Greek government issues Letter of Award for US$600 million airport PPP
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GMR Group has announced that the Government of Greece has issued Letter of Award to a consortium of GMR Airports Limited, a subsidiary of GMR Infrastructure Ltd, and TERNA Group for the development, operations and management of a new international airport of Heraklion at Crete.
The existing airport at Heraklion, Nikos Kazantzakis International Airport, is the second largest in Greece. It has witnessed a compound annual growth rate in traffic of ~10% over the past three years and is now facing capacity constraints, projected to handle eight million passengers in 2018.
The scope of the project involves the design, construction, financing, operation, maintenance and exploitation of the new airport, which will replace the existing one. The concession period for the greenfield project is 35 years, which includes an initial five-year construction period.
It is thought that the consortium will deliver a 72,000m2 terminal, a 3.2km runway, a commercial zone and road infrastructure. The estimated cost of construction is EUR520 million (US$610.8 million).
The GMR-TERNA consortium was declared provisional contractor in June 2017. Despite a lengthy tender process featuring multiple deadline extensions, the consortium was the sole bidder. GMR Airports Limited is the designated Airport Operator in the consortium.
The entire project will be funded through a mix of equity, accruals from the existing airport, and a financial grant being provided by the Government of Greece, therefore debt is not required in this project.
GMR expects to complete necessary documentation and concession signing over the course of next few months. The Greek government retains a 46% stake in the concession.
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