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Business News/ Companies / News/  Documents indicate aviation ministry partial towards GMR
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Documents indicate aviation ministry partial towards GMR

Last year, the ministry was criticized by the CAG for taking the side of DIAL at the cost of government interests

Documents show that over the past two years, state-owned Airports Authority of India has brought to the attention of the ministry, several moves by Delhi International Airport Pvt. Ltd that were not in keeping with the terms of agreement between the two. Photo: MintPremium
Documents show that over the past two years, state-owned Airports Authority of India has brought to the attention of the ministry, several moves by Delhi International Airport Pvt. Ltd that were not in keeping with the terms of agreement between the two. Photo: Mint

New Delhi: India’s civil aviation ministry continues to be partial to the GMR Infrastructure Ltd-led consortium that runs Delhi airport, even if this comes at the cost of government interests, according to documents reviewed by Mint.

The documents show that over the past two years, state-owned Airports Authority of India (AAI) has brought to the attention of the ministry, several moves by Delhi International Airport Pvt. Ltd (DIAL) that were not in keeping with the terms of agreement between the two, and which, therefore, affected the share of the state’s revenue from the airport.

Indeed, the documents show that there was no action on these issues, even as the ministry responded promptly to requests from DIAL for exemptions. And one document features a noting by the current minister, suggesting that the ministry’s partiality may extend to GMR Hyderabad International Airport Pvt. Ltd (GHIAL), which runs the Hyderabad airport.

AAI gave control of Delhi airport to DIAL under a privatization agreement in 2006 that mandated a 46% revenue share for it under a public-private partnership. The first phase of modernization worth $3 billion (around 16,200 crore today) under the supervision of the aviation ministry ended in 2010.

Last year, the aviation ministry was criticized by the government auditor for taking the side of DIAL at the cost of government interests. Its report pertained to the year ended 31 March 2012.

Internal documents of the ministry reviewed by Mint indicate that this practice continued.

“Since the beginning of 2011, DIAL has been approaching MoCA (ministry of civil aviation) and AAI, one or the other way, in connection with issues which are having adverse impact on obligations of DIAL and/or the payment of the monthly annual fee (MAF) to AAI," a recent AAI note to the civil aviation ministry said.

It added that several of DIAL’s moves disregarded contractual provisions and resulted in lower monthly payments to AAI. It also warned of greater financial implications unless the issue was addressed.

The ministry is, interestingly, critical of its own role in the matter regarding the GMR-led private airport operator, pointing to an internal divide and perhaps a clean-up attempt by current aviation minister Ajit Singh, who took over in December 2011 from Vayalar Ravi. The airport had been privatized in 2006 under Praful Patel, who headed the ministry till January 2011.

This became evident when DIAL recently sought an exemption from the ministry on counting the interest to be paid by Air India as revenue. Air India has delayed payments to airports and other vendors as it’s going through a financial crisis.

A civil aviation ministry official, on the advice of aviation minister Singh, sought comments from AAI on whether DIAL should be granted a waiver, but also indicated that the ministry was in favour of an exemption.

Singh rejected the view in a file noting on 1 February. He indicated that the ministry should have only asked for AAI’s views without implying that it had its own view.

“This seems incorrect since no such view has been taken by the ministry and the issue is still under examination," Singh wrote on the DIAL file. “The issue of giving one-time waiver of interest to exclude the interest portion of Air India dues needs to be legally examined in view of the provisions of the OMDA," Singh wrote, adding, “I also fail to understand how one-time waiver to exclude the interest portion of Air India dues from the definition of revenue would help Air India from avoidable additional financial burden."

OMDA, or operation management and development agreement, refers to the privatization agreement.

In his 1 February noting, the minister also admitted that no action has been taken on allegations against DIAL/GHIAL.

“It is regrettable that no action has so far been initiated on various letters written by AAI regarding alleged deviations by DIAL/GHIAL from the provisions of OMDA," Singh wrote on the file.

Mint couldn’t ascertain the nature of AAI’s complaints against GHIAL.

Civil aviation secretary K.N. Srivastava, who heads the oversight committees on both the Delhi and Mumbai airports and presides over the meetings to iron out issues on these projects, declined to comment on the matter.

He also declined to comment on why the ministry sent its own views to AAI when it was only supposed to seek AAI’s views. Singh, too, did not comment on the issue.

An AAI official, asking not to be named, said the airports authority has serious differences with DIAL. Most of these references have to do with payment terms and the recognition of revenue, and AAI has escalated the matter to the ministry.

AAI wrote four letters to the aviation ministry—on 13 June and 24 November in 2011, and 6 January and 1 February the following year—on alleged deviations by DIAL from OMDA provisions, the internal note shows.

DIAL has violated OMDA by not paying AAI its revenue on time, said another person with knowledge of the subject, who also asked not to be named.

This person added that under the terms of agreement between the two, DIAL has to give AAI one-12th of the estimated revenue for the year in the first week of every month. “DIAL took a view that it will give it on actual basis and whenever it will be received. That is against OMDA," this person added.

This person further said that following this, two AAI representatives on DIAL’s board moved a dissent note.

“Ministry did not do anything. AAI wrote to the ministry explaining this, ministry did not do anything. AAI wrote again. Nothing was done. Then DIAL wrote to the ministry recently, seeking interest waivers and the government reacted immediately—within three days," this person added.

DIAL denied it has asked for any changes.

“No. We have not changed any payment condition. Even now we are paying the revenue share on the projected income of DIAL as approved by DIAL board. There is no change in the methodology. Monthly annual fee is paid to AAI every month on due date based on the projected revenue approved by the board. Hence DIAL has not violated OMDA," a DIAL spokesman said in an email.

The spokesperson added that the company had not sought any exemptions from AAI or the ministry.

Mumbai airport, privatized in 2006 under terms similar to those for DIAL, continues to pay AAI on time as per the conditions agreed upon.

The AAI official cited earlier said that Air India’s recent payments to DIAL, while keeping dues to it pending, showed the government operator was being made to play second fiddle.

“Air India owes us 1,300 crore in dues, but we were not paid (though) DIAL/GHIAL was given 415 crore this month. Shouldn’t we have been given our dues first before the private operator?" he said. The official added that this shows the aviation ministry’s “priorities".

Previously, the Delhi airport operator had to scrap a plan to lease out 45 acres of land for hotel development as the proposal was seen as a means to reduce the revenue share to AAI and, therefore, to the government, Mint reported on 13 August 2007. The then aviation secretary Ashok Chawla blocked the move after a long consultation and legal process.

Last year, the Comptroller and Auditor General of India (CAG), the apex government auditor, said that “whenever DIAL raised an issue regarding revenue to accrue to it or expenditure to be debited to government in contravention to the provisions of Operation Management and Development Agreement (OMDA), the ministry and AAI interpreted the provisions always in favour of the operators and against the interest of the government".

CAG said this in its report on the Implementation of Public Private Partnership Indira Gandhi International Airport, Delhi, which was tabled in Parliament in August.

A public accounts committee headed by Bharatiya Janata Party leader Murli Manohar Joshi is looking into the CAG audit on Delhi airport and is expected to submit its report to Parliament soon.

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Published: 13 Feb 2013, 11:58 PM IST
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