Faulty joint ventures by DIAL led to Rs 103 cr loss to AAI

* CAG report says AAI could suffer more losses if agreement not reworked.

The Comptroller and Auditor General (CAG) has blamed faulty joint ventures (JVs) entered into by private consortium operating the Delhi airport for the Rs 103 crore revenue losses suffered by the Airports Authority of India (AAI) till December,2010. AAI is bound to suffer further losses if the agreement with the JVs continue in their present form,said CAG in an audit report tabled in the Parliament today.

According to CAG,the concession agreements signed by the Delhi International Airport Ltd (DIAL) GMR-led consortium which operated Indira Gandhi International Airport with 11 JV companies for rendering non-aeronautical services at the airport do not confirm to the provisions under operation,management and development agreement (OMDA).

The agreement of DIAL with its JV were not in consonance with the clause of OMDA relating to annual fee. AAI should have ensured that 45.99 per cent of the gross revenue as stipulated was received while DIAL concessioned out the non-aeronautical services, the report said.

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The auditor has recommended that the agreement be amended to include penalty clauses to safeguard AAIs interests. It further observed that if AAI had managed this agreement more effectively,it could have earned additional revenue of 23 to 24 per cent of revenue received. As per OMDA,AAI is entitled to 46 per cent of annual gross revenue.

DIAL entered into 11 such joint ventures with its equity shareholding ranging from 26 to 50 per cent and revenue share ranging from 10 to 61 per cent. CAG rejected DIALs plea that the revenue share with joint venture companies was decided after considering the capital investment on infrastructure to be made by the concessionaire. DIAL had said it entered into concession arrangements with bidders quoting highest revenue share.

The report cited the case of cargo and car parking operations which were undertaken by DIALs JV Celebi Delhi Cargo Terminal Management India and Delhi Airport Parking Services respectively. On operationalisation of the joint venture,the cargo revenue of DIAL decreased by 37 per cent during December,2009 to November,2010 even though the cargo handling increased by 25 per cent.

Some of these JVs in non-aeronautical services at the airport include Travel Food Services,Devyani Food Street,Delhi Select Services Hospitality,Delhi Duty Free Services and Delhi Airport Parking Services.