Revenue sharing model between DIAL, AAI 'defective': CAG

The Airports Authority of India (AAI) could have earned an additional 24% revenue from the Delhi International Airports Limited (DIAL) had it managed its contract with the private-led operator more effectively, the Comptroller and Auditor General (CAG) has said.

In a report tabled in Parliament today, the CAG also observed that DIAL was "unduly benefitted due to the non-levy of interest on excess annual few actually received as per the provision of the OMDA (Operation, Management and Development Agreement)".

It recommended amendments to the provisions of the OMDA to include penalty clauses for protecting the interests of the AAI against delayed payments by DIAL.

Terming the revenue sharing model between DIAL and AAI as "defective", the government audit body found that AAI's receivable annual fee saw a "substantial reduction".

Maintaining that AAI was not in a position to levy penal interest in case of delayed payment by DIAL due to the absence of enabling provisions in the OMDA, the CAG said "had the AAI managed this contract more effectively, it could have earned additional revenue of 23-24% of revenue received".

"Audit observed that while DIAL was required to pay to AAI, an annual fee at the rate of 45.99% of its gross revenue, DIAL's agreement with the joint ventures (on cargo and airport parking) provided for sharing of gross revenue on the contracted out services".

This "resulted in substantial reduction in annual fee receivable by AAI", the CAG observed.