 "GMR doesn't want to pay revenue share to AAI, wants it adjusted against Air India dues")
New Delhi: Should the Government allow public sector undertakings to offset dues of one another? Should the dues that one Government-owned entity runs up be deducted from earnings of another?
The Delhi airport, which is run by a consortium of private operators lead by GMR, has made a bold proposal to Civil Aviation Minister A Gajapathi Raju to recover dues from Air India. It wants them offset against the revenue share DIAL is obliged to pay to the Airports Authority of India. Both, Air India and AAI, are Government owned entities. So DIAL’s simplistic suggestion is: let its monthly payments to AAI be used to offset Air India’s dues to DIAL.
GMR did not offer any comment. The idea, however, is preposterous for many reasons.
Firstly, what DIAL pays to AAI is a part of its concession agreement which was signed when the Delhi airport was privatised and forms an important part of revenues of AAI. Why should AAI forego revenues because another aviation ministry PSU cannot make ends meet despite an elaborate Government bailout package?
Secondly, the minister has already announced plans to list AAI on the bourses. Its valuation would obviously be affected if a chunk of revenues is missing for the next several months.
Thirdly, it continues to be a mystery why despite the government bailout and improving financial and operational performance, Air India should continue to run up bills at DIAL. It can very well clear dues in tranches, if only the government were to be firm.
DIAL claims it is paying a monthly revenue share of Rs 150 crore to AAI because of a clause in the concession agreement of the airport which mandates that the operator will pay 46% revenues to AAI. It says Air India runs up bills of Rs 55-58 crore each month but leaves a shortfall of about Rs 11-14 crore when paying up - these dues pile up month on month.
It also says that AI’s dues account for more than half of its total dues from all parties. As on October 31, Air India owed DIAL Rs 731 crore. Of this, Rs 533 crore is towards DIAL and Rs 142 crore towards the Hyderabad Airport (which is also operated by GMR).
DIAL CEO Prabhakar Rao has pointed out in a letter to the minister that DIAL is facing “scarcity of liquidity” and finds it difficult to meet commitment to lenders, stakeholders and contractors.
The letter says AI is releasing monthly payment of Rs 340 crore through IATA for current passenger related charges and another Rs 10 crore towards space rental, landing and parking charges.
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