Banerji says DIAL deposit deal is fine

Banerji says DIAL deposit deal is fine

New Delhi: India’s attorney general Milon K. Banerji has said that Delhi International Airport Pvt. Ltd (DIAL) has a “right" to “raise" refundable deposits on land it was leasing out to developers, providing a contrasting and conflicting opinion to one previously expressed by the Union aviation ministry.

The opinion, which is not binding on the law ministry—which had sought it—or on the civil aviation ministry—which had referred the issue to the law ministry— means DIAL, the consortium developing the Delhi airport, can part-fund its Rs8,900 crore airport development by securing at least Rs2,835 crore in deposits, refundable after 28 years, and an annual licence fee from a realty developer, who will develop about 45 acres of airport land into a hospitality district. Aviation ministry officials had opposed the plan because it would mean a loss of revenue for the government—New Delhi is to receive some 46% of the airport revenues as part of the privatization deal—if such an arrangement was permitted.

According to Banerji, DIAL “has a legitimate right to raise such deposits and it should not be seen as any substitution of revenues, or a foul play on the part of DIAL".

He added that the deposits were “capital receipts", not “revenues". “There is no impediment on DIAL on accepting refundable security deposits from developers as part of means to finance its obligations," Banerji said. Aviation ministry officials couldn’t be contacted for comment.

A spokesperson for DIAL said the firm was unaware of what had transpired between the civil aviation and law ministries. “We are, however, hoping that the matter would be expedited at the earliest," the spokesperson added.

Mint had reported on DIAL’s plans to generate money through security deposits, and the civil aviation ministry’s concerns over this. Given the attorney general’s opinion, the government should “define revenue in a very exhaustive manner" so that “these loopholes are fixed", said Amrit Pandurangi, executive director at audit and consulting firm PricewaterhouseCoopers.

Rahul Chandran of Mint contributed to this story.