Bangalore’s aviation in mid 2006, while the terminal was still in blue-print stage, but the promoters refused to pump in a measly Rs. 200 Cr. additional, to ensure the required corrective action.

The article goes on to say “When the work on BIA had commenced, there was a report that called for immediate attention —colossal air traffic growth. The study was commissioned by BIAL. Lufthansa Consulting carried it out. The verdict was that between 2005 June and 2006 July, air traffic grew by 45 percent, the largest in the history of any city in the country. The revised traffic study showed Bengaluru’s explosive air traffic growth and pegged it at 10.1 million passengers by 2010, which it has already crossed now,” sources said.

A special board meeting was called to discuss the report in mid 2006. “The stakeholders led by Mr Albert Brunner, were called to attend that meeting. During the meeting, all the four members of management belonging to Siemens, Unique (Flughafen Zürich AG) — Zurich Airport, Switzerland, Larsen & Toubro, and officials of the Airport Authority of India and KSIIDC were apprised of the situation. “The time was ripe to affect any changes in the structural and design plans as the blueprint was still on the drawing board and no work had taken place,” sources said adding that it was arrived at that an additional Rs 200 crore had to be invested to meet the growing demand.

Already drained in terms of the two years taken in signing the concession agreement, the private investors were in no mood to listen. “They outright rejected the proposal stating that a lot of time and money was already wasted and that they wouldn’t give in to the new demand, despite the state argued that it has provided land free of cost and centre stated that it was pumping in 13 percent of total cost.

But the private partners while refusing to pump in additional funds said that they could make good with a functional airport and at the same increase the airport’s capacity. So a compromise was made on the aesthetics and futuristic architecture to save money,” the official said. So what Bengaluru eventually ended up with is a 71,000 sqft unimpressive terminal with maximum holding capacity of 15 million passengers as claimed by BIA”

This disclosure and the apparent contradictions raise serious doubts about the commitment of the private partners, to the best interests of Bangalore, both short term and long term. The finger of suspicion, for refusing the additional investment, can be fairly pointed at Siemens, since it is the dominant private partner and has the most number of Directors on the board, at 5. As the CEO of the corporation, Mr. Brunner has to follow the instructions of the board.

Out of a total project funding of Rs. 2,015.23 Cr., the private partners have brought in only Rs. 326.70 Cr. i.e. about 16%. Despite being the minority funders, the private partners have been given inordinately high control and 40% of the equity.

One has to pause and think, whether it is this inordinate ceding of our rights to a private monopoly by government, that has resulted in Mr. Brunner’s statement, in the Times, on “UDF being absolutely essential”, “Only that will convince our shareholders to bring in more money for the second phase of development”. I am distressed by the implications of the message and angered by the dictation of terms.

In my recent article in praise of the operations at Bengaluru International Airport, I made the statement Trust will take time, and engagement is the method. Trust is a two way street. In an era of Corporate Governance, it is incumbent on any corporation, and its leadership to engage its stakeholders, including customers, with the highest levels of transparency and integrity, which breeds the required trust.

My good friend Syed, raises some very pertinent questions of government as well. Apart from being on the board of BIAL, they are responsible and duty-bound to uphold our rights.

1. Why are the GOK/GOI officials tight lipped?
2. Is it because, in our governing system, the ultimate authority lies in corridors of political bosses and their offices?
3. How do we empower these helpless (if they indeed are) souls to stand up for the public good?
4. How do we force the public partners to get emboldened and force the private partners to do the right thing?
5. How do we ensure that private partners in public infrastructure are actually held accountable for their follies?

All these years of dealing with politicians seems to have taught BIAL a thing or two. If BIAL does not want us Bangaloreans taking all their statements, as we do of our politicians, with a huge pinch of salt, it’s time for BIAL, which includes government, to come out and tell us the whole truth, and nothing but the truth.