DELHI AVIATION FUEL FACILITY (P) LTD. New Udaan Bhawan ,Terminal 3, opp ATe complex ,IGI Airport ,New Delhi-ll0037

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Dated: September 15,2010 M ~. cg~ ~-~~ J -- 0) ~ r

Mr. Sandeep Prakash 11' .A

Secretary,

Airports Economic Regulatory Authority of India

Administrative Complex

Safdarjang Airport

New Delhi - 110003

Sub: Submission of response on Consultation paper No.5/2010-11

Dear Sir,

This is in reference to Consultation paper on AERA (Terms and Conditions for

Determination of Tariff for Service Provided for Cargo Facility, Ground

Handling and Supply of Fuel to the Aircraft) Guidelines, 2010". Issued by

Airport Economic Regulatory Authority "AERA" on 2nd august 2010.

At the outset, we would like to place our sincere appreciation to AERA for the

giving us opportunity for participating in the airport regulation framework.

The response to the consultation Paper has is enclosed for your kind reference .

In case, AERA requires further clarification on the response , we would be glad

to address the same.

Thanking you

Yours Faithfully

For DELHI AVIATION FUEL FACILITY (P) LTD.

t~~ Prabin Dokania

Chief Financial Officer

DELHI AV IATION FUEL FACILITY {P} LTD. New Udaan Bhawan ,Terminal 3, opp ATe complex ,IGI Airport ,New Delhi-11003? - . .- - - ­

At th e o u tse t, we we lco m e th e se t t ing up of the Airport Economic Regulatory Authority

" /\FR;\" or "Au tho r ity", W e a rc lookin g forward to an affirmative approach and role played

by J\I-:R/\ in developing a nd fos te r ing th e growt h in Indian Aviation. In this context, we are

looki ng (orward to workin g with l\ ERi\ on related matters to ensure fair and reasonable

objective of a ll s ta ke holde rs a rc m e l.

We arc re spo ndi ng to th e recent Consu lta ti on Paper No. OS/ 2010-11 issued by AERA on

J':c:o nom ic Regulation o f Services Provided for Cargo Facility, Ground Handling and Supply

0:' Fuel to th e Ai rc ra It.

We wo uld respo nd to th e Con sulta tion Pa per point wise as under:­

I. BACKGRO UND OF DELHI AVIATION FUEL FARM PRIVATE LIMITED "DAFFPlJJ

Del h i Int e rn ati on al Airpo r t Pri vate Limited "DIAL" h ad issued a Tender for Finance, Design,

Develo pmen t, Cons tru ctio n , Operation, Management, Maintenance and Transfer of the

/\\' ia tio n Fuel Facility at Term inal- a , Tcrrninal-g and Cargo Terminal of IGI Airport on

Nove m be r 24,20 08 . Th e following par ties were in fray:

1. rOCL

) BI'CL

;j . 111'CL-1 Ch ev ron

,~. !-:' c li'll1ce

S. Sh ell an d

(J. Sky Tan king I TOT

Th e Lende r was resp on ded an d the bi ds (both Technical and Financial) were submitted to

DIi\ L.

The cr ite rion for the award o f co ncess ion was to first qualify t echnically and thereafter on

qu alifi ca tion, Cin an cial bids were open ed . The bid process was transparent and global

practices for th e ma rke t price d iscovery were adopted.

Based on th e eva lua tion of th e Fin an cial bids and the independent due diligence by DIAL,

the Facility Ch a rge q uo ted by co nsortiu m of lOCI. an d IOSL was found to be lower than all

l ho hi dd ing participan ts . Th e ca pping of the infrastructure cha rg e by DIAL, over the p eriod

o f co ncess io n (i .c 2 5 yea rs) , by choos ing th e bidder with the least Return ex pectati on is in the

inte rest of the use rs/ airlin es . We st ron gly se e the a ligned objecti ves of AERA and DIAL in th is reg a rd ,

lh ring th e awa rd p rocess o f the co ncess ion to IOCL, Ministry of Petroleum and Natural

G;ls"iV! o I'NG" and Mini s try o f Civil Aviat io n "Mo CA" intervened based on the BPCL request

fo r inclu s ion in the Project. Acco rd ing ly during the meeting on April osth 2009 ch aired by

Secre tary (Coo rd ina tion ) Cab ine t Se cretariat, it was decided that IOCL, BPCL would have

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f~ p(ffiv;J4 f S"/ 0 c{;;'10

DELHI AVIATI ON FUEL FACILITY {P} LTD. i\JCVJ Udaan Bhawan ,Term inal 3, opp ATe complex ,IGI Airport ,New Delhi-ll0037

: ~ 7'}{) equity each a nd BPCL wo ul d tr ans fer the its Existing Facility located at IGI Airport to

th e New JV i.c 1);\I;1"P1, on an agreed valuation formula of "Replacem ent Cost Less

Deprecia tion" wi tho u t alterin g th e origi na l bid conditions.

I I. DEFENITION OF SERViCE PROVIDERS

In te r ms o f Secti on 2 s u b section (n ) o f th e AERA Act, 2008, the term "Servi ce Provider" is ,,dClined as un der :

mean s an i) pe rson who provi des aeronautical services and is eligible to levy and clia rqe lI SCI' deoelop ment f ee f rom the embarking passengers at any airport and includes the authori ty w hich manages it; "

01 1 the pla in readin g of th e afo re men tioned definition, two principles are clearly defined by

the i\ 1':R;\ Ac t:

1. Prov is ion o f Aeronau tical Services and

2 . J':ligih ility Lo levy and charge user development fee from embarking

passenge rs at an y a irport.

;\ s J) ; \ 1"FPL, we arc in co nc u rr cncc o f provision of Fuel Farm Services to the Airlines and

h en ce forth , th e se rv ices rendered arc ae ron au tical in nature. As regard, the second provision, J)1\ j'1"F1. is no l eli gibl e to levy a nd ch arge user development fee from any embarking

passe ngers . Therefore, we don 't fal1 in the category of service providers as per definition of

Lhc ;\UZi\ Act and hence arc noL within th e purview of the draft guidelines as enshrined by

the Authori ty.

111 \i e\v o f 2 a bove , we a rc not o ffe ring our detailed comments, however in the event AERA

ho lds a different view as regards de fin ition of service provider and its applicability on the

serv ice pr ovide rs other than those covered by the above definition, we will like to have an

oppo rtun ity to ma ke our rep resentati on .

fJ.. -t: f) Paw.I(Ju ! ~ . ---T~/ O cr 2A l b

Authorized SIgnatory

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