Ministry-DIAL revenue share fight snowballs

Mumbai: A dispute between Delhi International Airport Ltd (DIAL) and the Ministry of Civil Aviation over revenue sharing is threatening to escalate into a major controversy, with the latter seeking the view of the solicitor-general.
At the heart of the issue is the percentage of revenue that DIAL will end up sharing with Airport Authority of India (AAI), which according to the contract is to be just above 45 per cent.
According to calculations by the ministry, if DIAL proceeds with its plans, the percentage of revenue it shares will be only 6 per cent.
This has put the ministry in a flap and it has raised two serious objections to DIAL's plans. One, it is objecting to DIAL setting up various wholly owned subsidiaries to handle different aspects of the business, as a result of which revenues from these businesses will not accrue to DIAL and so won't be part of the shared pool.
Secondly, the ministry is upset with DIAL for calling bids for developing 43 acres for a term of 28 years plus 30 years (assuming DIAL will get an extension and will be able to give an extension for commercially developed land).
So, in the bid, the company has asked bidders to pay the deposit amount on the basis of the revenues that will accrue over 58 years.
22/10/07 Anjuli Bhargava/Business Standard

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Categories: Airports Oct 2007