Development Fee, Concessional Land for Delhi Airport Draws Flak in CAG Report

Friday, August 17th, 2012 | by

The development fee that is being levied on passengers using Delhi Airport stands in violation of the bid conditions for the benefit of GMR-led DIAL to the tune of over Rs 3,415 crore, by the Civil Aviation Ministry. The report has pressed for fixing responsibility. The report also states that DIAL has the potential to earn Rs 1,63,557 crore over a period of 60-years from the land given to it on a lease for Rs 100 per annum.

The Union government has been asked to probe into all cases of post bid concessions and henceforth fix responsibility. A recommendation has also been made to link all public private arrangements to certain basic triggers like tariff, traffic volume, return on investment, break-even points etc. “A long concession period without any trigger may lead to undue financial benefit to the concessionaire,” CAG said.

On the issue of development fee, the report states that by allowing DIAL to levy Development Fee, the very sanctity of bidding process has been vitiated, leading to undue benefit of Rs 3,415.35 crore to the private firm. “It was noticed that Ministry of Civil Aviation and Airport Authority of India, on some occasions, violated the provisions of the transaction documents in the interest of the concessionaire,” the official auditor said. GMR Infrastructure has 54% stake in Delhi International Airport Ltd.

The report also states that DIAL was granted permission to use the amount collected as Development Fees for various projects, even though it was contrary to provision of the airport’s concession agreement. ”In face, only 19 per cent of the project cost came from equity, approximately 42 per cent 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.

The airport levies development fee for both outgoing and incoming domestic and international passengers. It ranges from Rs 220 to Rs 520 for domestic passengers and Rs 490 to Rs 1200 for international travellers.

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