Delhi International Airport

Ltd.

Submitted By:
Debasis Senapati
Madhura Modi
Hilak Patel
Priya Agarwal
Pulokesh Ghosh
 Project Transaction Risk Social Economic Details of
Introduction PPP Financials Conclusion
Overview Document Management Impact Impact Financing

Delhi International Airport Pvt. Ltd.

• 5100 acres of land | only airport in India with 3 runways
• Busiest airport in India in terms of passenger traffic since 2009
• Also the busiest airport in the country in terms of cargo traffic
overtaking Mumbai in late 2015
• Capacity – 55 million passengers
• IGIA was built at a cost of INR 128.5 bn ($2.7bn)
• The airport was operated by Indian Air Force
• Its management was transferred to the airports authority of India
• In May 2006, the management of the airport was passed over to Delhi
Financial Management
International Airport Limited (DIAL), a public private consortium led by
Total 12857
GMR group Loans 5266
Development Fee 3619.49
• Concession Agreement – 30 years + 30 years (Extendable) Equity (GMR) 1813
• Phase 1 – New runway & domestic terminal; Phase 2 – Modern Security Deposits 1471
Equity (AAI) 637
integrated passenger Terminal 3 Internal Accruals 50
0 2000 4000 6000 8000 10000 12000 14000
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TIMELINES
Nov 2005
Shortlisting of two
bidders GMR-Frapot
and Reliance-ASA by
bid evaluation
committee

Sept 2005
Five consortiums April 2006
submitted bid for DIAL entered into
Delhi and Six for operations,
Mumbai management and
Jan 2006 development
agreement (OMDA)
Mandate was
with Airport
awarded to GMR led
Authority of India
consortium to
(AAI)
modernize the Delhi
Airport after a
competitive bidding
process
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Project Brief
STAKEHOLDERS
 Delhi International Airport Private Limited (DIAL) is a joint venture
consortium of GMR Group (54%), Airports Authority of India (26%), and DIAL
Fraport & Eraman Malaysia (10% each). GMR is the lead member of the
consortium; Fraport AG is the airport operator in Frankfurt Airport,
Germany, Eraman Malaysia - the retail advisors 10%
10%

54%
 DIAL entered in to an Operations, Management and Development 26%
Agreement (OMDA) on April 4, 2006 with the Airport Authority of India
(AAI). The initial term of the concession was for 30 years extendable by a
further period of 30 years.

 On 3rd July, 2009, a new world class integrated passenger terminal GMR AAI Farport AG Eraman Malasia
(Terminal 3) was commissioned. The first phase of the airport was designed
and capable to handle 60 million passengers per annum (mppa). In • DIAL is a Joint Venture formed to operate,
subsequent stages, the airport will be further developed with an ultimate manage and develop the IGI Airport
design capacity of 100 million passengers per annum • GMR is the lead member of the
consortium
 As per ACI, ASQ rating IGI ranked No.2 next to Incheon Airport (South • Fraport AG is the airport operator
Korea) in its group Airports ranging up to 35 million Passenger movements • Eraman Malaysia is the retail advisor.
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Public Private Partnership

• PPP is a mode of providing public infrastructure and services by Government in partnership
with private sector. It is a long term arrangement between Government and private sector
entity for provision of public utilities and services.

• Public-private partnership arrangements have existed throughout history, but have become
significantly more popular across the globe since the 1980s as governments attempt to
obtain some benefits from the private sector without having to make the full privatization
jump
• Due to limited funding and increasing constraints, many government agencies are looking into different models of public-
private partnership (P3) as a means of maintaining updated infrastructures without having to make large investments. There
are many different types of public-private partnerships to fit various construction, operation, ownership, and revenue-
generating scenarios.

• These models operate on different conditions on the private sector regarding type of project (for example, a road or a prison),
level of investment, ownership control, risk sharing, technical collaboration, duration of the project, financing mode, tax
treatment, management of cash flows etc.

• Some Examples: From 1990 to 2009, almost 1,400 PPP arrangements were signed just in the European Union (EU),
representing a capital value of about €260 billion. Since 2008 – the onset of the global financial crisis – the EU estimates that
PPP deals in the trading bloc have declined by over 40%.
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Different Types of PPP

• The public component of the partnership acts as a contracting • The private partner builds the facility and transfers it to
officer. It looks for funding and has overall control of the Build- the public partner.
Traditional
project and its assets. Transfer- • The public partner then leases operation of the facility to
P3s
• examples are public road projects, maintenance of parks, and Operate P3s the private party under a long-term lease agreement.
construction of schools and other public buildings.

• The private component of the partnership operates and Build-Own- • the public partner builds, possesses, and operates the
Operation and maintains the project, while the public agency acts as the Operate- project for a limited time, then the facility is transferred,
Maintenance owner of the project. Transfer P3s free of charge and including ownership, to the public
P3s • Examples of these contracts include bridges and tollways. agency.

• It is similar to a client-contractor arrangement. The private

partner designs and builds the facility, while the public
Design-Build
partner provides the funds for the project.
P3s
• The public partner retains ownership of the project and any
assets generated through its use.
• Similar to design-build P3s but include ongoing operation and
Design-Build- maintenance of the property facility or project by the private party.
sOperate P3s
• The public partner acts as the owner of the installation and
provides the funds for construction and operation.
• the private party provides financing and design, then builds,
Design-Build- possesses, and operates the facility.
Finance-Operate
• The public partner provides funding only while the project is
P3s
being used or is active.
• the private contractor builds, possesses, and operates
Build-Own-
the facility and also has control over profits and losses
Operate
generated by the facility. This is similar to a privatization
P3s
process.
• involves the public owner leasing a facility to a private firm.
The private company must operate and provide
Lease P3s
maintenance for the facility per specified terms, including
additions or a remodelling process.
• the private agency operates and maintains the facility for
a specific period of time.
Concession P3s
• The public partner has power over the ownership, but the
private partner possesses owner rights over any addition
incurred while the facility is being operated under its
domain.
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Different Types of PPP

 Project Transaction Risk
Introduction PPP
Overview Document Management
Advantages
•Better infrastructure solutions than an initiative that is
wholly public or wholly private. Each participant does what
it does best.
Faster project completions and reduced delays on
infrastructure projects by including time-to-completion as
a measure of performance and therefore of profit.
ROI, might be greater than projects with traditional, all-
private or all-government fulfillment. Innovative design
and financing approaches become available when the two
entities work together
•Risks are fully appraised early on to determine
project feasibility. In this sense, the private partner can
serve as a check against unrealistic government promises
or expectations.
•By increasing the efficiency of the government's
investment, it allows government funds to be redirected to
other important socioeconomic areas.
Social Economic Details of
Financials Conclusion
Impact Impact Financing
Disadvantages
•Every public-private partnership involves risks for the
private participant, who reasonably expects to be
compensated for accepting those risks. This can increase
government costs.
When there are only a limited number of private entities
that have the capability to complete a project, the limited
number of private participants that are big enough to take
these tasks on might limit the competitiveness required
for cost-effective partnering.
Profits of the projects can vary depending on the assumed
risk, the level of competition, and the complexity and
scope of the project.
•If the expertise in the partnership lies heavily on the
private side, the government is at an inherent
disadvantage. For example, it might be unable to
accurately assess the proposed costs.
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PUBLIC PRIVATE PARTNERSHIP IN INDIA

India has had 881 PPP projects worth more than INR5.4 trillion in awarded/underway status (i.e., in operational, construction
or in stages where at least construction/implementation is imminent) as per data available till August 2012.
• Roads dominate the PPP scenario in India, accounting for 52 of all PPP projects.
• There is a need for mainstream PPPs in several areas, such as power transmission and distribution, water supply and sewerage,
and railways. These are sectors where there are significant resource shortfalls, and a need for efficient delivery of services.
• There is also a need to focus on social sectors, especially health and education, which currently accounts for only 3.7 of PPP
projects in India.
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PUBLIC PRIVATE PARTNERSHIP IN INDIA

The Draft Public Procurement Bill (2011)
The Draft Public Procurement Bill 2011 is also expected to impact the regulatory landscape of PPPs by introducing
competitive dialogue and negotiations in government contracts. The Bill provides a framework for procurement of
goods and services through PPPs.

Prominent features of the bill for P P P

• A grievance resolution mechanism for private bidder facing issues related to procurement
• Audit of the concessionaire’s books of accounts by the Comptroller and Auditor General of India, upon the
request of the procuring entity

National P P P policy (2011) and Draft P P P Rules (2012)
In the light of growing PPP trends and policy/institutional intervention, the GoI had felt the need to have a broad
policy framework in place. The Ministry of Finance drafted a National PPP policy for soliciting suggestions in 2011.
Subsequently, it came out with a comprehensive set of draft PPP rules in 2012. The draft policy proposes to focus
on assisting Central and State Government agencies and private investors by:
• Undertaking PPP projects through streamlined processes and principles
• Ensuring the adoption of value-for-money approach through optimization of risk-return allocation in project
structuring
• Attaining adequate public oversight and monitoring of PPP projects
• Developing governance structures to facilitate competitiveness, fairness and transparency
Prominent features of the policy
• The GoI plans to formalize PPPs as preferred implementation models. It has laid down strong procedures to
procure a PPP project. In order to instill transparency in the PPP process, it will publish separate mandatory
disclosures and fair practices, set up a dedicated dispute resolution mechanism, develop new market-based
products (e.g., pre-bid rating) and explore possibilities of setting up a web-based PPP market place.
• The PPP process should comprise four phases:
Regulatory initiatives
• The GoI has a progressive financial support system for PPP projects. Some of the key initiatives include
India Infrastructure Project Development Fund (IIPDF), Viability Gap Funding (VGF), resources for annuities/
availability-based payments, long-tenor lending, re-financing facility, infrastructure debt funds, etc. The GoI
will provide legislative and policy support to develop equity, debt, hybrid structures and appropriate credit
enhancement structures.
• The GoI is expected to undertake capacity building interventions to develop organizational and individual
capacities for the purpose of identification, procurement and managing of PPPs.
• The PPP Cell in the Department of Economic Affairs will have professionals who provide technical support to the
ministries and other authorities developing PPPs.
Financial initiatives
• Bank loans to earning-based PPP infrastructure projects under concession agreements are to be treated as
secured advances. This is expected to boost infrastructure financing, particularly for BOT roads projects and
power sector projects. 3
• ECB norms have been relaxed to help infrastructure companies raise more funds from overseas markets 4
• Infrastructure companies are allowed to raise bridge finance from overseas market under the automatic
route. Earlier, the companies were required to seek permission from the RBI in order to raise bridge finance.
• ECB limit has been increased for NBFC-IFCs (non-banking finance companies classified as infrastructure
finance companies) under the automatic route from 5 0 to 7 5 of their owned funds, and hedging
requirement for currency risk has been reduced from 1 0 0 of their exposure to 7 5 .
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PUBLIC PRIVATE PARTNERSHIP IN INDIA

Challenges of PPP in India
Project development activities are not given adequate importance by
concessioning authorities in India. Risk allocation among the sponsoring agency
and the developer is not appropriate, which makes it difficult to attract
Project structuring
developers for bidding. The absence of adequate project development leads to
reduced interest by the private sector, mispricing and, many a times, delays at
the time of execution.

The PPP program in India lacks a comprehensive database of the projects/

The government has envisaged a total private investment of
approximately INR6.5 trillion during 2012–2017 in these four sectors.
• Private sector investment in roads to increase by 3.3 times in
the Twelfth FYP
• Private sector investment in railways to increase by nearly 11
times in Twelfth FYP
• The Planning Commission estimates the cargo traffic to reach
1.8 billion ton by 2019 — an increase of almost 50% during the
Twelfth FYP
• In the Twelfth FYP, the Planning Commission has projected an
investment of INR877 billion for the airports, which is
• approximately 142% more than what was projected in the
Eleventh FYP
studies to be awarded under PPP. An online database, comprising all the project
Lack of information
documents, including feasibility reports, concession agreements, and status of
various clearances and land acquisitions will be helpful to all bidders.
Land acquisition is a major roadblock in development of infrastructure projects
under PPP. There is generally a considerable difference between the registered
value offered and the actual market value, which results in disputes and
Land acquisition
litigation. Amendments to the Land Acquisition and Rehabilitation &
Resettlement Bill (LARR) are under discussion to ease the process of land
acquisition and reduce the number of litigations.
Several highways and ports projects have been delayed in recent years due to lack
Environmental of environmental and forest clearances. Delays in conducting environment
clearances appraisal meetings and in constituting State-level Expert Appraisal Committees
(SEACs) slows down the project approval process.
The private sector depends on commercial banks and equity markets to raise
financing for PPP projects. With commercial banks reaching sectoral exposure
limits, and large Indian infrastructure companies being highly leveraged, funding
Financing constraints
the PPP projects is becoming difficult. Equity markets are also not favorable for
financing projects because of uncertainties in the global economy and due to long
regulatory requirements that limit exit options.
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PUBLIC PRIVATE PARTNERSHIP IN INDIA

Key upcoming PPP projects
• Hyderabad Metro Rail Project: The project is under construction on PPP mode (DBFOT), with a total cost of INR164.8
billion. It is the single-largest private investment in a PPP project in Railways with a viability gap funding of INR14.6 billion
• Dedicated freight corridors project: DFCCIL awarded the contract worth INR33 billion for a 343-km section of the eastern
corridor to a JV of Tata Projects Limited and Spain-based Aldesa
• Seven greenfield airports in Andhra Pradesh: New airports will be developed through the PPP mode and will entail a private
investment in the range of INR10 billion–INR20 billion each. The Government will also offer concessions, including land, water,
power and approach roads
• Six greenfield airports in Maharashtra: The Government plans to build one international airport at Ckan (INR71 billion) and five
domestic airports at Solapur (INR3.1 billion), Amravati (INR2.8 billion), Shirdi (INR2.6 billion) and Jalagaon (INR2.6 billion) on
PPP basis
• International airport in Uttar Pradesh: The Government of Uttar Pradesh plans to develop an international
airport at Kushinagar worth INR3.5 billion through DBFOT
• International airport in Mopa, Goa: The Government of Goa plans to develop its airport with an investment of INR30 billion
over the next four years on PPP basis
• Greenfield international airport at Navi Mumbai: The new airport is being built through PPP and the cost of the
project is estimated to be between INR32 billion and INR40 billion
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PPP IN DIAL – TRANSACTION DOCUMENTS

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PPP IN DIAL – TRANSACTION DOCUMENTS

OMDA
 On 4 April 2006, in the capacity of the state promoter, AAI signed an Operation Management Development Agreement (OMDA) with DIAL.
 The AAI handed over IGI airport, Delhi to DIAL on 3 May 2006 on ‘as is where is' basis and granted DIAL the exclusive right to undertake functions of operations, maintenance,
development, design, construction, modernization, finance and management of the Airport
 In case a second airport was to be considered within a 150 km radius of the airports given to the JVC; by following a competitive bidding process, the JVC could also participate if it
wished to exercise its Right of First Refusal (RoFR).
 The JVC was required to charge for aeronautical services at rates as specified by the GoI for the first three years and thereafter determined by AERA/GoI as the case may be under the
SSA. Non-aeronautical services would be provided at rates fixed by the JVC in a competitive manner

State Support Agreement

 On 26 April 2006, State Support Agreement was signed between The President of India (on behalf of The Government of India) and Delhi International Airport Private Limited.
 The JVC (DIAL) undertook that in order to expedite the grant of Clearances, it will, in a diligent and timely manner, (i) prepare and file applications, which are in full compliance with the
Applicable Law, with the concerned authorities; (ii) follow-up the aforesaid applications with the concerned authorities; and (iii) respond in a timely manner to all requests for further
information and clarifications.
 GOI shall, throughout the Term, provide, or cause to be provided, at the Airport the Reserved Activities (other than air traffic control and air navigation services) (hereinafter referred to
as the “GOI Services”).

Airport Operator Agreement

 An agreement was signed on 1 May 2006 between DIAL and Fraport AG Frankfurt Services Worldwide to provide airport services.
 The agreement contractually sets out the role, responsibilities, accountabilities and financial arrangements between the AO and DIAL.
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PPP IN DIAL – TRANSACTION DOCUMENTS

Shareholders Agreement
 On 4 April 2006, Shareholders Agreement was signed between:
 Airports Authority of India
 Delhi International Airport Pvt. Ltd.
 GMR Infrastructure Ltd.
 GMR Energy Ltd.
 GVL Investments Pvt. Ltd
 Fraport AG Frankfurt Airport Services Worldwide
 Malaysia Airports (Mauritius) Private Limited
 India Development Fund
 The agreement specifies the shareholding of each equity partner, their rights and obligations in the Joint Venture. The agreement also specifies the composition of Management Board
and its functions

Lease Deed Agreement

 Lease Deed Agreement was signed on 25 April 2006 between the Airport Authority of India and DIAL to provide support services to the project
 The Lease Agreement leased out the Demised Premises to the DIAL and granted the rights, privileges and benefits of the property throughout the term of 30 years and is extendable for
another 30 years in case DIAL renews the contract in accordance with the terms specified in OMDA
 In consideration for the lease, Delhi International Airport limited is liable to pay the lease rent of Rs. 100/year to the Airport Authority of India at the beginning of the financial year
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All risks associated The intricacies and Risk associated with All the risks Operational factors
with the overall involvement of govt. increase in costs due associated during related to financing,
project start and and political risks to some unforeseen the construction future agreements,
operational planning associated with it circumstances and phase such as land sharing of revenue
how to avoid them acquisition etc. etc.

Project Risk Political Risk Cost Overrun Risk Construction Risk Operational Risk
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Project Risk Political Risk Construction Risk Cost Overrun Risk Operational Risk

Project Risk
 As per EIL final report, the estimated area required and permitted as per Financial Closure was 470179 m^2. However, the
area constructed by DIAL was 553887 m^2
 The difference in area is 83708m2 which accounts for 17.18% of the overall size

 EIL accepted 98% of the constructed land and had not approved the 2% of the total area meant for the following purpose:
o 8652 m2 is for the food court and retail area at CIP, Office and Hotel level
o 1914 m2 in the mezzanine level is meant for plant rooms, DIAL BHIS control room, Transfer area for passengers and
stores

 AAI have submitted the area to be considered for the following reason:
o Food Court will increase the commercial activities in the passenger Terminal Building (PTB), which will enhance
passenger facilitation and also fetch additional revenue
o Even though the plant and control rooms may not have commercial potential, they would increase the operational
efficiency and convenience of passengers
 Also due to this expansion, all other items estimated in the initial cost increase proportionately
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Project Risk Political Risk Construction Risk Cost Overrun Risk Operational Risk

Political Risk
 There was no political risk as such, however conflict of interest between the centre and the state govt
 Risk of change in govt and modification in contract or PPP laws at later date

Construction Risk:
This type of risk includes matters related to land encroachment, procurement of additional land if required, removal of
obstruction to ensure safety and efficiency and providing utilities

 An agreement was signed between state govt. and DIAL for such services, known as State Govt. Support Agreement (SGSA)
 SGSA also provided help in procuring various clearances required to implement the project as mentioned in OMDA
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Project Risk Political Risk Construction Risk Cost Overrun Risk Operational Risk
Cost Overrun Risk
DIAL had taken the following cost overrun mitigation risk measures for the project:
 Benchmarking: Engaging Jacobs to carry out the benchmarking exercise in compliance with the Schedule 21 of OMDA
(Operations, Management and Development Agreement)
o The report was however submitted in Feb 2009, when selection of many contracts had already been accomplished
 Incentivization: To control costs, the contractors usually sign “sharing of pain-gain” agreement, where penalties are built
into contracts by adjusting contractor’s fee depending upon target and actual costs. However, no such relevant clause was
mentioned in the agreement
 Dis-incentivization: This is another method where contractors are disincentivized to increase costs by capping their fees at
a fixed absolute level rather than a percentage of base out; in DIAL case it was the latter
 Engaging external Project Management Consultant (PMC): Parsons Brinckerhoff International Inc was engaged by DIAL as
the PMC.
o The scope included giving cost control advice, warning for variance and assessment of implication on cost for design
changes
o KPMG when reviewed three cost monitoring reports provided by the PMC didn’t find any comparison between a
package’s original and final cost estimate or the analysis for cost escalation or corrective action that would be taken in
the future
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Project Risk Political Risk Construction Risk Cost Overrun Risk Operational Risk
Cost Overrun Risk
Implications:
 The original project cost approved by DIAL and communicated to AAI was 8975 crore
 Final project cost adopted by Airports Economic Regulatory Authority (AERA) was 12502.86 crore (43.25% higher)
 The financial gap was met by levy of Development Fees which was 27.32 per cent of the total capital outlay
OMDA didn’t predict earlier about charging this DF from passengers since the entire funding was supposed to be done through debt and
equity only
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Project Risk Political Risk Construction Risk Cost Overrun Risk Operational Risk
Operational Risk

 Right of First Refusal: State Support Agreement (SSA) provided the ROFA to DIAL with regard to any other airport being
planned within the distance of 150 km radius.
o DIAL can win the bid through a competitive bidding process. If unsuccessful, if its bid is within 10% of most
competitive bid, it would be allowed to match it and win
o Validity given: 30 years
 Clarity in definition of Aeronautical and non-aeronautical services: It differed between AERA Act and OMDA, thus
affecting the calculation of targeted revenue for tariff fixation
 Maintaining Debt to Equity Ratio: DIAL submitted a proposal to maintain a D/E ratio of at least 2:1. Further they were
restricted to raise fresh equity as this will result in dilution of the shareholding of AAI/AAI nominees
 High Risk Premium: EIL commented that the risk premium considered by the principal contractor was high due to high risk
of the project, and it was totally borne by JVC leading to further increased costs
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• Following Analysis were done by the National Council of Applied Economic Research and published in
March 2017 report
• Direct economic impacts are the financial and employment changes for all the existing establishments
whose activities are linked to the airport such as airport employees, freight companies, retailers,
facilitators of movement of passengers and cargo etc.
• Input-output (I-O) framework has been considered as an appropriate approach to provide an assessment
of the multiplier effects
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Profile of passengers travelling in terms of gender and their occupation in IGI Airport through a survey conducted
among 3500 travellers
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Stages Direct Impact Indirect Impact

jobs and income directly
Income and Employment impact through
originating from the construction
Development/Construction multiplier effect (due to activities and
of an airport captured through
Phase incomes generated by the direct
expenditure incurred during
Impact) captured through I-O Analysis,
development
Income and employment
Operations Phase Estimated generated through I-O Analysis
generated during operation
Services Enabled by airport or Services used by passengers or Income and Employment generated
Induced Effect freight operators through investment, tourism etc.

• By 2020, the overall economic impact of Delhi Airport is expected to be Rs 909.5 billion, which will be 0.7
per cent of the National GDP and 22.2 per cent of Delhi’s GDP.
• Delhi airport’s operations contributed Rs 294.7 billion (0.45 per cent) and the construction sector
contributed INR 68.23 billion (0.104 per cent) to the national GDP (in 2009–10)
• In terms of economic performance, a major portion of Delhi airport’s revenue comes from non-aeronautical
services (44.8 per cent) followed by aeronautical services (36.4 per cent) and the remaining portions of
revenue comes from services like cargo, CPD and other income.
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Operations Phase
Gross Value Added Employme
Output (INR Bn) nt % GDP %Employment Value Added Employment
Operations
Total Impact 491.2 294.7 1577.7 0.45 0.34
Induced Impact 291 174.6 1061.6 0.27 0.23
Direct Impact
Direct and Indirect 200.2 120.1 516.1 0.18 0.11 Direct Impact Indirect Impact
Indirect Impact
Induced Impact
Direct Impact 71.5 42.9 64.974 0.07 0.01 Induced Impact
Airport Transport 49.28 29.57 33.956
Airport Services 22.22 13.33 30.118
Indirect 128.7 77.2 451.126 0.12 0.10
I-O table multiples 2.8 0.722

Construction Phase Value Added Employment

Gross Value Employme
Output Added(INR Bn) nt % GDP %Employment
Total (Direct and Indirect) 113.8 68.3 614.1 0.10 0.13
Direct Impact 42.86 25.71 35 0.04 0.01
Indirect 70.94 42.59 579.1 0.07 0.12 Direct Impact Direct Impact

I-O table multiples 2.655 1.433 Indirect Impact Indirect Impact

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DETAILS OF FINANCING The DIAL's funding source furnished,

Funding Source Amount (Rs in Crores) vide their letter dated 14.01.2011

Equity Capital 1,200

Share Application Money 1,250
Equity Share Capital 2,450
Rupee Term Loan 3,650
Foreign Currency Loan 1,616
Total Debt 5,266
 Proposal for the funding source required DIAL to maintain D/E of atleast 2:1 and further equity cant be raised if this ratio is breached below this
level.
 Without support of AAI, they cant raise fresh equity due to dilution of the shareholding of AAI/AAI nominees
 AERA had admitted Rs. 12502.86 crores as the total project cost out of Rs. 12857 crores. The funding gap of Rs. 3415.35 crores to be collected
from the passengers through levy of DF which was not envisaged in OMDA and SSA
 Out of the total capital expenditure of Rs. 12857 crores, the promoter’s equity was Rs. 2450 crores out of which 26% was contributed by AAI,
only 19% of it was promoters’ contribution. Rs. 5266 crores came from loans and Rs. 1471 crore came from Security Deposits.
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REVISIONS IN ESTIMATES AND COST OVERRUNS

Allowable
Description (all costs in Rs in Initial cost Final cost as
cost as per
crores) as per DIAL per DIAL
EIL  Estimated overall cost of project was Rs. 9800 crores. Cost over-
T1, T2 & Initial CWIP 762 754 754
run of Rs. 1000cr has been incurred including ATC tower.
Runway/Taxiway/Apron/Lighting 1765 2634 2,610.18
Terminal-3 and Associated  The major cost increase is due to increase in area/volume of the
4669 6836 6,373.50
Buildings
facilities and increase in prices of the material during the course of
Airport Services Building & Airport
- 160 160 Project execution
Connection Building
 Due to high risk involved in the project, risk premium percentage
Preliminary, Preoperative &IDC 1279 1320 1,320
considered by the principal contractor and subcontractor were
Metro 350 350 350
high and borne by JVC resulting into further increase in Project
Upfront Fee Paid to AAI 150 150 -
Cost
Rehabilitation of Runway 10-28 - 110 90
Delhi Jal Board Infrastructure  The Security related Capex of Rs.139 crore has been considered
- 54 54
Funding
against cost of Baggage handling system up to screening stage and
New ATC Tower with Equipment - 350 -
Security Capex - 139 139 Capital cost incurred on Boundary wall and Chain linking fencing
Total Project Cost 8975 12,857 11,850.68
 Project Transaction Risk Social Economic Details of
Introduction PPP Financials Conclusion
Overview Document Management Impact Impact Financing

PROJECTIONS AND VALUATIONS

 Aeronautical and Cargo revenue are major sources of income
 Total Revenue CAGR of 12.53%
 WACC is coming out as 7.07 %
 Debt to Equity Ratio of 4.25
 Time period of 12 years
 An NPV of INR 4224.5 millions
 Expected increase in passenger movement of 6.26 % on yearly basis
 Cargo movement to increase at 7.18% on yearly basis
 The project has an IRR of 23.8%
 Cost of equity is 11.6% and cost of debt 6% respectively
 Project Transaction Risk Social Economic Details of
Introduction PPP Financials Conclusion
Overview Document Management Impact Impact Financing

Conclusion
 DIAL was first of its kind project taken in brownfield airfield project and it has been declared 2nd best airport in its category and has won many
awards

 As it was first of its kind modalities of project were not exhaustive and CAG has reported that government/passengers suffered at cost of
promoters

 The total cost overrun of project was 42% of total project cost but project was completed in time

 The promoters of led by GMR has got extremely good deal and long term rating of DIAL is AA-/stable which is excellent for this kind of project

 Currently many new airports are being built using the same model. The design Approach model was a great success

Recommendations
 Contracting in PPP projects should be rigorously defined so that none of contracting party faces undue loss or gain

 The clause of Right to first refusal should be decided keeping in find future revenue streams and in way that it doesn’t thwart
competition

 In terms of bid evaluation weightage allocation to higher non-aeronautical revenue share needs to be revisited for future bids (AAI
made 30% revenue loss due to this)