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Business News of Wednesday, 12 August 2015

Source: B&FT

Airports Company secures US$250million loan

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The Ghana Airports Company Limited (GACL) has secured a loan of US$250million to undertake the construction of a new terminal to be known as Terminal 3, at the Kotoka International Airport.

Managing Director of the company, Mr. Charles Asare told the B&FT that the funds have been secured from a consortium of banks led by Ecobank Capital.

“We expect to cut the sod for the construction of the Terminal 3 this month. Last week we raised the financing we needed. It is estimated to cost us US$250m. We have raised the first US$250m.”

The GACL last year announced that it was to expand facilities at the Kotoka International Airport to accommodate the increasing passenger throughput and increasing number of airlines servicing the KIA.

Part of the proposal is the construction of the third terminal to be known as Terminal 3 within the KIA enclave.
“It is not just Terminal Three but also the runway, taxi ways, and the aprons. Ground lights, underground fuel lines and runway lights” he said.

This however requires huge capital outlay that the sole shareholder, government, is unable to provide given its limited budget.

Management of GACL, following the promulgation of the Airport Tax Amendment Act in 2013 -- which allows the GACL to retain 100 percent of its revenues -- turned to private capital to improve aviation infrastructure in the country.

Prior to amendment of the Act, 60 percent of all airport taxes went directly to the Ghana Revenue Authority to support the national budget -- while GACL retained just 40 percent.

Mr. Charles Asare, Managing Director of GACL earlier told B&FT that the company has set up a special fund solely for airport infrastructure. He said 70 percent of the revenue from its Airport Passenger Service Charge (APSC) will be kept in the fund to service the loan.

Latest figures obtained from airport authorities show a significant growth in transit passengers and cargo throughput for the Kotoka International Airport (KIA) for 2014, pointing to the growing importance of Ghana as an aviation hub in the sub-region.

Transit passengers increased from 162,000 in 2013 to 178,000 in 2014, representing an increase of some 9.5 percent. Cargo throughput also increased by 24.5 percent from 44,000 tonnes in 2013 to 54,000 tonnes in 2014.

The increase in transit passenger throughput has been attributed to the growing presence of regional and international airlines in Ghana and the choice of consumers to use the KIA for on-ward connections to mainly Europe, the Gulf, and Asia due to the good safety record of the country -- bar the recent cargo aircraft accidents in recent times.

Growing transit passenger throughput is positive for revenue generation as airlines pay navigation charges and various taxes

Mr. Asare said the company is also to raise additional capital to finance the development of existing regional airport in the country. “We are going to raise additional US$150m. We are also using some of the funds to open up domestic aviation. This year we completed rehabilitating Kumasi. We are going to rehabilitate Sunyani.”

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