PMO wants to know why DIAL costs rose

New Delhi: The Prime Minister’s Office has asked the civil aviation ministry to explain why the cost of building the Capital’s Indira Gandhi International Airport rose 42%, although the project was commissioned on time. The PMO action follows a Parliament member’s complaint that the Delhi International Airport Ltd (DIAL) project, built as a public-private partnership, saw a cost escalation from R8,975 crore to R12,718 crore.
Further, a KPMG audit report has said the ministry and the Airport Authority of India (AAI) were not informed of the increased cost on a regular and proactive basis. AAI, which has nominees on the DIAL board, holds 26% in DIAL, while GMR holds 54%. Malaysia Airports Holdings and Fraport AG hold 10% each.
The higher cost means the government will have to spend more for a viable rate of return. It also led to a decision to levy airport development charges, which were, however, dropped after a court order.
Sources said that Davinder PS Sandhu, director in the PMO, wrote to the ministry seeking its explanation. An aviation ministry official confirmed the receipt of the letter, adding, “We are preparing a reply.”
Two consultants — KPMG and Engineers India Ltd engaged by the Airport Economic Regulatory Authority of India to make financial and technical audits respectively of the project — have reported that DIAL overshot its target and built additional floor area, costing R700 crore more.
12/07/11 Nirbhay Kumar/Financial Express

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Categories: Airports Jun 2011