CAG report reveals how fliers forked out Rs 3,415 cr as ad hoc charges

A report tabled by the Comptroller and Auditor General of India (CAG) in Parliament on Thursday made a startling revelation that the civil aviation ministry and Airports Authority of India (AAI) during the United Progressive Alliance regime held back information from the Airports Economic Regulatory Authority (AERA) which enabled Delhi International Airport Limited (Dial)- the private company managing the Delhi airport -to impose a staggering Rs 3,415- crore development fees burden on travellers .

In February 2009, the government had allowed Dial to levy a development fee at the rate of Rs 200 per embarking domestic passenger and Rs 1,300 for each embarking international passenger purely on ad hoc basis for 36 months with effect from March 1, 2009. One of the conditions of the approval was that the final determination of the levy should be made by the government/regulator (Aera) after adequate consultation with users.

Aera after taking into consideration the revised final project cost informed by Dial as Rs 12,857 crore as against Rs 8,975 crore projected to the ministry in October 2009 sought responses from stakeholders in its consultation paper in April 2011.

The AAI in its submission in May 2011 stated that it was not in a position to make further contribution towards equity. Dial submitted that as AAI had expressed inability to make a further contribution to equity, it will not be possible to raise more equity without diluting AAI's share.

Considering these submissions, Aera permitted Dial in November 2011 to levy the development fees with effect from December 2011.

The report points out that while determining the levy of the fees, Aera observed that various "clauses of the shareholders agreement would seem to indicate that the private participants are obliged to acquire the equity shares offered to AAI at the time of further capitalisation and which it does not subscribe".

The CAG observes, "AAI and the ministry of civil aviation did not bring to the notice of Aera four clauses of the shareholders agreement emphasising the rights of AAI with respect to Reserve Board Matters and Reserved Shareholders Matters even when it holds 10-per cent of the equity capital of Dial thereby affirming AAI's rights in respect of special resolution under the Companies Act, 1956, and Reserved Board Matters."

The CAG report points out that by pegging the AAI share at 10 per cent, other shareholders of Dial could have contributed `5,733 crore as capital. This would have enabled Dial to maintain the required debtequity ratio and bridge the funding gap and spared fliers of the development fee burden.

Aera also stated, however, irrespective of the position whether other promoters can bring in further equity or not, in case, they are presumed to be able to bring in such equity, the same will lead to a reduction in equity of AAI below the current level of 26 per cent. Keeping in view the provision of the Companies Act, it will fundamentally alter the special position of AAI in the joint venture company (Dial). "The Authority feels that such fundamental alteration does not appear to be in public interest in as much as AAI is lessor of the airport and ought to have a special position in Dial."