REPORT SLAMS GMR-LED DIAL
The Comptroller and Auditor General of India (CAG) in his report on 'Implementation of Public private partnership Indira Gandhi International Airport, Delhi' tabled in Parliament has slammed the levy taken from passengers using Delhi's Indira Gandhi International Airport to finish the remaining work at the airport.
The report said the Civil Aviation Ministry violated the bid conditions for the benefit of GMR-led Delhi International Airport Limited (DIAL) to the tune of over Rs 3,415.35 crore. It also termed the decision of the civil aviation ministry to allow DIAL to collect the development fee (DF) as a 'post-contractual benefit' which violated the tendering process by which the company was selected and called for fixing responsibility.
The report said, 'In fact, 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.' The CAG has recommended that all pre-bid for PPP projects be declared upfront and monetised, and value of all concessions, including assets transferred, be calculated well in advance before inviting any bids.
'The Tariff fixed by Airports Economic Regulatory Authority (AERA) for various aeronautical services at Delhi Airport did not factor 70 per cent of the revenue generated from non-aeronautical services.
It also did not include revenue from non transfer assets i.e. revenue generated from the commercial exploitation of 239.95 acres of land,' the report said.
On the issue of DIAL's financing of the project the report said, 'With a owner’s equity contribution of Rs 2450 crore out of which 26 per cent is AAI’s contribution, DIAL have got an airport in the capital of India for thirty plus thirty years and in addition commercial rights of land currently valued at Rs 24000 crore (as per valuation communicated to audit by AERA) with a income generation potential of Rs 1,63,557 Crore (as per the estimates of DIAL).' The report mentioned that even other substantial benefits have also accrued to DIAL. 'The equity contribution of the private partner in DIAL is 1813 crore. Out of the capital expenditure of ` 12857 crore, only 19 per cent of the capital expenditure has been promoters’ contribution,' said the report.
'With an equity contribution of Rs 2,450 crore of which the private consortium's ( GMR-led) share was Rs 1,813 crore, the Delhi International Airport Limited (DIAL) got a brownfield airport for 60 years,' the CAG said. A brownfield airport is one which is already in existence.
The report also slammed the government for allowing DIAL to commercially exploit 240 acres of land which was valued at Rs.24,000 crore against a lease fee for 56 years for only Rs.2,450 crore.
'The potential revenue from this land in licence fee for 58 years was calculated by DIAL at Rs.163,557 crore out of which DIAL's share would be Rs.88,337 crore,' said the report. The report 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,' said the report.
WRONG NUMBER DIALLED
‘CAG NOT FOLLOWING MANDATE’
Maintaining that CAG had not followed the mandate under the constitution, the government said Friday that the official auditor's report on coal blocks tabled in parliament would be considered final only after it was examined by the Public Accounts Committee (PAC).
The CAG report on allocation of coal blocks has pegged loss to the exchequer as on March 11 last year at a whopping Rs.1.85 lakh crore ($37 billion). Minister of State in the Prime Minister's Office V. Narayanasamy said he would not like to go into the merits of the report. He said submission of the ‘draft report’ was ‘not going to give a message’. ‘CAG has a certain mandate under the constitution,’ Narayanasamy said.
COAL BLOCK ALLOCATION FAULTY: AUDITOR
The CAG report on 'allocation of coal blocks and augmentation of coal production' said that 142 coal fields were allotted to private and state-run firms without transparency and objectivity between 2005 and 2009.
The CAG said that lack of transparency in the allocation of coal blocks to private players resulted in a loss of a whopping Rs.1.85 lakh crore ($37 billion) to the exchequer as on 11 March last year.
The CAG names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.
A crucial aspect of this report is focused on the process involving allotment of captive coal blocks was through a screening committee mechanism which recommended the allocation of coal block to a particular parties out of all the applicants would be recorded in minutes of the meeting. Interestingly there was 'nothing on record in the said minutes or in other documents indicating any comparative evaluation of the applicants', which reveals that 'a transparent method for allocation of coal blocks was not followed by the Screening Committee. 'The audit report, also reveals that an expert committee for increasing the production of coal, had recommended that 'the drilling capacity of Central Mine Planning and Design Institute Limited (CMPDIL) be enhanced to at least 15 lakh metre per annum.' While against it, the expected drilling capacity of CMPDIL was only 3.44 lakh metre in 2011-12.
The CAG report said, 'As of June 2004, 39 coal blocks stood allocated. During the period from July 2004 to September 2006... 71 more blocks were allocated. In all, since July 2004, 142 coal blocks were allocated to various Governments and private parties.' This reveals the lack of transparency and objectivity, said the report.
‘RELIANCE RECEIVED UNDUE BENEFITS’
The Comptroller and Auditor General of India in its report on performance audit of ultra mega power projects under special purpose vehicles, that was tabled in Parliament on Friday has found that Reliance Power Limited (RPL) was given undue benefit for use of excess coal from the three coal blocks allocated to the 4000 Mega Watt Sasan power project.
The report states that 'Audit has estimated the financial benefit that will accrue to the Project Developer on the basis of comparison of tariff of Sasan Project (1.196 per unit) with that of Chitrangi Project (2.450 for Madhya Pradesh and 3.702 for Uttar Pradesh).
The overall financial benefit to RPL due to impact of the difference in tariff works out to Rs 29,033 crores with a net present value of Rs 11,852 crore.
The report points out that Reliance Power Limited would accrue unintended benefit since the tariff of Chitrangi project is higher than Sasan UMPP and the benefit of using surplus coal would not pass on to the consumers in the next 20 years as the tariff for Chitrangi Project had already been fixed as per the bid of RPL.
The CAG further notes that the permission to utilise surplus coal for projects with tariff based competitive bidding has been violated since tariff for Chitrangi Project, for which such permission was granted, was already fixed before the permission was granted.
The report mentions that the allocation of the third block (Chhatrasal) should be reviewed again as the permission to use excess coal from the three coal blocks allocated to Sasan UMPP after its award,vitiated the bidding process and it will result in post bid concessions to the developer having significant financial implication.
In November 2007, Chief Minister of Madhya Pradesh had requested the Prime Minister, to allow Reliance Power Limited to use the surplus coal from the captive blocks of Sasan UMPP in the power plant being set up by RPL at Chitrangi tehsil. This matter was referred to EGOM and the issue was discussed in the meetings held on 28 May 2008 and 14 August 2008. The EGOM later recommended that RPL be allowed to use the surplus coal from blocks allotted to Sasan UMPP for its other projects where power was sold through tariff based bidding.
UNRELIABLE!
The Comptroller and Auditor General of India (CAG) in his report on 'Implementation of Public private partnership Indira Gandhi International Airport, Delhi' tabled in Parliament has slammed the levy taken from passengers using Delhi's Indira Gandhi International Airport to finish the remaining work at the airport.
The report said the Civil Aviation Ministry violated the bid conditions for the benefit of GMR-led Delhi International Airport Limited (DIAL) to the tune of over Rs 3,415.35 crore. It also termed the decision of the civil aviation ministry to allow DIAL to collect the development fee (DF) as a 'post-contractual benefit' which violated the tendering process by which the company was selected and called for fixing responsibility.
The report said, 'In fact, 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.' The CAG has recommended that all pre-bid for PPP projects be declared upfront and monetised, and value of all concessions, including assets transferred, be calculated well in advance before inviting any bids.
'The Tariff fixed by Airports Economic Regulatory Authority (AERA) for various aeronautical services at Delhi Airport did not factor 70 per cent of the revenue generated from non-aeronautical services.
It also did not include revenue from non transfer assets i.e. revenue generated from the commercial exploitation of 239.95 acres of land,' the report said.
On the issue of DIAL's financing of the project the report said, 'With a owner’s equity contribution of Rs 2450 crore out of which 26 per cent is AAI’s contribution, DIAL have got an airport in the capital of India for thirty plus thirty years and in addition commercial rights of land currently valued at Rs 24000 crore (as per valuation communicated to audit by AERA) with a income generation potential of Rs 1,63,557 Crore (as per the estimates of DIAL).' The report mentioned that even other substantial benefits have also accrued to DIAL. 'The equity contribution of the private partner in DIAL is 1813 crore. Out of the capital expenditure of ` 12857 crore, only 19 per cent of the capital expenditure has been promoters’ contribution,' said the report.
'With an equity contribution of Rs 2,450 crore of which the private consortium's ( GMR-led) share was Rs 1,813 crore, the Delhi International Airport Limited (DIAL) got a brownfield airport for 60 years,' the CAG said. A brownfield airport is one which is already in existence.
The report also slammed the government for allowing DIAL to commercially exploit 240 acres of land which was valued at Rs.24,000 crore against a lease fee for 56 years for only Rs.2,450 crore.
'The potential revenue from this land in licence fee for 58 years was calculated by DIAL at Rs.163,557 crore out of which DIAL's share would be Rs.88,337 crore,' said the report. The report 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,' said the report.
WRONG NUMBER DIALLED
- As per the agreement relating to revenue share with AAI, DIAL is to pay 45.99 per cent of its gross revenue with a owner’s equity contribution of Rs 2450 crore, 26 % is AAI’s contribution.
- Commercial rights of land currently valued at 24000 crore with a income generation potential of Rs1,63,557 crore.
- DIAL slammed for commercially exploiting 240 acres of land, valued at Rs 24,000 crore.
- Potential revenue for 58 years calculated by DIAL at Rs 163,557 crore.
- Additional 190.19 acres land leased to DIAL, bringing the total demised premises at 4799.09 acres.
- Land handed over to DIAL at the lease rent of 100 per annum
- Only Rs 6.19 crore has been charged for 190.19 acres of land leased out.
‘CAG NOT FOLLOWING MANDATE’
Maintaining that CAG had not followed the mandate under the constitution, the government said Friday that the official auditor's report on coal blocks tabled in parliament would be considered final only after it was examined by the Public Accounts Committee (PAC).
The CAG report on allocation of coal blocks has pegged loss to the exchequer as on March 11 last year at a whopping Rs.1.85 lakh crore ($37 billion). Minister of State in the Prime Minister's Office V. Narayanasamy said he would not like to go into the merits of the report. He said submission of the ‘draft report’ was ‘not going to give a message’. ‘CAG has a certain mandate under the constitution,’ Narayanasamy said.
COAL BLOCK ALLOCATION FAULTY: AUDITOR
The CAG report on 'allocation of coal blocks and augmentation of coal production' said that 142 coal fields were allotted to private and state-run firms without transparency and objectivity between 2005 and 2009.
The CAG said that lack of transparency in the allocation of coal blocks to private players resulted in a loss of a whopping Rs.1.85 lakh crore ($37 billion) to the exchequer as on 11 March last year.
The CAG names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.
A crucial aspect of this report is focused on the process involving allotment of captive coal blocks was through a screening committee mechanism which recommended the allocation of coal block to a particular parties out of all the applicants would be recorded in minutes of the meeting. Interestingly there was 'nothing on record in the said minutes or in other documents indicating any comparative evaluation of the applicants', which reveals that 'a transparent method for allocation of coal blocks was not followed by the Screening Committee. 'The audit report, also reveals that an expert committee for increasing the production of coal, had recommended that 'the drilling capacity of Central Mine Planning and Design Institute Limited (CMPDIL) be enhanced to at least 15 lakh metre per annum.' While against it, the expected drilling capacity of CMPDIL was only 3.44 lakh metre in 2011-12.
The CAG report said, 'As of June 2004, 39 coal blocks stood allocated. During the period from July 2004 to September 2006... 71 more blocks were allocated. In all, since July 2004, 142 coal blocks were allocated to various Governments and private parties.' This reveals the lack of transparency and objectivity, said the report.
‘RELIANCE RECEIVED UNDUE BENEFITS’
The Comptroller and Auditor General of India in its report on performance audit of ultra mega power projects under special purpose vehicles, that was tabled in Parliament on Friday has found that Reliance Power Limited (RPL) was given undue benefit for use of excess coal from the three coal blocks allocated to the 4000 Mega Watt Sasan power project.
The report states that 'Audit has estimated the financial benefit that will accrue to the Project Developer on the basis of comparison of tariff of Sasan Project (1.196 per unit) with that of Chitrangi Project (2.450 for Madhya Pradesh and 3.702 for Uttar Pradesh).
The overall financial benefit to RPL due to impact of the difference in tariff works out to Rs 29,033 crores with a net present value of Rs 11,852 crore.
The report points out that Reliance Power Limited would accrue unintended benefit since the tariff of Chitrangi project is higher than Sasan UMPP and the benefit of using surplus coal would not pass on to the consumers in the next 20 years as the tariff for Chitrangi Project had already been fixed as per the bid of RPL.
The CAG further notes that the permission to utilise surplus coal for projects with tariff based competitive bidding has been violated since tariff for Chitrangi Project, for which such permission was granted, was already fixed before the permission was granted.
The report mentions that the allocation of the third block (Chhatrasal) should be reviewed again as the permission to use excess coal from the three coal blocks allocated to Sasan UMPP after its award,vitiated the bidding process and it will result in post bid concessions to the developer having significant financial implication.
In November 2007, Chief Minister of Madhya Pradesh had requested the Prime Minister, to allow Reliance Power Limited to use the surplus coal from the captive blocks of Sasan UMPP in the power plant being set up by RPL at Chitrangi tehsil. This matter was referred to EGOM and the issue was discussed in the meetings held on 28 May 2008 and 14 August 2008. The EGOM later recommended that RPL be allowed to use the surplus coal from blocks allotted to Sasan UMPP for its other projects where power was sold through tariff based bidding.
UNRELIABLE!
- Overall financial benefit to Reliance Power Limited is Rs 29033 crore.
- Allocation of Chhatrasal should be reviewed.
- CAG not clear how power ministry came to the conclusion that two initially allocated blocks for Sasan power project would be inadequate.
- Principle of equity in public procurement not followed while awarding consultancy assignments to Ernst & Young.