The Maharashtra government has cleared a state guarantee for a Rs 60 bn loan that the Maharashtra Industrial Development Corporation (MIDC) will raise to fund land acquisition for the proposed Chhatrapati Sambhaji Raje International Airport at Purandar in Pune district. The guarantee will remain in force for one year, within which the borrowing must be tied up and the proceeds deployed for buying land and disbursing compensation to affected farmers. A formal government resolution to this effect was issued on Friday.

About 3,000 acres are slated to be acquired for the greenfield airport, with the district administration responsible for completing the acquisition exercise and handing over parcels to MIDC. The cabinet had earlier approved, on 10 February, raising the Rs 60 bn facility for this purpose and resolved to form a special purpose vehicle bringing together MIDC, the Maharashtra Airport Development Company (MADC), the City and Industrial Development Corporation (CIDCO) and the Pune Metropolitan Region Development Authority (PMRDA). MIDC has been positioned as lead borrower and tasked with mobilising funds required for acquisition.

Officials indicated that the bulk of paperwork around land acquisition is in place, although physical takeover has not commenced because compensation rates have not been fixed. They expressed hope that the government decision will hasten rate fixation and pave the way for actual acquisition. MIDC will need to move quickly to raise the funds and route them to the district administration so compensation can be paid to landowners.

Under the repayment arrangement agreed within the SPV framework, CIDCO will shoulder the largest share at 51 per cent, MADC will account for 19 per cent, and MIDC and PMRDA will take 15 per cent each. While MIDC will act as the lead borrower, the repayment liability will be distributed among partner agencies through the SPV and the state government has committed to settling dues should the SPV falter. Officials said the guarantee is intended to accelerate acquisition so project implementation can proceed.