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India's Comptroller & Auditor General criticises development fee, concessional land to Delhi Airport

20-Aug-2012 10:51 AM

India's Comptroller and Auditor General (CAG), in a report on the 'Implementation of Public Private Partnership Indira Gandhi International Airport Delhi', criticised (17-Aug-2012) the Indian Government for allowing GMR Infrastructure Ltd, the private operator of the airport, to obtain a majority ownership position in the airport for a period of 60 years and to obtain several hundred acres of land at a fraction of market prices (INR18.13 billion/USD323 million), creating tens of billions of dollars in lost revenue for the Government. CAG noted DIAL could potentially earn INR1.6 trillion (USD29.3 billion) over a 60-year period from the land provided on lease of INR1 billion (USD17.9 million). CAG also objected to the development fee charged on passengers by the airport. “This decision to levy development fee, after the effective date, has vitiated the sanctity of the bidding process, as the draft OMDA, part of the bid documents, does not mention funding of the project cost… through levy of development fees. In case the joint venture was to have been permitted to levy development fee to finance the project after signing the OMDA, this important condition should have been known upfront to all the bidders at the time of bidding,” the report noted. CAG also noted the Ministry of Civil Aviation and Airports Authority of India (AAI) failed to take any action when it became evident that the floor area of T3, as constructed by DIAL, was 83,708sqm more than indicated in the major development plan. CAG also concluded that "many observations in the present report would indicate that whenever DIAL raised an issue regarding revenue to accrue to it or expenditure to be debited to Government in contravention of the provisions of OMDA, the Ministry and AAI interpreted the provisions always in favour of the operators and against the interest of the Government."

Despite the criticism of the process, CAG noted that "from the point of view of development of infrastructure, Indira Gandhi International Airport can be considered as a success" and PPPs "are an appropriate way for airport development and modernization". Parliament’s Public Accounts Committee will soon decide on taking up the CAG report (PTI, 17-Aug-2012). "The time will be decided to take up the reports shortly and future course of action will be decided as per rules," PAC chairman and BJP leader Murli Manohar Joshi said. [more - original PR - CAG report]