Pruned realty deposit plan at Delhi airport may take wing

Pruned realty deposit plan at Delhi airport may take wing
Comment E-mail Print Share
First Published: Wed, Jul 16 2008. 11 54 PM IST
Updated: Wed, Jul 16 2008. 11 54 PM IST
New Delhi: The Union ministry of civil aviation is considering allowing Delhi International Airport Ltd, or DIAL, the firm modernizing the airport in the Indian capital, to raise Rs900 crore through lease deposits from realty and hospitality firms keen on developing airport land.
The money, one-third of what DIAL initially wanted to raise, could help meet part of the modernization cost. In a related move, the ministry had decided to turn down a DIAL proposal on levying a so-called user development fee, or UDF, on passengers with immediate effect, although the airport itself still remains work-in-progress.
DIAL, under criticism for traffic snarl ups and crowded lounges at the Delhi airport, had suggested it be allowed to levy UDF—separate from the current Rs225 each passenger pays to the government to cover costs such as security—to help ease finances in the project.
/Content/Videos/2008-07-17/Josey on Airport_MINT_TV.flv
The lease deposit proposal, which, when first proposed in May 2007, envisaged raising at least Rs2,835 crore in refundable deposits for a period of 28 years, apart from a licensing fee, for leasing out 45 acres of land to realty and hospitality firms through a bidding process initially planned for September last year.
The plan, with the deposits to be routed through DIAL unit Delhi Aerotropolis Pvt. Ltd, ran into rough weather, including legal trouble, with charges that the proposal was fashioned so that the airport developer would not have to share revenues—46%, as per a summer of 2006 privatization agreement—with the government. The plan, part of a total debt-raising plan of Rs4,500 crore from land lease rights, was frozen by the government in December 2007.
“They can take deposits, one-third of the originally planned,” said a senior civil aviation ministry official, who did not want to be quoted because a decision on the proposal is not final. He described this lowered deposit as “a standard trade practice”.
The proposal will next be discussed by DIAL board members, three of whom are government representatives. The DIAL board has 16 members.
ALSO READ
A spokesperson for DIAL declined comment.
DIAL is controlled by Hyderabad-based GMR Infrastructure Ltd, which has a 50.1% stake in the firm with Frankfurt airport operator Fraport AG and a unit of Malaysian Airports Holding Bhd each owning 10%. Private equity firm India Development Fund has a 3.9% stake, while the rest is held by the Airports Authority of India, or AAI.
Since late last year, AAI, the country’s airports regulator, and the aviation ministry have been reviewing several proposals from DIAL to proceed on the hospitality project including one which sought a new UDF. A similar fee of up to Rs1,000 has been approvedat new airports in Hyderabad and Bangalore, which started operations earlier this year, but it is yet to be finally approved on domestic passengers even in these two airports. The same rule cannot be permitted, the aviation ministry official said, at Delhi or Mumbai airports immediately. “UDF is allowed only after project is completed,” this official added.
The operator will also need to take all revenues, including the lease deposits, into DIAL, the main company licensed to run the airport, and not in units such as Delhi Aerotropolis and DIAL Cargo Pvt. Ltd.
Ashutosh Agrawala, chief financial officer in charge of strategic finance at GMR Group, said earlier this week that the company had reached a “win-win situation” with the government on the deposit plan and expected resolution by next month. He declined to give specifics then and declined comment on Wednesday.
Comment E-mail Print Share
First Published: Wed, Jul 16 2008. 11 54 PM IST