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

MDT/PTI 17 August 2012

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.

Comments

User

MK Gupta

1 decade 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?