Saturday, August 18, 2012

NEWS | GMR’s Big Steal: Rs 24,000 cr land for Rs 31 lakh

If the report of the Comptroller and Auditor General’s (CAG’s) on the Delhi airport privatisation is to be believed, GMR, which led the consortium that won the bid, has got away with murder.

At the very least, the CAG report exposes the sheer hollowness of the policy of roping in private parties to run gigantic infrastructure projects; at its worst, it is a disturbing indictment of crony capitalism with all its attendant risks of private loot at public expense.
Consider this one single stat: with a private equity investment of just Rs 1,813 crore, the Delhi International Airport Ltd (DIAL) raised more than six times as much in debt and fees to run an already running airport for 60 years (effective concession period: 58 years). In the process it gets to use land with a commercial value of at least Rs 24,000 crore – with the upper end potential earnings going up to Rs 1,63,557 crore, according to GMR’s own estimates.
In short, you need just Rs 1,813 crore of your own money to hop on to a gravy train that could be worth 90 times your investment over 58 years. If this does not stink of a cushy land scam, nothing does.
The math to arrive at this runs something like this. Of the total capital expenditure of Rs 12,502 crore, the promoters (GMR and its partner Fraport) put in equity of Rs 1,813 crore, with the Airports Authority of India (AAI, a 26 percent partner in DIAL) putting in Rs 637 core, for a total equity of Rs 2,450 crore. On this the company raises Rs 5,266 crore as debt, Rs 1,471 crore as security deposits, a measly Rs 50 crore from internal accruals, and Rs 3,415 crore by fleecing passengers through airport development fees (UDFs).



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