Agreement on Delhi's T3 terminal stacked in favour of private operator
In a charge that is likely to heighten the war of words between the Opposition and the Congress, a draft report of the Comptroller and Auditor- General says the contents of a Cabinet note approved in 2003 were “omitted” by the government in April 2006 when the Operation Management Development Agreement (OMDA) for Delhi's T3 terminal was signed to suit the interests of the GMR-owned Delhi International Airport Limited (DIAL). These omissions are an example of an “undue favour” being given to the company, the draft report notes, and led to serious discrepancies in the government's final agreement with DIAL, which operates the terminal.
One of the issues the CAG examines is the absence of any provision in the OMDA for mutual agreement and fresh negotiations before an extension of the original concession period is granted.
“The decision to adopt the joint venture route was taken based on the Cabinet note of September 2003. While seeking approval for restructuring the Delhi and Mumbai airports, this Cabinet note specifically envisaged an initial concession period of 30 years, which could be extended by another 30 years subject to mutual agreement and negotiation of terms. However, in the draft OMDA, which formed part of the bid documents, the important condition, ‘subject to mutual agreement and negotiation of terms,' was omitted.”
This was not only a violation of the commitment in the Cabinet note but also amounted to a unilateral and unfair advantage given to DIAL, which is detrimental to government interest. For, it does not give the government any scope for a review of any of the conditions, says the CAG.
The report says four critical elements that determine a concessional agreement in any public-private partnership of this type are: traffic volumes; tariffs; the concession period; and the capital cost. In the OMDA, the provisions of which regulate the development of the Indira Gandhi International Airport, the concession period has no trigger, indicating any linkage of any of these four elements. Neither the Ministry of Civil Aviation nor the Airports Authority of India could provide any evidence to indicate that these inputs were considered while fixing the 60-year concession period, the draft notes.
“Such a sweeping provision, without any scope of review at any time during the currency of the concession period, has effectively granted DIAL the sole right to operate the airport for a period of sixty years with the terms and conditions frozen in the OMDA.” The audit could not find any infrastructure project, except the Delhi and Mumbai airports, wherein the concession period is initially for 30 years and can be extended for another 30 years at the sole option of the JVC and, that too, on identical terms and conditions.
In addition to the unilateral right to DIAL to manage the IGI Airport for 60 years, the State Support Agreement (SSA) allows it the Right of First Refusal with regard to a second airport planned within a 150-km radius of the IGI Airport.