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Saturday , August 18 , 2012
Since 1st March, 1999
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Govt action under audit attack
Delhi airport project faces rough weather

New Delhi, Aug. 17: The Comptroller and Auditor General (CAG) today alleged that Delhi International Airport Limited (DIAL) was awarded the land for its project for a song.

The national auditor pulled up the government for handing out land with potential earning capacity of Rs 1,63,557 crore in exchange of an equity contribution of just Rs 2,450 crore.

It also slammed the government for permitting DIAL to levy a development fee on passengers, which was beyond the purview of the government’s contract with the operator and led to undue benefits of over Rs 3,415 crore to the company. DIAL is a joint venture between a consortium headed by Hyderabad-based GMR (54 per cent stake) and the Airports Authority of India (46 per cent).

According to the auditor, the GMR consortium made an equity contribution of just Rs 1,813 crore — the remaining contribution of the total Rs 2,450 crore equity was by the AAI — and got a brownfield airport for 60 years along with the commercial rights to land valued at Rs 24,000 crore with an estimated earning capacity of Rs 1,63,557 crore. (Brownfield airports are airports that are in existence.)

On the development fee paid by passengers, the auditor said the agreement signed by the AAI with the consortium did not provide for any levy to meet the project cost. The CAG said the draft operation, maintenance and development agreement (OMDA) did not mention the development fee and pressed for fixing of responsibility.

“But the ministry of civil aviation allowed DIAL to levy DF (development fee) in 2009 which is in direct contravention of OMDA, AAI Act and the act under which the AERA (Airports Economic Regulatory Authority) is run,” stated the report.

The auditor claimed that the government had turned a blind eye to the collusion between DIAL and the AERA in allowing these levies.

Charges denied

The civil aviation ministry has lashed out at the CAG and refuted the loss figures and other allegations. “The calculation of presumptive gain from the commercial use of land at the Delhi airport is totally erroneous and misleading as it simply adds the nominal value of the projected revenue, without taking the net present value into account. In fact the net present value of the figure quoted by CAG is Rs 13,795 crore only.”

It said the auditor had failed to take into account the fact that 46 per cent of any earnings would be payable to the AAI.

Besides, land was not given to DIAL on a rental basis. The criterion for giving the land was the gross revenue share quoted by the bidders; the sum of Rs 100 was a token amount for carrying out the conveyance deed.

The government said the fee was not a post contractual benefit provided to DIAL at the cost of passengers. “Further, the levy of the DF has been upheld by the Supreme Court, which has already examined and rejected all the issues now being raised by the CAG in its report.”