Comments
The risks involved in the development of the Chhatrapati Shivaji International (CSI) Airport, Mumbai, were not “appropriately transferred” to the developer Mumbai International Airport Ltd (MIAL) the Comptroller and Auditor General has said. MIAL, is a consortium led by the GVK group.
“Though the project cost more than doubled to ₹12,380 crore from ₹5,826 crore, the concessionaire did not appear to have faced financial vulnerability as the funding gap was being largely absorbed by passengers through the levy of a Development Fee though such a fee was not there in the Operation, Management and Development Agreement (OMDA),” the Government auditor said in its latest report on ‘Implementation of Public Private Partnership project at Chhatrapati Shivaji International Airport, Mumbai,’ which was tabled in Parliament on Friday.
The OMDA was signed on April 2, 2006 between the Airports Authority of India (AAI) and MIAL.
The report points out that the absence of a review clause and re-negotiations appear to allow MIAL the right to operate the airport for 60 years with the terms and conditions frozen in the OMDA.
“It is essential that a regular and well-documented review of MIAL by the Ministry of Civil Aviation is in place to safeguard the interest of the Government and to get MIAL to deliver the committed output,” the Government auditor said. The report also calls on the Civil Aviation Ministry and AAI to devise a time-bound and regular monitoring structure related to progress of works at the airport. The report points out that incentives such as an increase in base airport charges were allowed by Civil Aviation Ministry despite the “inordinate delays” in completing the project.
The Ministry has also been asked to “critically assess” the financial impact of concessions granted under OMDA and the revenue ensured from MIAL after ground handling and cargo services were categorised as aeronautical services.
The report points out that as the project cost for the airport kept increasing to touch ₹12,380 crore in 2011 from ₹5,826 crore in 2006, MIAL sought and was allowed to levy a development fee on passengers to cover the funding gap. This was done despite the initial financing plan, according to which the project cost of ₹ 5,826 crore was to be financed entirely through equity, internal accruals and debt.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.