The Civil Aviation Ministry has termed as "erroneous" the CAG's observations that "undue benefits" were given to operator of the Delhi International Airport.
In a point-by-point rebuttal of the auditor's observations on Delhi International Airport (DIAL), the ministry has told Parliament's Public Accounts Committee (PAC) that the process of selection of joint venture partners was completed as per laid-down procedure by observing all relevant guidelines and in accordance with the decisions of the union cabinet and the Empowered Group of Ministers (EGoM).
It said the process also underwent judicial scrutiny and was validated by the Supreme Court.
"No discrepancies were found at any stage. The entire process has been examined at nine levels of scrutiny...," the Ministry informed the PAC in a written submission.
On the issue of CAG's observation on conflict between Operation Management and Development Agreement (OMDA) and Airport Economic Regulatory Authority (AERA) Act, the ministry said OMDA pre-dates AERA Act.
"The non-aeronautical services mentioned under OMDA were part of the bidding process. It is totally absurd to say that this provision was made for giving undue advantage to DIAL. Had that been the case, AERA Act should have been enacted to match the provisions of OMDA...," it said.
Referring to the auditor's observation on misuse of the concept of upfront fee, the Civil Aviation Ministry said the condition was mentioned in the bidding documents.
The issue, it said, was discussed in the meeting of the EGoM where it was observed that between the two options of levying OMDA fee as a percentage of gross revenue and per passenger/ per ton cargo fee, the former was considered more beneficial.
"The Inter-Ministerial Group (IMG) had analysed the average profit of both AAI airports and broadly firmed up the profit of the order of Rs 150 crore for each airport in 2003-04. Hence, IMG recommended Rs 150 crore as upfront fee to be levied on JVC of both (Delhi and Mumbai) airports as one-time payment to AAI.
"Therefore, the quantum of upfront fee (Rs 150 crore) had no relation with the extent of land and asset at the airport," it said.
"... Therefore, entire observation of CAG audit is erroneous," the Ministry told the PAC.