GMR-led DIAL's JVs made aviation ministry, AAI lose crores
Reportedly, the government auditor, after scrutinizing the GMR group-led Delhi International Airport Private Limited (DIAL), has unearthed that the Ministry of Civil Aviation (MoCA) and the Airports Authority of India (AAI) had undermined public interest by okaying cargo JVs in 2009-10. The Union Government had to suffer a loss of Rs. 88.94 crore due to this negligence. Here's more about it.
What did DIAL do?
DIAL, in 2009, had appointed two cargo operators: Celebi Hava Servisi AS for brownfield cargo (the existing cargo terminal) and Delhi Cargo Service Center for the green field (the new cargo terminal). It entered into a 25-years joint venture and was a minority stockholder. DIAL raked 162% profit from DCSC equity sale, of which it gave nothing to AAI. It still has its JV with Celebi.
Why were no fingers raised?
The audit shows that AAI and MoCA, under the UPA regime, had turned a blind eye to the financial interests, as they approved these JVs for cargo activity in Indira Gandhi International Airport by DIAL. These cargo JVs are among the several non-aeronautical services operations of GMR-led DIAL, which has caused a loss of Rs. 2,397 crore over the last six years.
What should have been done?
DIAL should've been directed by AAI to make sure that the revenue doesn't fall below the agreed-upon levels, which would have safeguarded the public exchequer from losses. AAI, however, remained unperturbed, as revenues kept dwindling over the past years, post these cargo JVs. The audit memo states, "Due diligence was not applied by AAI to protect its financial interest in case of JVs formation"
How bad is the loss?
DNA got hold of the CAG audit memo and divulged the "loss of revenue share by AAI due to the decrease in cargo revenue after formation of JVs by DIAL". As per the document, DIAL revenue, in 2008-09, from cargo activity stood at Rs. 211.92cr and post-JVs it tumbled down to Rs. 175cr in 2009-10, Rs. 138.59cr in 2010-11 and Rs. 128cr in 2011-12.
What's the excuse?
GMR-led DIAL responded to DNA's query by saying that these contracts were "awarded after they were approved by the subcommittee of directors, with representatives of MoCA and AAI". It is to be noted that DIAL entered into 11 JVs for non-aeronautical services at IGI Airport between June 2009 and July 2010.
A dual policy at play
AAI had written a letter to DIAL pertaining to JV formation for mount equipment services in July 2010, which said that its "…expected revenue will not decrease as compared to existing revenue on this account." Then again CAG found out that "this condition was not applied by AAI in respect of formation of JVs for cargo activity by DIAL," as per DNA report.
