The Comptroller and Auditor General (CAG), supreme audit institution of India tabled three reports - on power, coal and airports - in Parliament. This reveals that UPA government has caused a loss of more than Rs 1.86 lakh crore to the exchequer in the case of coal alone.
The Report has been prepared for submission to the President of India under Article 151 of the Constitution.
The report tabled on August 17 shows how government favored private companies. This so-called 'Coal-gate' scam is bigger than the 2G scam. Report No. 7 of 2012-13 for the period ended March 2012 - Performance Audit of Allocation of Coal Blocks and Augmentation of Coal Production (Ministry of Coal) is available on CAG's website.
In its report, CAG concludes that the permission for use of excess coal by Anil Ambani's Reliance Power Limited (RPL) from the three coal blocks allocated to Sasan Ultra Mega Power Project (UMPP) of 3960 MW (6x660 MW)after its award not only vitiated the bidding process but also resulted in undue benefit to RPL." CAG recommends appropriate review of the allocation of the third coal block (Chhatrasal) since the Developer had committed that he would be able to source 20 million tonne from the two blocks there would be adequate coal to feed the Sasan UMPP. This project is not yet commissioned as scheduled date of commissioning of first unit of 660 MW is 31-01-2013. The Project is scheduled to be commissioned by 30th June 2014.
In its Report on the Performance Audit of implementation of Public Private Partnership Project by Airports Authority of India at Indira Gandhi International Airport Delhi for the period from 2006 to 2012 , it notes that the airport has been adjudged as the second best in the world in the category of 25-40 million passengers per annum but its conclusions reveal a series of scams. It concludes that "the concept of upfront fee was used to lease out an additional land of 190.19 acres for a paltry one time payment of Rs 6.19 crore."
It concludes, "Ministry of Civil Aviation and later AERA (Airports Economic Regulatory Authority of India) allowed DIAL (Delhi International Airport Limited) to collect Development Fees amounting to Rs 3415.35 crore. The order of Ministry in February 2009 allowing that was in contravention of the OMDA, AAI Act and the AERA (Airports Economic Regulatory Authority of India) Act. Contrary to the provisions of OMDA (Operation Management and Development Agreement), DIAL (Delhi International Airport Limited) was allowed to use the amount collected as Development Fees to meet the project costs."
DIAL is a joint venture consortium of GMR Group (54%), Airports Authority of India (26%), Fraport & Eraman Malaysia (10% each). GMR is the lead member of the consortium; Fraport AG is the airport operator, Eraman Malaysia - the retail advisors.
In January 2006, the consortium was awarded the concession to operate, manage and develop the IGI Airport following an international competitive bidding process. DIAL entered in to Operations, Management and Development Agreement (OMDA) on April 4, 2006 with the AAI. The initial term of the concession is 30 years extendable by a further 30 years.
Allowing these post contractual benefits violated the tendering process by which the Joint Venture (JV) partner was selected. It was also noted that against an equity contribution of Rs 2450 crore, the JV was allowed rights of commercial exploitation of 240 acres of land. The land was valued by AERA at Rs 24000 crore. The potential revenue from this land in license fee for 58 years was calculated by DIAL (Delhi International Airport Limited) itself at Rs 163557 crore out of which DIAL’s share would be Rs 88337 crore.
"As regards the Master Plan and major development plan, it was noticed that the floor area of terminal T3, as constructed by DIAL (Delhi International Airport Limited) was 83708 square metres more than what was indicated in the major development plan. Ministry as also AAI did not take any action despite this being pointed out by the auditors appointed by AAI(Airports Authority of India)."
"As regards land handed over to DIAL (Delhi International Airport Limited), it was noted that basic documents like Khasra were missing thereby making it impossible for Audit to check the land actually transferred." CAG report concludes, "Provisions of OMDA (Operation Management Development Agreement) and SSA (State Support Agreement) have a tilt towards the private operator i.e. DIAL in revenue sharing."
"Many observations in the present report would indicate that whenever DIAL (Delhi International Airport Limited) raised an issue regarding revenue to accrue to it or expenditure to be debited to Government in contravention of the provisions of OMDA, the Ministry and AAI (Airports Authority of India) interpreted the provisions always in favour of the operators and against the interest of the Government." This CAG Report is based on its scrutiny of files and documents pertaining to the Ministry of Civil Aviation, Airports Authority of India, Airport Economic Regulatory Authority of India, Operation, Management and Development Agreement of 2006, Passenger Service Fee (Security Component) Escrow Account, etc.
CAG exposed the government on August 17, 2012 for giving out Delhi airport and its land with a potential earning capacity of Rs 1,63,557 crore to private-led operator DIAL which made a total equity contribution of only Rs 2,450 crore.
With an equity contribution of Rs 2,450 crore of which the private GMR-led consortium's share was Rs 1,813 crore, the Delhi International Airport Limited (DIAL) got a brownfield airport (already in existence) for 60 years, as per CAG's report.
The CAG report on the 'Implementation of Public private partnership Indira Gandhi International Airport, Delhi', tabled in Parliament, claimed that the commercial rights of land was valued at Rs 24,000 crore with a potential earning capacity according to its own estimates of Rs 1,63,557 crore.
The levy of Development Fee (DF) on passengers using Delhi Airport has also been crticized. CAG also charged the Civil Aviation Ministry with violating the bid conditions for the benefit of DIAL to the tune of over Rs 3,415 crore and pressed for fixing of responsibility.
At present DF is charged from both outgoing and incoming domestic and international passengers at the Delhi airport. The fee, levied in terms of distances, ranges from Rs 220 to Rs 520 for domestic passengers and Rs 490 to Rs 1200 for international ones.
Allowing DIAL to levy DF "vitiated the sanctity of bidding process" and led to undue benefit of Rs 3,415.35 crore to the private firm GMR.
"It was noticed that Ministry of Civil Aviation and Airports Authority of India, on some occasions, violated the provisions of the transaction documents in the interest of the concessionaire." the CAG report reveals.
The CAG said the decision to levy DF after the effective date has vitiated the sanctity of the bidding process as the draft Operation, Maintenance and Development Agreement (OMDA), which was part of the bid documents, "does not mention about funding of the project cost of the airport through levy of development fees."
In case the joint venture was to have been permitted to levy Airport Development Fund to finance the project after signing OMDA, this important condition should have been known upfront to all the bidders at the time of bidding.
The OMDA has allowed DIAL to use five per cent of the demised land for commercial exploitation. The current value of 9.50 acres as per AERA amounted to Rs 950 crore. The earning potential for 58 years from 9.50 acres based on DIAL's own projections was Rs 6,457 crore.
DIAL carried out construction on 553,887 sq mt of land as against the area of 470,179 sq mt indicated in the Major Development Plan (MDP). This has caused an increase in the project cost by 43.25 per cent.
CAG notes that of the 15 mandated capital projects to be completed by April 3, 2008, 11 were delayed for period ranging from 87 days to 236 days.
CAG says that based on the State Support Agreement, DIAL was not entitled for any incentive in support of base airport charges. "The Ministry, however, approved in February 2010, 10 per cent increase in aeronautical charges, including landing, parking, passenger service fee among others as incentive to DIAL".
CAG said contrary to provision of the airport concession agreement, DIAL was allowed to use the amount collected as Development Fees to meet the project costs.
CAG report raeds: "In face, only 19 per cent of the project cost came from equity, approximately 42 per cent came from debt. The remaining project costs were met from security deposits and Development Fees".
CAG has recommended that all public private arrangements must be linked to certain basis triggers like traffic volume, tariff, return on investment, break-even point.
"A long concession period without any trigger may lead to undue financial benefit to the concessionaire," says CAG.
In light of these developments, CAG has asked Government to investigate all cases of post bid concessions and fix responsibility.
If CAG could probe GMR Varalakshmi Foundation, the Corporate Social Responsibility arm of the GMR Group which is a Section 25 (not-for-profit) company and is governed by a Board chaired by Group Chairman, GMR Group, this could reveal truth about its CSR work as well.
Thus, Indira Gandhi International Airport (IGIA), Delhi is a shining example of the corruption ridden PPP model of infrastructure development in India.
In effect, CAG has revealed that coal scam is bigger than 2G scam. It has established multiple scams in Delhi International Airport Limited and collusion of heads of Civil Aviation Ministry. It has shown how both centre and state colluded for favoring Anil Ambani's Sasan power project in Madhya Pradesh.
US Nuclear Reactor Project in India: Anti-Nuke Activists Write to the Consulate - India and the United States have announced the construction of six nuclear power plants in India, according to a joint statement issued at the conclusion...