Govt auditor's (CAG) report slams levy of development fee on passengers at Delhi airport

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Govt auditor's (CAG) report slams levy of development fee on passengers at Delhi airport
New Delhi:  The government's auditor shared with Parliament today a report that says that thousands of crores have been lost in the way in which coal mines were allocated to private players; another report finds fault with how the Delhi international airport was privatised. The government has prepped a detailed defense for both sectors; it claims the auditor's calculations are erroneous.

The Comptroller and Auditor General's (CAG) report on the Delhi airport finds that the 1.63 lakh crores were lost because land was leased at a fraction of its market price to the public-private partnership, DIAL (Delhi International Airport Ltd). (Read the full CAG report here)

DIAL is led by the GMR Group, which has 54 per cent stake, and the state-owned Airports Authority of India. Germany's Fraport AG and Malaysia Airport Holdings are the other minority partners in the consortium that has operated the Delhi airport since 2006.

The auditor says that land was given to the airport project at highly concessional rates - 4800 acres were allotted, of which 240 acres could be used for commercial purposes like shops at Rs 100 a year. The auditor says that the land has a potential earning capacity of 1.63 lakh crores, and was assigned to the consortium against an equity contribution of just 2,450 crores.

The government's auditor has also objected to the development fee that passengers at the Delhi airport are charged - they pay between Rs 400 and Rs 2600, depending on whether they're flying domestically or internationally. The auditor said this tax was not part of the original contract, and that the fee gives DIAL an undue benefit of over Rs 3,400 crore.

But in a statement earlier this year, the public-private partnership that handles the airport, referred to as DIAL (Delhi International Airport Limited), rebutted that "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."

In a press release today, DIAL said it "has not received any undue benefits from the government before, during or after the bidding process. The entire process of the privatisation and selection of Joint Venture was based on a transparent, international, competitive bidding which was guided and presided over by competent bodies and has been upheld as such by the Hon'ble Supreme Court in 2006."

"It is alleged that with the airport modernisation project DIAL was effectively handed over land valued at Rs 1,63,557 crore for only Rs 100 per year... The entire commercial land available with DIAL neither has any immediate commercial value nor can be put to use and therefore cannot be monetised immediately. Thus, just using value of one acre and extrapolating the same for the entire land parcel is at best an arithmetic exercise and not practical," DIAL also said.

The government has said that that the token rent charged for the land saves the state-run Airports Authority of India hundreds of crores as stamp duty, and that the concessions available to GMR to run the Delhi airport were part of the bid documents and were available to every bidder, so no preferential treatment was shown to GMR, which landed the project.

(With inputs from agencies)

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