AERA’s cost-plus tariff model ‘flawed’: Haldea

Replying to a question on a proposal to link charges at airports with wholesale price index,he said that tariff setting by AERA has led to many questions. “For example,at the time of award,Delhi airport was expected to be upgraded at an investment of about Rs 4,000 crore. At the end of construction,it turned out to be over Rs 12,500 crore. I am not going into the merits of this investment. The real issue is that if a private entity makes an investment,it should undergo an independent scrutiny by a public authority,” he said adding that AERA’s regulation of AAI airports is also flawed.

Haldea feels that AERA should move away from ‘cost-plus approach’ and rely on competitive bidding for future projects.

“All other infrastructure sectors in India such as power,highways,ports,etc,have given up cost-plus regulation of private entities. AERA needs to adopt these national and international best practices,” he said.

On questions relating to the civil aviation ministry’s plan to draft its own Model Concession Agreement (MCA),Haldea said that he is not aware of any such development,as the MCA drafted by the Planning Commission had been circulated to the inter-ministerial committee headed by the civil aviation secretary.

“We drafted the MCA at the request of the civil aviation ministry. The draft MCA has been revised four times on the basis of inputs received from all stakeholders and experts. This will require further deliberations and approval by an inter-ministerial committee. Writing an MCA is a very expensive,tedious and time-consuming task that takes several months and involves multi-disciplinary experts. In case they choose to write another MCA,we will be glad to comment during the inter-ministerial process,” Haldea said.

The civil aviation ministry’s decision to write its own MCA is likely to delay the process of privatisation of six airports in the country.