With an equity contribution of Rs 2,450 crore of which the private consortium’s share was Rs 1,813 crore, Delhi International Airport Ltd (DIAL) got a brown field airport for 60 years.

This has been brought out by the Comptroller and Auditor General in its report on ‘Implementation of Public private partnership Indira Gandhi International Airport, Delhi. The report was tabled in Parliament on Friday.

Govt rejects charges

The report adds that in addition, the commercial rights of land valued at Rs 24,000 crore had a potential earning capacity according to its own estimates of Rs 1,63,557 crore

Rejecting the report, the Ministry of Civil Aviation, however, has said that its views and those of Airports Authority of India (AAI) have not been incorporated in the final report of the CAG.

DIAL said that it had “not received any undue benefits from the Government before, during or after the bidding process”

DIAL is a joint venture consortium led by the GMR Group which was mandated by the Government to modernise Delhi airport. The other members of the consortium include Frankfurt airport, AAI and Malaysian Airports.

The report adds that Operation, Maintenance and Development Agreement (OMDA) allows DIAL to use five per cent of the demised land for commercial exploitation. The current value of 9.50 acres as per Airports Economic Regulatory Authority’s communication to Audit amounted to Rs 950 crore. The earning potential for 58 years from 9.50 acres based on DIAL’s own projections is Rs 6,457 crore.

Development fee

The Ministry has also rejected the CAG point that the decision to levy development fee after the effective date, has vitiated the sanctity of the bidding process, as the draft OMDA, which was part of the bid documents, does not mention about funding of the project cost of the airport through levy of development fees. The Ministry has said the condition for levy of ADF was known to bidders.

Currently, the ADF charge at Delhi is Rs 200 for a passenger taking a domestic flight and Rs 1,300 for every passenger departing on an international flight.

The report points out that 4,608.9 acres were leased to DIAL on ‘as is where is basis’ on a highly concessional annual lease rent of Rs 100.

The Ministry has clarified that the land has not been given to DIAL on rental basis. “Rs 100 is just a token amount for the purpose of the conveyance deed. The determining factor for grant of concession to the bidder was the gross revenue share quoted by the bidders. As a result, AAI now receives 45.99 per cent share of gross revenues of DIAL and 26 per cent of all dividends,” the Ministry has said. It adds that benefit to AAI is likely to be more than Rs 3 lakh crore in this process during the entire concession period. AAI has already got its revenue share of Rs 2,936 crore in the last six years and likely to get Rs 1,770 crore in 2012-13 and Rs 2,287 crore in 2013-14.

The report states that against the area of 470,179 squares metres indicated in the major development plans, DIAL actually constructed 553,887 square metres at IGI airport.

Cost variation

The report points out that the variation in actual project cost vis-à-vis original project cost was 43.25 per cent higher than the original project cost. Audit has also noted that of the 15 mandated capital projects to be completed by April 3, 2008, 11 MCPs were delayed for period ranging from 87 days to 236 days.

The report points out that based on the State Support Agreement, DIAL was not entitled for any incentive in support of base airport charges. “The Ministry, however, approved in February 2010, 10 per cent increase in aeronautical charges, including landing, parking, passenger service fee among others as incentive to DIAL,” the report states.

The Ministry has also denied any changes in documents such as concession period, right of first refusal and upfront fee among others.


(This article was published on August 17, 2012)
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