The Maharashtra state finance department on Friday issued a Government Resolution (GR) outlining the terms for its Rs 6,000 crore guarantee to finance land acquisition for the proposed Purandar airport. The GR emphasizes safeguards, liability clauses, and monitoring norms, allowing the Maharashtra Industrial Development Corporation (MIDC) to raise loans from Housing and Urban Development Corporation or other financial institutions at competitive rates. It formalizes the structure following the state cabinet's approval on February 10 and replaces an earlier order from the industries department.
Project Overview
The greenfield airport project requires approximately 1,285 hectares (nearly 3,000 acres) of land across seven villages: Vanpuri, Kumbharvalan, Udhachiwadi, Ekhatpur, Munjavadi, Khanvadi, and Pargaon in Purandar. An estimated Rs 6,000 crore will be needed for land acquisition.
Key Terms of the GR
- The guarantee is capped at Rs 6,000 crore and remains valid for 12 months.
- MIDC will act as the principal debtor; lenders cannot extend loans beyond the sanctioned limit without prior state government approval.
- Funds must be used strictly for land acquisition.
Repayment Structure
Repayment responsibility lies with the special purpose vehicle (SPV) set up for the project. The SPV comprises MIDC (15%), Pune Metropolitan Region Development Authority (15%), Maharashtra Airport Development Company (19%), and City and Industrial Development Corporation (51%). Each entity is liable in proportion to its shareholding. An official from the state finance department stated, "The GR seeks to ring-fence the state's financial exposure. If the SPV fails to service the loan due to unavoidable circumstances, the government may step in after assessing its financial position, but the guarantee does not automatically translate into a direct burden on the state exchequer."
Reporting and Monitoring
A key clause mandates lending institutions to report any default in repayment or interest within 90 days. Any breach of conditions can render the guarantee invalid. MIDC has been directed to raise only the required amount and ensure strict end-use compliance. It must submit audited accounts and periodic financial updates. The SPV is required to furnish monthly repayment progress reports to the industries and finance departments.
Guarantee Fee and Penalties
The GR prescribes a guarantee fee of 0.5% per annum on the outstanding amount, payable every six months. Delays will attract penal interest of 16% for the first three months and 24% thereafter, with payments deposited in the government treasury under a specified head. Officials from the industries and finance departments have been authorized to execute agreements with lenders and monitor compliance.
