Finance dept issues GR for 6,000 crore Purandar airport loan guarantee

Pune: The state finance department on Friday issued a Government Resolution (GR) detailing terms for its Rs6,000 crore guarantee to fund land acquisition for the proposed Purandar airport.Emphasising on safeguards, liability clauses and monitoring norms, the GR allows Maharashtra Industrial Development Corporation (MIDC) to raise loans from Housing and Urban Development Corporation or other financial institutions at competitive rates. It also formalises the structure following the state cabinet's Feb 10 approval and replaces an earlier order of the industries department.The greenfield airport project requires around 1,285 hectares (nearly 3,000 acres) of land across seven villages — Vanpuri, Kumbharvalan, Udhachiwadi, Ekhatpur, Munjavadi, Khanvadi and Pargaon — in Purandar. About Rs6,000 crore would be required for land acquisition.Under the GR, the guarantee is capped at Rs6,000 crore. It will remain valid for 12 months. MIDC will act as the principal debtor, and lenders cannot extend loans beyond the sanctioned limit without prior approval of the state government. Funds must be used strictly for land acquisition.The repayment responsibility has been assigned to 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 will be liable in proportion to its shareholding."The GR seeks to ring-fence the state's financial exposure. If the SPV fails to service the loan because of 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," said an official from the state finance department.A key clause mandates lending institutions to report any default in repayment or interest within 90 days. Anny breach of conditions can render the guarantee invalid.The 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, while the SPV is required to furnish monthly repayment progress reports to the industries and finance departments.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 to be deposited in the government treasury under a specified head.Officials from the industries and finance departments have been authorised to execute agreements with lenders and monitor compliance.
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