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GVK Power & Infrastructure has announced that it has achieved financial close of the first phase of the INR160 billion (US$2.3 billion) Navi Mumbai airport PPP project.

The company will deliver a new international airport in Maharashtra, west-central India, to relieve the pressure on Chhatrapati Shivaji International Airport (CSIA), the only airport currently serving the Mumbai Metropolitan Region.

Led by GVK, Mumbai International Airport Limited (MIAL) was formally awarded the project, which entails the design, construction, financing and operation of a greenfield airport with capacity to handle 60 million passengers per year, in October 2017.

In January, the company signed a concession agreement with the City and Industrial Development Corporation (CIDCO) of Maharashta to create a special purpose vehicle (SPV) for developing the airport.

MIAL holds a 74% stake in the SPV, with the remaining 26% stake owned by CIDCO. The initial concession period is 30 years, with an option to extend for a further 10 years. After the concession expires, ownership of the airport will be transferred to CIDCO.

GVK has not disclosed the amount of debt financing secured, though has stated that Yes Bank has been appointed the lead bank and mandate lead arranger for phase I and phase II of the project. CRISIL has assigned the project an A+ or stable rating.

The first phase of the airport will be able to handle 10 million passengers annually and is expected to be operational in 2019. 

The project has been in development since 2012. CIDCO issued a Request for Qualifications (RFQ) in June 2014. Of the four respondents that were prequalified, only MIAL initially submitted a proposal. The Request for Proposals (RFP) deadline was extended twice in an attempt to encourage other bids.

Developers' wariness to compete against MIAL makes sense - the company, in which shares are also held by Airports Company South Africa and Bidvest, operates CSIA. With Navi Mumbai International Airport also serving the Mumbai Metropolitan Region, the two airports together will form India's first urban multi-airport system.

Once the new airport commences full commercial operations, scheduled for 2030, it will be the largest airport in India.