Govt scanning BIAL spend

Govt scanning BIAL spend
Saurabh Sinha | TNN

New Delhi: Can a smaller airport with lesser facilities charge UDF as much as a bigger airport? The civil aviation ministry is grappling with this question as the new Bangalore airport wants to charge a UDF from domestic passengers. But the ministry is in a bind over its capex claims.
The Bangalore International Airport Ltd (BIAL) claims that its 71,000-square-metre airport and associated facilities were built for Rs 2,470 crore which means roughly the same cost as new Hyderabad airport, despite being smaller in size. The 105,300-square-metre new Hyderabad airport was built at a cost of Rs 2,500 crore and was allowed to charge Rs 375 as UDF from domestic passengers from August.
The ministry is verifying the capex claims as L&T has built both airports. “But in Bangalore they did not get the contract on competitive bidding. They are 17% stakeholder in Bangalore airport and were the preferred contractor,” said sources. The sources added that the GMR-built Hyderabad airport has more facilities compared to Bangalore airport. Guidelines followed: BIAL
New Delhi: With the civil aviation ministry is grappling with the question of domestic user development fee (UDF) the capex of Siemens Ventures-led Bangalore International Airport Pvt Ltd (BIAL) has come under question.
Responding to the query on a shareholder being the contractor, BIAL spokesperson Anjana Kher Murray said: “According to our shareholders’ agreement, any transaction between any of the constituents of the private promoters or their affiliates and the company... shall be on arms length basis (indicates treatment of partners as contractors). With respect to the proposals received from the private promoters and their affiliates for the project agreements, the board shall appoint an independent consultant engineer to evaluate the same. Such project agreements will be subject to board approvals and comply with procurement guidelines to ensure competitiveness of such contracts.” She said this process was followed in the building of the Bangalore airport. The ministry, however, is taking this argument with scepticism as the much bigger Hyderabad airport has more facilities and was built at almost the same cost. Moreover, the traffic flow at the two airports is also causing problems while clearing the UDF of Rs 675 per outgoing passenger that BIAL has sought. “BIAL has a capacity of handling 10 million passengers annually and is handling 10.5 million. Hyderabad has a capacity of 12 million, while the current traffic is 7 million. So we have a situation where one airport has a UDF of Rs 375 being collected from lesser number of domestic passengers. And on the other hand, a much smaller airport wanting a high UDF from larger number of passengers for a facility it claims is built almost for as much as the bigger one,” said sources. Asked how their smaller airport was costing almost the same as bigger Hyderabad, BIAL’s Murray said: “Comparison between airports is difficult. They are all different in size, scope and investment. There are two aspects to the design of an airport the aesthetic look and the functionality. BIAL aims to build a passenger-friendly, well-operated and financially sound airport with a first class infrastructure and a very high performance standard.”