House panel questions Delhi airport land development

Panel criticises government for not monitoring project cost

The public accounts committee of Parliament has said outsourcing of non-aeronautical services by Delhi International Airport Ltd put additional burden on passengers, in the form of development fee, and deprived the Airports Authority of India of revenue.

The committee, headed by Bhartiya Janata Party (BJP) leader Murli Manohar Joshi, also criticised the civil aviation ministry for not monitoring the project cost of the Delhi airport.

The panel tabled its report in Parliament on Thursday.

It questioned the extension of concession period of the Delhi airport lease period from 30 to 60 years. The commercial exploitation of Delhi airport land and creation of 11 joint ventures by GMR-led Delhi International Airport Ltd for non-aeronautical business has come under the committee’s scrutiny, as it has had an adverse impact on the Airports Authority of India’s share in revenue from the project. Under the bid terms, DIAL shares 45.99 per cent of its gross revenue with AAI.

The committee noted the original project cost approved by DIAL and communicated to AAI in 2008 was Rs 8,975 crore. However, the actual project cost escalated to Rs 12,857 crore which was considered by AERA for tariff fixation. The committee expressed surprise that the project cost was neither monitored nor approved by the civil aviation ministry before finalisation of such a large project and suggested formulation of transparent rules and an institutional mechanism for for monitoring PPP projects and safeguarding public interest.

Under the agreement, DIAL is eligible to commercially exploit five per cent of the land (240 acres of the 4,799 acres of AAI land which has been leased out) and project earning capacity of the land parcel is pegged at Rs 1.63 lakh crore over 58 years. As of last February, DIAL had leased out only 45 acres.

The civil aviation ministry defended the decision, saying revenue share was the sole criterion of bidding and value of land was not considered by the government. The ministry submitted that against the permissible commercial exploitation of five per cent land, so far DIAL had not used even one per cent against the limit of five per cent. It was further submitted that it would not be proper to consider the usage of five per cent of airport land for commercial purposes as “subsidy in kind” — as “AAI is the biggest beneficiary of these clauses”.