CBI has re-started investigations into the irregularities, violations related to the privatization of Delhi airport. The CBI has asked the ministry of civil aviation (MoCA) for complete OMDA files between AAI and GMR from beginning to till date. This is our four-part cover story for this edition.
In 2006, the UPA-1 had awarded the contracts for airport modernization under PPP model to GMR-led consortium in Delhi and GVK led consortium in Mumbai. The entire selection process was structured to select GMR and GVK. Not just this, the extension of the contract period by 30 years beyond the existing 30 years was also done in violation of government’s policy in respect of similar PPP infrastructure projects.
Recoveries of capital cost was facilitated through levies exacted from passengers. These were not part of the original tender. Parking charges were also hiked. Both GMR and GVK formed several jvs and awarded contracts to these jvs or in other words, themselves to corner revenue and deny AAI their share. They moved lucrative services barred by OMDAs to their jvs. They inflated costs and grabbed land for hotel construction. Their cost overruns they passed onto passengers in the form of Development Fee charged on both domestic and international passengers. Both GMR & GVK are sitting over land assets worth over lakh of crore of rupees for over at least 60 years of the contract period. Instead of raising the capital for investments through equity or debt or public offer or dilution of stake, they found a very comfortable route through User Development Fee (UDF).
MoCA levied UDF to facilitate more funds to DIAL for meeting their cash-flow requirement for the project. This was challenged by a consumer organization in the Supreme Court. The apex court quashed the MoCA order as being ultra-vires. The court had said that the appropriate authority for such levies was not MoCA. Thereafter, AERA started consultation with the stakeholders. AERA, allowed the UDF to be charged at the same rates with effect from Dec 1, 2011, for 18 months (till May 2013). This was extended to Oct 2014. After this, AERA has been issuing tariff orders in a routine manner. AERA not only hiked the Development Fee but also levied it for arriving passengers. As a result, in the case of MIAL UDF accounted for 29.19 per cent of project funding while the equity stake of the private partners of MIAL at Rs 888 crore contributed a mere 7.6 per cent. This was not what was envisaged in the bidding process and is a subversion of OMDA contracts. Subsequent red flags by auditors have also been brushed aside by AERA. Many other unsavoury facts are stated in the story.
