New Delhi airport audit sparks protest from GMR, aviation ministry

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India's Ministry of Civil Aviation and GMR Infrastructure have condemned a government audit alleging irregularities involved with the public-private partnership to develop New Delhi's international airport.

In a 44 page report to India's parliament, the Comptroller and Auditor General of India took issue with several aspects of privatisation of Indira Gandhi International Airport, which was transferred to GMR unit Delhi International Airport Pvt Ltd (DIAL) in 2006. Under the deal, DIAL assumed control of virtually all of the airport's major functions.

The auditor recognises that public-private partnerships are "appropriate" for airport development, but suggests that DIAL unduly benefited from the privatisation.

"More rigour was necessary in drafting of the transaction documents as it was noticed in audit that many of the provisions were more skewed in favour of the concessionaire [DIAL]," says the report. "It was also noted that the Ministry of Civil Aviation and the Airport Authority of India [AAI], on some occasions, violated the provision for these transaction documents in the interest of the concessionaire."

The report contends that additional land of 190.19 acres (77 hectares) was leased out to DIAL for a "paltry" one-time payment of Rs61.9 million ($1.1 million). It compares this with 7.6 acres of land leased to the Director General of Civil Aviation and Bureau of Aviation Security for recurring annual payments of Rs24.1 million.

The auditor also takes issue with DIAL's use of airport development fees, land records associated with the airport, tender process violations and cost overruns.

The report concludes with seven recommendations, mainly focused on improving the transparency around the tender process for public-private partnerships and the structure of such deals.

GMR, for its part, issued a press release flatly disagreeing with the audit.

"DIAL has not received any undue benefits from the government before, during or after the bidding process," says GMR. "The entire process and selection of joint venture was based on a transparent, international, competitive bidding which was guided and presided over by competent bodies and has been upheld as such by honourable supreme court in 2006."

The Ministry of Civil Aviation also disputes the audit: "Reports like these would damage the process of public private partnerships and stunt infrastructure development in the country."