Monday, October 23, 2017

DIAL’s Dubious Deal?

As had been pointed out in more than one expose by India Legal, there is much that is rotten in the joint venture (JV) that Airports Authority of India (AAI) had with GMR Infrastructure’s subsidiary, GMR Airports Ltd (GAL). The JV created Delhi International Airport Limited (DIAL), with GAL holding 64 percent, Germany’s Fraport, 10 percent and AAI, 26 percent.

The deal, heavily undervalued to suit the private sector infrastructure giant, has come back to haunt the venture as well as Indira Gandhi International Airport, once declared the best airport in the world. It has been revealed that the JV has been bled to such an extent that the intrinsic value of its equity has heavily eroded. It has also been alleged that charges have been levied where not legally permissible and have been hiked to almost unrealistic proportions in other cases.
How that erosion happened was revealed when a team of officers of the Internal Audit Wing of the Principal Accounts Office, Ministry of Civil Aviation (MoCA) conducted an audit of the accounts of DIAL in March 2016. Several anomalies came to the surface, including the fact that DIAL had not paid Rs 655 crore due as Cost of Deployment (CoD) to the Central Industrial Security Force (CISF) which guards the airport. That amount had, as on September 11, 2017, reached approximately Rs 697 crore, together with penal interest on delay in payment as per the contract.

In July 2017, as per media reports, CISF chief OP Singh wrote a letter to civil aviation secretary RN Choubey, complaining that huge amounts were outstanding from the 59 airports where the CISF operates. He wrote: “A review of the outstanding dues against various airports shows that an amount of Rs 735.33 crore is outstanding against 59 airports. Out of the total pending dues of Rs 735.33 crore, an amount of 655.40 crore relates to Delhi International Airport Limited (DIAL) alone (that amount has now gone up).” Singh had requested the central government to intervene and recover its dues from the private operator.

India Legal has learnt of another disconcerting detail. The DIAL management had diverted Rs 486.06 crore of the amount due to CISF as CoD to paying electricity bills, maintenance of machinery and equipment and even on capital expenditure (litigation regarding this is pending in the Delhi High Court), deployment of private security (this too is the subject of pending litigation) and payment of interest on loan.
These have come up in the MoCA audit. The audit report says:

“On scrutiny of expenditure booked against the Passenger Service Fee (PSF) (Security Component, or SC), it is observed that certain unauthorized expenditure is booked by DIAL against PSF (SC). Such unauthorized transaction and amount involved in these transactions till March 31, 2014 is listed below:

Capital Expenditure (Case pending in Delhi HC)—Rs 299.048 crore
Expenditure on deployment of Private Security (pending in court)—Rs 22.48 crore
Expenditure on Maintenance of Machinery & Equipment—Rs 42.02 crore
Insurance premium on Terrorism Insurance Policy—Rs 11.41 crore
Expenditure on Electricity Charges on Air Side perimeter lights—Rs 1.28 crore
Payment of Interest on Loan—Rs 107.39 crore
The Total Unauthorised payments comes to Rs 486.06 crore.”
23/10/17 Sujit Bhar/India Legal

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