Friday, August 17, 2012

Ministry of Civil Aviation Refutes Loss Figures and other Allegations in CAG Report on IGI Airport, Delhi
AAI Likely to get more than Rs. 3 Lakh Crore during Entire Concession Period

                Ministry of Civil Aviation has gone through the report of the CAG on Indira  Gandhi International Airport, Delhi as tabled in Parliament today and strongly refutes the loss figures and other allegations as made in the report.
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. In fact the net present value of the figure quoted by CAG is Rs 13795 crores only. CAG has further failed to appreciate that 46% of this amount would be payable to AAI as revenue share.
It is also pointed out that the levy of Development Fee is under Section 22 (A) of AAI Act, 1994 and was in the knowledge of all the bidders prior to the bidding process. Hence, contrary to what the CAG has said, the levy of Development Fee by DIAL was not a post contractual benefit provided to DIAL at the cost of passengers. Further, the levy of the Development Fee has been upheld by the Supreme Court, which has already examined and rejected all the issues now being raised by CAG in its report.
On the issue of lease of Airport land, it is clarified that the land has not been given to DIAL on rental basis. Rs100 is just a token amount for the purpose of the Conveyance Deed. The determining factor for grant of concession to the bidder was the Gross Revenue share quoted by the bidders. As a result, Airports Authority of India (AAI) now receives 45.99% share of Gross Revenues of DIAL and 26% of all Dividends. Benefit to AAI is likely to be more than Rs 3 lakh crores in this process during the entire Concession period. AAI has already got its revenue share of Rs.2936 crores  in the last 6 years and likely  to get Rs. 1770 crores in the year 2012-13 and Rs. 2287 crores in the year 2013-14. The AAI share of revenue from DIAL is further going to constantly rise every year in the balance concession period.
       It may also be noted that the right to use 5% of Airport land for commercial purpose was also defined in the bid and known to all bidders.
The decision to restructure and modernize Delhi and Mumbai Airports was a policy decision of the highest body i.e., the Cabinet following the broad policy formulations of Policy on Airport Infrastructure, 1997. The modalities of modernization/ restructuring were as per the Cabinet decision and were frozen in the Transaction Documents finalized and approved by the Empowered Group of Ministers (EGoM), based on which the bidding process was completed.  The issues now being highlighted in the CAG report, viz. Concession Period, Right of First Refusal (ROFR), Upfront Fee, Commercial exploitation of land, and Lease rental of land were part of these documents and were symmetrically known to all bidders before bidding and during the bidding process. These documents were later converted into different agreements, like Operation Management and Development Agreement (OMDA), State Support Agreement (SSA), Shareholders Agreement (SHA), Lease Deed Agreement, CNS-ATM Agreement, and State Government Support Agreement (SGSA), and there has been no change in these documents ever since. 
All decisions including the entire bidding process and the approval of the OMDA was monitored by EGoM and subsequently approved by the Union Cabinet. The bidding process has also been upheld by the Supreme Court.
All Aeronautical and Airport assets created by DIAL will be transferred back to AAI  as per agreement at the end of the concession period.
It is further stated that the views of Ministry of Civil Aviation and AAI have not been incorporated in the final report of the CAG and there are aspects mentioned in the final report which were neither included in the draft audit report nor were discussed with the Ministry of Civil Aviation at any point in time.
It is pertinent to mention that CAG in its report has itself acknowledged the significant improvement in the services for travelling public, new terminal T-III being completed within the time frame for Common Wealth Games and Delhi Airport being adjudged the second best in the world in the category of 25 to 40 million passengers per annum by the Airports Council International.
India has few world class Airports achieved in a very short span of time. Reports like these would damage the process of PPP and stunt infrastructure development in the country.
            The brief parawise comments to the CAG report on IGI Airport are  attached as Annexure and are  also available on the website of Ministry of Civil Aviation.

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