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Delhi airport operator GMR idling on prime land

Firm under scrutiny to see if it had diverted land for aviation use to build business hub, writes Gaurav Choudhury. DIAL's finances | The land deal | Unanswered questions

delhi Updated: Jun 12, 2013 00:51 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
GMR,Delhi Airport,DIAL

The GMR-led Delhi International Airport Limited (DIAL), the infrastructure company that runs Delhi's Indira Gandhi International airport, is learnt to be under scrutiny of a parliamentary panel over questions that it may have used land reserved for core aviation activities to build a commercial hub.

The GMR tried to stonewall a query on the issue from Hindustan Times, obtaining an injunction from the Delhi High Court on June 5 and restraining this newspaper from writing a story. The court, after hearing HT's arguments, lifted the restriction in an order on Tuesday.

Under a January 2006 agreement, the GMR-led consortium was awarded the concession to develop and operate Delhi's Indira Gandhi International Airport for 30 years after a competitive bid. This concession is extendable by another 30 years.

Questions surround the GMR-led DIAL business hub being developed on 45 acres, or a fifth of the 230.45 acres available to it for commercial development.

Under the 2006 agreement, the government allowed the consortium to acquire 4,608.9 acres in all to modernise the airport. Under the terms and conditions, about 5% of this land, or 230.45 acres, could be used for building hotels, malls and convention centres. DIAL's finances | The land deal

The consortium also got additional 190 acres in August 2009, which it could use only for aeronautical purposes. It is unclear whether carved out the 45-acre commercial hub from this additional land exclusively reserved for core aviation functions, such as terminals, apron extensions or aircraft hangers.

The Hindustan Times had e-mailed the DIAL a questionnaire on June 1, 2013, seeking comments on various aspects of DIAL's operations. The company did not respond. Instead, it petitioned the court to obtain an injunction.

The DIAL had leased out the 45-acre land to 12 real estate developers to create 61.20 lakh square feet of commercial space for lease rental at Rs. 1.96 crore an acre for 2012-13. According to sources, DIAL also received Rs. 1,471 crore as security deposit for this. While the state-run Airports Authority of India (AAI) gets a share of revenues earned from the lease rental, DIAL does not share revenues earned from security deposits with the AAI.

DIAL's operational strategies raise public-interest questions, because it has chosen to develop just a fraction of the land available for commercial use, while allowing the remainder land to idle, which could generate huge capital to fund airport operations. Instead, it earns revenues from additional fees on passengers to raise capital, making flying expensive.

According to a source, who did not wish to be identified, DIAL has "misrepresented facts" appropriate authorities which "amount to falsification."

DIAL's strategy, sources said, is to develop the rest of the land only from the 20th year of its operations, possibly to allow time for property rates to go up and use the passenger fees to fund part of its capital and operational expenditure.

The master contract - known as the operation, management and development agreement (OMDA) --signed between the AAI and DIAL in April 2006 clearly stipulates that any additional land, over and above the original "demised premises" of 4608.9 acres, can be transferred to DIAL only if it is required for creating aeronautical assets.

The OMDA also makes it clear that "parties shall come together to negotiate in good faith the terms and conditions" on which the additional land will be transferred to DIAL. Strangely, the additional 190 acres were handed with an upfront fee of Rs. 6.19 crore, without carrying out "negotiations in good faith" as specified by the OMDA, sources said.

It is unclear why DIAL had to pay an upfront fee when it got the additional 190.19 acres.

Another source said that DIAL should be asked to return the land it has failed to utilize commercially. " They (DIAL) should be asked to return the land or pay current market prices for it," the source said, requesting not to be identified.

First Published: Jun 11, 2013 11:28 IST