The private sector operators of Mumbai and Delhi airports caused a revenue loss of around Rs.43 crore to their public sector partner Airports Authority of India (AAI), according to a Comptroller and Auditor General (CAG) report tabled on Monday. Both Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) had set up a Marketing Fund in April 2010 and August 2012 respectively to collect 0.5 per cent and one per cent, respectively, of net sales from various concessionaires as a marketing fund charge to “promote business” at the two airports.
As per the public-private partnership (PPP) agreement, DIAL has to share 45.99 per cent of its revenues with AAI, while MIAL is supposed to share 38.7 per cent of revenues. “Audit observed that MIAL and DIAL had collected or billed from the concessionaires (till March 2015) an amount of Rs 66.76 crore in the name of Marketing Fund (MIAL Rs.14.90 crore and DIAL Rs.51.86 crore) without sharing it with the AAI,” the report stated.
While MIAL was supposed to share Rs.7.79 crore with AAI, including the interest amount, DIAL had to share Rs.35.69 crore with AAI as per the PPP contract, the CAG said.
“Fact remains that though constitution of Marketing Fund was in contravention of provisions of OMDA [Operations, Management and Development Agreement], AAI did not object to constitution of the fund,” CAG highlighted. It said although AAI’s independent auditors had highlighted the issue of non-sharing of revenue in their quarterly revenue audit reports for December 2012 quarter in case of MIAL and June 2014 quarter for DIAL, AAI failed to resolve the issue promptly resulting in non-realising of revenue.
The CAG also pointed out the “potential revenue loss” AAI could accrue due to a “flaw in agreement” between MIAL and private developer Housing Development and Infrastructure Limited (HDIL) for removal of encroachments from the Mumbai airport land.
It said MIAL awarded rights for commercial development on a considerable portion of Mumbai airport land owned by AAI to HDIAL for “a very long period” of up to 60 years in return to remove encroachments “without informing AAI.” According to the contract, MIAL would not receive any revenue from HDIL for the commercial development. Although the contract has been terminated in February 2013, the case is still going on in courts so the “attached commercial development rights have not been closed finally.”
