Mumbai: Delhi International Airport Ltd (DIAL) has been told to submit a long-delayed review of its estimated cost for modernizing the Indira Gandhi International Airport in the capital by 15 April.
The Airports Economic Regulatory Authority of India, or Aera, said it would not allow DIAL to levy the airport development fee (ADF) on passengers from 1 August if it failed to meet the deadline.
An executive of GMR Group, which leads a consortium that owns DIAL, said they would submit the review of estimated cost by 6 April.
DIAL had estimated it would incur Rs8,975 crore for the modernization project. It also cited a funding gap of Rs1,827 crore, and was allowed to levy an ADF of Rs1,300 on every international passenger flying out of the city and Rs200 on every domestic passenger from 1 March 2009 to bridge the gap.
In the wings: The under-construction Terminal 3 of the Indira Gandhi International Airport in New Delhi.Sanjeev Verma/HT
The ADF, which is inclusive of all taxes, was levied on an ad hoc basis for 36 months on the condition that DIAL would submit a review of the estimated cost by 31 August 2009. The deadline was later deferred to February 2010, but DIAL again failed to submit the estimates.
Aera has now put its foot down. “DIAL should submit the final project cost (estimates) at the earliest. In case, the submission is so delayed that the authority is not in a position to obtain final cost, duly audited by the independent technical auditor, latest by 31 July the levy of ADF shall not be permitted with effect from 1 August,” Aera chairman Yashwant S. Bhave said in a consultation paper.
To allow Aera to obtain audited final costs in time, DIAL will have submit the review of estimated cost by 15 April.
Bhave said the levy period may be “reduced to 24.5 months (from 36 months) in the final determination”.
This is because DIAL has received an additional Rs559.51 crore as security deposits from commercial property developers to whom it has leased out airport real estate. While citing the funding gap, DIAL had expected to receive only Rs912 crore from these refundable deposits, but ended up getting Rs1,471.51 crore.
Bhave told Mint there will not be any restrictions if DIAL submitted the review of estimated cost in time.
Sidharth Kapur, chief financial officer (airports), GMR Group, did not agree with Bhave’s consultation paper.
“We will be filing the project cost estimates by 6 April and we don’t see any reductions in the ADF amount or discontinuation of ADF levy. The Aera’s consultation paper is based on incomplete information. Things will be clear once we submit the estimates,” he said.
Airlines had not taken kindly to the ADF, which came during a slump for the industry.
The International Air Transport Association (Iata), which represents 230 airlines that account for 93% of international air traffic, said in a letter to Aera that DIAL needed to show to the regulator and airlines that all other financing options had been exhausted. It also needed to show that pre-funding through levying the ADF was the most beneficial financing option for the industry.
“The fact that the industry at this stage would be adversely affected by advance payment of airport development costs as opposed to deferred payment should be an important consideration. In the absence of such justification, the ADF should not be approved,” Iata had said.