Siemens 2012 Annual Report Download - page 14

12
Public-private partnership
Bengaluru
International
Airport
“Public-private partnerships – The formula for India’s success”
Bengaluru International Airport is a prime example of how Siemens provides
financing as well as technological solutions for future-oriented infrastructure
developments. The project was launched in the early s, when a public-
private partnership was first proposed. G.V. Sanjay Reddy is convinced that
cooperative efforts of this kind – partnerships in which governments and private
companies work hand-in-hand to implement projects that benefit entire com-
munities – are “the formula for India’s success.” Why? There are two reasons,
Reddy explains. The first is financing: “The Indian government doesn’t have the
ability to fund the huge infrastructure deficit that we have in India,” he says.
“Over the next five years, the government expects that India will need around
$ trillion worth of infrastructure investment. And the public sector does not
have the capability to invest that amount.” Therefore, the Indian government is
relying increasingly on private investment. And the second reason why public-
private partnerships are so important is that they offer major advantages for private
companies: “The private sector has the ability,” says Reddy, “to benchmark to
the global best practices and find the best solution.” In the case of Bengaluru
International Airport, for example, that solution was Siemens.
Siemens paved the way for the public project’s private financing and also sub-
sequently invested in BIAL, with Siemens Project Ventures (SPV), a business
unit of Financial Services (SFS), acquiring a % stake in the new airport com-
pany. Other investors included Larson & Toubro Ltd., India’s largest engineering
and construction company, and Unique Zurich Airport, a Swiss airport operator,
each of whom acquired a % stake. To ensure that the state would also have
a say in the running of this strategically vital infrastructure project, the remain-
ing % was split between the government of Karnataka and India’s federal
government. “And this still applies today,” says G.V. Sanjay Reddy, “because under
Indian law, its % stake gives the government a minority veto.”
BIAL has primary entrepreneurial responsibility for the entire airport. To enable
the company to recoup its investment, the Indian government has granted it
long-term rights to collect airline and passenger fees.
Siemens has been active in India since
. Today, the Company has some
, employees in the country.