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June 05, 2012

DIAL Questions CAG Audit, Jurisdiction


05 June 2012

Mumbai: Questioning the jurisdiction of the Comptroller and Auditor General (CAG), which had detected a loss of Rs 1.63 lakh crore in the leasing of land to GMR-led private operator, Delhi International Airport Pvt Ltd (DIAL) recently said the concessions available to it to run the Delhi airport were part of the bid documents and were available to every bidder, according to a report by PTI.

CAG, in its draft audit report which is yet to be tabled in Parliament, states that DIAL could earn Rs 1.63 lakh crore over a period of 60 years from land that was leased out for a mere Rs 100 per year.

"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 five per cent of airport land for commercial purposes were available to all bidders. "The bid process and conditions were reviewed and upheld by the Supreme Court of India in 2006," it said.

Stating that the figure of Rs 1.63 lakh crore as value of land was "theoretical and grossly misleading", it said the amount of revenue accruing to DIAL over 58 years does not represent the time value of money.

"It (Rs 1.63 lakh crore) is simply the absolute amount of revenues that accrue to DIAL over 58 years (45.99 per cent of the same will be shared with Airport Authority of India) – and does not represent the time value of money. The net present value of this land would be only Rs 4,547 crore (about Rs 19 crore per acre)," the statement said.

On CAG's criticism of the Civil Aviation Ministry allowing DIAL to charge airport development fees (ADF) from air passengers in violation of agreement, the operator 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.

The imposition of the development fee on passengers at Delhi airport came under attack in the Rajya Sabha last month with CPI-M, BJP, SP and BSP members questioning the levy for incoming passengers.

"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 that passengers and airlines would have else been paying 200 per cent of additional tariff hike.

"As a result, DF is actually detrimental to DIAL as it meant a loss of nearly Rs 546 crore of revenue per year," it said. The company added that DIAL has delivered world-class infrastructure in fulfilment of its commitment under the concession document.