• Prem Watsa’s BIAL stake buy still stuck at security clearance

    Security clearance for Prem Watsa’s investment in Bengaluru airport is turning out to be a headache for authorities as the Centre dithers over the issue, raising uncertainties over the stake purchase by the Indian-origin Canadian billionaire.

    Karnataka has declined to get involved in the process of granting security clearance for the transaction after the Ministry of Civil Aviation (MoCA) sought its comments on the matter, according to sources aware of the developments. Delays in obtaining the approval are holding up the additions of a second runway and a terminal at Bengaluru airport even as passenger and cargo traffic surge.

    Watsa’s Toronto-based Fairfax Group in March struck a deal to buy a 33% stake in Bangalore International Airport (BIAL) from Hyderabadbased GVK Group, and later another 5% stake from Flughafen Zurich AG. The transactions cannot go through without security approvals from the Union government.

    According to sources in Delhi, the Ministry of Home Affairs (MHA) has already communicated to the MoCA its go-ahead for granting the clearance.

    The civil aviation ministry, however, wrote to the Karnataka government seeking its comments on certain security aspects and on proposed appo intments to the BIAL board.

    The State government has taken the view that granting the clearance falls within the realm of the Union Home Ministry, and that it does not have the expertise to vet security aspects in cases involving foreign direct investments in strategic sectors. Karnataka Infrastructure Minister RV Deshpande confirmed the State government’s response to MoCA.

    “There has been a delay at Delhi in clearing the stake sale by GVK group. The traffic volumes at BIAL have surpassed projections, requiring us to add a second runway and terminal at the earliest. I hope the Centre will expedite the process,“ he told ET. Quess Corp. “It is not as if (Wat BIAL’s board has kept pending key decisions, related to capital investments and award of contracts, as these involve huge longterm commitment of resources and they do not want to proceed in the absence of the largest stakeholder.

    Security aspects in BIAL’s case, according to an expert, cover the relationship between the two nations involved, and the backgrounds of the individuals and their firms seeking to make the investment. Watsa is a person of Indian origin and Fairfax group has made investments in India through Thomas Cook and sa) is investing for the first time,“ this expert said, declining to be identified.

    A former Civil Aviation secretary told that matters related to security clearances come un der the domain of the MHA, and a correspondence such as this betrayed either a lack of application of mind or wilful delay. “The whole purpose of this stake sale by GVK Group is to raise some funds with which it can pare its debt. A prolonged delay will only defeat this purpose,“ the officer said, also seeking anonymity.

    Bengaluru airport handled more than 11 million passengers in the January-September period, the traffic increasing 22.4% from a year earlier and at a faster pace than at the Delhi, Mumbai and Hyderabad airports. Cargo traffic increased nearly 11%. Gaylord Perry Womens Jersey

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