Citizens' Issues
CAG slams fee, concessional land given to GMR-led Delhi airport

CAG said GMR-led Delhi International Airport can potentially earn Rs1.63 lakh crore over a 60-year period from the land given to it on a lease of Rs100 per annum

New Delhi: Slamming the levy of development fee on passengers using Delhi Airport, the  Comptroller and Auditor General (CAG) on Friday said the Civil Aviation Ministry violated the bid conditions for the benefit of GMR-led Delhi International Airport Ltd (DIAL) to the tune of over Rs3,415 crore and pressed fixing responsibility, reports PTI.
CAG in its audit report on Indira Gandhi International Airport (IGIA) that was tabled in Parliament said DIAL can potentially earn Rs1.63 lakh crore over a 60-year period from the land given to it on a lease of Rs100 per annum.
Allowing DIAL to levy Development Fee vitiated the sanctity of bidding process and led to undue benefit of Rs3,415.35 crore to the private company, it said.
Earlier in June, questioning the jurisdiction of CAG, the DIAL in a release had said the concessions available to it to run the Delhi airport were part of the bid documents and were available to every bidder. "At the outset we would like to state that DIAL, being a public-private partnership, does not come under the purview of CAG audit," DIAL said in a statement.
GMR-led DIAL said it had won the bid to development Delhi airport through a global tender where terms like concessional land and usage of 5% of airport land for commercial purposes were available to all bidders.
GMR Infrastructure holds 54% stake in DIAL.
"It was noticed that Ministry of Civil Aviation and Airport Authority of India (AAI), on some occasions, violated the provisions of the transaction documents in the interest of the concessionaire," CAG, the official auditor said.
CAG said contrary to provision of the airport concession agreement, DIAL was allowed to use the amount collected as Development Fees to meet the project costs. "In fact, only 19% of the project cost came from equity, approximately 42% came from debt. The remaining project costs were met from security deposits and Development Fees".
"Whenever DIAL raised an issue regarding revenue to accrue to it or expenditure to be debited to government in contravention to the provisions of Operation Management Development Agreement (OMDA), the Ministry and AAI interpreted the provisions always in favour of the operators and against the interest of the government," it said.
Currently, the development fee is charged on both outgoing and incoming domestic and international passengers at the Delhi airport.
The fee ranges from Rs220 to Rs520 for domestic passengers and Rs490 to Rs1200 for international ones.
CAG asked Government to investigate all cases of post bid concessions and fix responsibility.
It recommended that all public private arrangements must be linked to certain basis triggers like traffic volume, tariff, return on investment, break-even point.
"A long concession period without any trigger may lead to undue financial benefit to the concessionaire," it said.
On CAG's criticism of Civil Aviation Ministry allowing DIAL to charge airport development fees (ADF) from air passengers in violation of agreement, the operator had said development fee is a form of pre-funding that is globally applied in number of airports.
"ADF is permitted under Section 22A of the AAI Act and this was known to all bidders. Hence this was not a post bid change," it said.
CAG had stated there was no mention of a development fee in the original bid and levying of such a charge violated the Operation Management Development Agreement (OMDA).
GMR-led DIAL said the levy of development fee was necessitated on account of inability of AAI to infuse further equity and lenders not willing to provide further debt.
"For DIAL, it must be noted that, amount of DF levied directly reduces the basis used for calculating the aeronautical tariff at the airport to be charged from passengers and airlines," the statement said adding passengers and airlines would have else been paying 200% of additional tariff hike.
"As a result, DF is actually detrimental to DIAL as it meant a loss of nearly Rs546 crore of revenue per year," it said adding DIAL has delivered world class infrastructure in fulfilment of its commitment under the concession document.



MK Gupta

5 years ago

It is inhuman, in the name of security, to ban the entry of a passenger--however old--with a water bottle in to Delhi Airport, thus compelling all to buy water from the costly shops within the airport premises. And then, the trudging by all for miles and miles to reach the boarding gate! What do our ruling VVIPs think? Are all people escorted by car to the tarmac? And, above all, no 3-wheelers are allowed to go to the airport--is it not discrimination and unconstitutional?

CAG: Reliance Power got undue benefit of Rs29,033 crore

CAG said the permission to use of excess coal from Moher, Moher Amlohri and Chhatrasal blocks allocated to RPower's Sasan power project after its award "not only vitiated the bidding process but also resulted in undue benefit to the company

New Delhi: Flaying post-bid concessions to Reliance Power (RPower), the Comptroller and Auditor General (CAG) on Friday said the Anil Ambani-led company got undue benefit of Rs29,033 crore when the government allowed use of surplus coal from blocks allotted to Sasan power plant for its other projects, reports PTI.


CAG in its report tabled in Parliament said subsequent to award of the 4,000 MW Sasan ultra mega power project to RPower, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group's Chitrangi project in Madhya Pradesh.


"A reading of all the clauses in the allocation letters together conveyed that clauses were inserted in the coal allocation letter as a safeguard measure to prevent misuse of coal by the developer.


"The permission to use surplus coal in other projects of the bidder after award of the contract based on acceptance of the lowest tariff, vitiated the sanctity of the bidding process which would result in post bid concessions to the developer having significant financial implication," it said.


CAG said the permission to use of excess coal from Moher, Moher Amlohri and Chhatrasal blocks allocated to RPower's Sasan power project after its award "not only vitiated the bidding process but also resulted in undue benefit to RPower".


"This decision resulted in financial benefit of Rs29,033 crore with a net present value of Rs11,852 crore to the project developer (RPower)," the official auditor said.


CAG said it was not clear how Power Ministry in October 2006 came to the conclusion that two initially allocated blocks for the Sasan project (Moher and Moher Amlohri) would be inadequate to fire the 4,000 MW plant.


"The basis on which Ministry of Coal was prevailed upon in October 2006 itself to allot an additional block (Chhatrasal) of coal to Sasan ultra mega power project by de-allocating it from the public sector NTPC is not clear," it said.


CAG said to ensure fair play, a level playground and transparency of the bidding process for future developers to derive comfort in Government action, the allocation of third coal block (Chhatrasal) should be appropriately reviewed.


In seeking such action, it pointed to RPower's commitment to source 20 million tons from the two initial blocks which was adequate to feed the Sasan project.


The audit estimated the financial benefit that will accrue to RPower on the basis of comparison of tariff of Sasan project (Rs1.196 per unit) with that of Chitrangi project (Rs2.450 for Madhya Pradesh and Rs3.702 for Uttar Pradesh).


"Government need to generate confidence among bidders of future UMPPs of its equity and fairness," it said.


Maruti's Gurgaon unit union opposes sacking of workers at Manesar

The worker's union said it will try to rally support of other unions in the Gurgaon-Manesar industrial belt against dismissal of Manesar plant workers

New Delhi: Workers of Maruti Suzuki India's Gurgaon plant have opposed the decision of the management to sack their 500 colleagues at the company's Manesar facility, reports PTI.


Maruti Udyog Kamgar Union (MUKU), the workers' body at the Gurgaon factory of Maruti Suzuki India (MSI), said it will try to rally support of other unions in the Gurgaon-Manesar industrial belt against dismissal of Manesar plant workers.


"We are opposed to the sacking of workers at the Manesar plant. This was not the right thing," MUKU general secretary Kuldeep Jhangu said.


He further said MUKU, along with unions from other firms in the Gurgaon-Manesar industrial belt, is organising a protest rally this afternoon at Gurgaon against the sacking of the Manesar workers, apart from making other demands.


Asked what would be MUKU's action if the sacked workers are not reinstated, Jhangu said: "The co-ordination committee which was formed sometime back will decide as to what we should do."


He declined a direct reply when pressed if the union would go on strike if the management refused to take back the sacked workers.


Apart from opposing sacking of MSI's Manesar plant workers and "harassment of innocent workers there", the rally will also highlight call for abolition of contract labor and hiking of minimum wage, among others.


Yesterday, MSI Chairman had announced that the company was terminating the services of the workers saying the management have "lost confidence in them".


"We have already issued notices to 500 permanent workers at the plant. The number may increase depending upon the investigation and if there is a need to issue more notices, we will," Bhargava had said.


The workers are being sacked for their alleged involvement in the 18th July incident in which one senior executive of the company was killed and nearly 100 others injured.


MSI has clarified that the extent of damage to the plant due to the arson and violence was "less than Rs10 crore" and not Rs110 crore as being reported.


The month-long lockout at the Manesar plant will be lifted on 21st August and partial production will resume. The company said 300 workers will report for duty.


Production at the plant will be ramped up gradually from an initial 150 cars per day, MSI had said, adding the normal capacity of the plant ranges from 1,500-1,700 units a day depending on demand.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)