Flying sick

The fact that CAG did not mention the PM specifically has not stopped the BJP from blaming him for the Coalgate scam. So why such kindness on Praful Patel when it comes to the massive Delhi Airport scam?

Poornima Joshi Delhi

Praful Patel is an affable man, not in the least given to disagreeable smirks of the kind flashed by Suresh Kalmadi that indicted him much before the courts took a view on the various scams in his organization of the Commonwealth Games. Besides, Patel is a PLU, although not quite in the league of Shashi Tharoor and Mani Shankar Aiyar in Delhi’s charmed circle. But, almost there.

This is only partly the reason for his total invincibility even in the wake of severe indictment by the Comptroller and Auditor General (CAG) in the matter of implementation of Public Private Partnership (PPP) at the IGI Airport, Delhi. Compared to what the government has already dismissed as a “notional” loss in the allotment of coal blocks, the damage inflicted directly on the passengers and the exchequer in the name of the IGI Airport development when Patel was Civil Aviation Minister is tangible and real.

The CAG has confirmed that the joint venture (JV) partner of the Airports Authority of India (AAI) in the case of IGI, a company incorporated as Delhi International Airport Pvt Ltd (DIAL), reaped “undue benefit” of a huge sum of Rs 3,415.35 crore by levying airport development fee on the passengers. This was an astounding violation of the basic provisions of the Operation Management Development Agreement (OMDA) that the Airport Authority of India (AAI) had signed with DIAL. As the CAG pointed out, this is total vitiation of the bidding process by the Ministry of Civil Aviation. The violation relates to the year 2008, during Patel’s tenure as minister.

As per original estimates, the entire funding was proposed to be through equity, debt, security deposits and internal accruals. However, this was reduced to 72.68 per cent of the total fund requirements of the actual project cost. This financial gap was mainly met by the levy of 
development fee which constitutes 27.32 per cent of the total capital outlay. OMDA did not envisage the funding of project cost through the levy of DF on passengers since the entire funding was to be through debt and equity only.

“Allowing DIAL to levy and use the development fees violates one of the basic provisions of OMDA, which was part of the bid documents. Request for Proposal (RFP)/OMDA did not mention funding of project cost through levy of development fee. This decision should have been known at the time of bidding to ensure that all the bidders submit their bids with prior knowledge of this fact. The decision to levy development fee after the effective date amounts to contractual deviation and funding of the project cost through fee collected from passengers. The action of the Ministry of Civil Aviation was also in contravention of the provisions in OMDA and thus vitiated the bidding process,” said the CAG report submitted in Parliament last week.

But there has been no demand for either the Public Accounts Committee (PAC) to examine the issue or a debate in Parliament. The Opposition has shied away even from mentioning Patel’s culpability in the process. On his part, Patel has clarified that the CAG, in fact, does not indict him. The fact that the CAG did not mention the Prime Minister Manmohan Singh specifically has not stopped the BJP from blaming him for the purported scam in the allotment of coal blocks. Why such kindness to Patel?

“Actually this issue has been discussed before. Parliament too has debated it... I haven’t gone through the CAG report thoroughly so it is difficult to pinpoint liability,” former Civil Aviation Minister and BJP MP Rajiv Pratap Rudy told this reporter.

What Rudy does not say is that Parliament did, indeed, debate the issue but without its top leaders in the Upper House, Arun Jaitley and SS Ahluwalia participating in it. The debate took place on May 21 this year on a statutory motion moved by CPM MP KN Balagopal for modification of the rules that allowed the levying of DF by DIAL. The motion was denied and the BJP did not join the chorus for pressing a division of votes raised by the Left MPs.

Even after the CAG report, no one, except KN Balagopal, has raised the issue in Parliament precincts. “We demand a thorough probe by federal agencies into the issue. All steps must be taken immediately to take back the amount illegally collected by DIAL and recover the huge wealth handed over to DIAL through illegal methods,” Balagopal says. “The ongoing collection of user development fee should be stopped immediately. Those who are responsible for causing loss to exchequer should be punished.

“Even when the Airports Authority of India (Major Airport Development Fee) Rules, 2011 were pending scrutiny of Parliament, the Airports Economic Regulatory Authority (AERA) went ahead and permitted increase of user development fee. The CAG has raised issues about any genuine necessity of charging development fee or whether the contractual obligations and undertakings of the Airport developer permitted such collection.

“The government's arbitrary decision to support the private developer by imposing this fee was patently illegal. A strong demand was made before the government that this money, which was illegally collected by the airport developers, should be taken back from them. But, instead of rectifying the mistakes done by the administration, the government immediately came out with Rules enabling the collection of user fee,” says Balagopal. Actually, the rules were framed because the Supreme Court, in a judgement by a division bench comprising Justices RV Raveendran and AK Patnaik, had ordered that private companies do not have the right to levy fees on people. Only AAI had the right. The order came on a petition filed by an NGO — Consumer Online Foundation. The court thus banned collection of this fee without proper rules and regulations. This development fee was being collected from March 1, 2009 up to June 1, 2011.

So, the government blatantly violated contractual agreements to allow the private developer to charge passengers as much as Rs 3,415.35 crore as development fee.

 'All steps must be taken immediately to take back the amount illegally collected by DIALand recover the huge wealth handed over to DIAL through illegal methods'

The CAG calculated the equity contribution of DIAL to be just Rs 1,813 crore for which it has the commercial control of an airport in Delhi. “With owner’s equity contribution of Rs 2,450 of which 26 per cent is AAI’s contribution, DIAL has got an airport in the capital of India for 30+30 years and, in addition, commercial rights of land valued at Rs 24,000 crore. Other substantial benefits have also been accrued to DIAL,” the CAG notes in the report.

The story of “other benefits” to DIAl too is astounding. The CAG noted that a concept called “upfront fee” was used to lease out additional land area of about 190.19 acres for a paltry one time payment of Rs 6.19 crore. AAI leased out 7.60 acres of land to government agencies such as Directorate General of Civil Aviation and Bureau of Civil Aviation Security at a licence fee of Rs 2.41 crore per annum. Application of this license fee with the same escalation clause for 190.19 acres of land would amount to Rs 4,534 crore for a period of 27 years.

“The ministry has not been able to provide a convincing reply as to why a private operator should be levied a fee which is much lower than that fixed by the government as payable by its own departments… Government offices were given a much harsher treatment,” the CAG noted.

But the Opposition is silent. BJP spokespersons maintain that the CAG report does not mention Praful Patel, a technicality that did not stop them from dragging the prime minister into the Coalgate controversy. The reasons, some MPs point out, are two-fold. One is that the BJP will not like to confuse matters while they tar its chief opponent, the Congress, with corruption matters. The Nationalist Congress Party (NCP), to which Patel belongs, is not a worthy adversary. And in the final analysis, the BJP may even need Sharad Pawar as an ally in a future alignment.

“Why target Praful Patel when PM can be attacked? The focus is Congress and corruption… it is pointless diluting it by raising additional points,” says a BJP leader.

Indeed, corruption is an attractive political bandwagon. The idea is not to cleanse the system, but score points. If Anna Hazare could do it with his puerile rhetoric, why can’t the principal opposition party try it with better efficiency?


This story is from the print issue of Hardnews: SEPTEMBER 2012