Delhi Airport: DIAL’s revenue sharing under CAG scanner

The Comptroller and Auditor General of India (CAG) has asked the ministry of civil aviation for a report on whether the joint ventures (JVs) floated by DIAL at the Delhi airport are causing revenue loss to the government.

The Comptroller and Auditor General of India (CAG) has asked the ministry of civil aviation for a report on whether the joint ventures (JVs) floated by DIAL at the Delhi airport are causing revenue loss to the government.

HT Image

DIAL (Delhi International Airport Limited) is the private-led consortium that runs the Indira Gandhi International Airport.

HT had reported a confidential note written by Yashwant Bhave, chief of Airports Economic Regulatory Authority — aviation sector’s infrastructure regulator — to the ministry in which he had pointed out that the JVs were depriving Airports Authority of India (AAI) of precious revenue.

Besides the impact on revenue share, the JVs may have certain serious regulatory implications, Bhave had written. DIAL denied these allegations.

Following the HT report, cabinet secretariat sought an explanation from the aviation ministry.

The ministry then directed AAI to appoint an independent consultant to look into each JV floated by DIAL and submit a report on whether they were causing loss of revenue.

DIAL has farmed out various activities at the airport to 11 subsidiaries and JVs through separate agreements with no role of AAI.

In 2006, DIAL had won rights to run the IGI airport for 30 years by pledging around 46% of its revenue to AAI.

Bhave’s letter said that as a result of the JVs, AAI share of revenue had been considerably diluted.

For instance, in the duty-free shop JV, DIAL earns R32 for sales of R100. DIAL shares 46% of this — Rs 14.72 — with AAI and keeps the rest. In effect, on revenue of Rs 100, AAI earns only Rs 14.72 — less than one-third of what it should have earned according to the original agreement. “I had the matter examined,” Bhave wrote.