Performance audit of Mumbai airport needed

CAG criticises the PPP partnership model for development of the airport stating 'the financing risks have not been effectively transferred to private partner'

The Comptroller and Auditor General (CAG) on Friday asked the government to review the financing structure and performance of the Mumbai International Airport Limited (MIAL), as the project cost for development and upgrade work of terminals has doubled because of inordinate delays, and the funding gap is now being addressed by levying development fee on passengers.

In its audit report titled Implementation of Public-Private Partnership Project at Chhatrapati Shivaji International Airport, Mumbai, tabled in Parliament on Friday, CAG criticised the public-private (PPP) partnership model for development of the airport stating "the financing risks have not been effectively transferred to the private partner".

The auditor held that although the Airports Authority of India (AAI) had the right to penalise MIAL for delaying the project by four years, no communication urging MIAL to hasten implementation work was on record.

"There is a strong case for the government to critically review the outcomes from the PPP arrangement in MIAL... and protect the interests of government and passengers," CAG stated in the report.

The delay in completion of the project has meant the cost has more than doubled from Rs 5,826 crore to Rs 12,380 crore, CAG said in its audit. However, the concessionaire, MIAL, did not face financial vulnerability for the same. The gap in funding gap was largely addressed as the civil aviation ministry and the Airports Economic Regulatory Authority allowed levy of development fee on passengers.