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Date: 2025-03-10 Category: Consultation Paper State: Union Government Country: India

Consultation Paper No. 08/2024-25 In the matter of Determination of Aeronautical Tariff for Chhatrapati Shivaji Maharaj International Airport, Mumbai (CSMIA) for the Fourth Control Period (01.04.2024 to 31.03.2029).

Issued by Airports Economic Regulatory Authority of India · Not Applicable

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Executive Summary & Key Takeaways

Okay, here's the summary of the consultation paper, following the format you requested. **Executive Summary** This document is a consultation paper (No: 08/2024-25) issued by the Airports Economic Regulatory Authority of India (AERA) on March 10, 2025. It pertains to the determination of aeronautical tariffs for Chhatrapati Shivaji Maharaj International Airport, Mumbai (CSMIA) for the fourth control period, spanning April 1, 2024, to March 31, 2029. Stakeholders are invited to submit written comments preferably in electronic form, with the last date for comments being April 9, 2025 and for counter comments April 19, 2025. A stakeholder consultation meeting is scheduled for March 25th 2025. **Key Points / Main Content** * **Background and Introduction:** * CSMIA is designated as a Major Airport. * This Consultation Paper considers audited figures submitted by MIAL for FY 2020-24 and projections for FY 2025-29. * The Authority will consider written feedback, comments, and suggestions from all stakeholders. * The tariff determined under the Tariff Order can be reviewed and revised. * OMDA provisions and Stakeholder Consultation Timelines are included. * **Tariff Determination** * The Authority proposes to determine the Target Revenue (TR) using a specific formula considering regulatory base, weighted average cost of capital, efficient operations, depreciation, corporate taxes, and revenue share assets. * **Stakeholder Engagement** * Stakeholders are invited to submit written comments on Consultation Paper No. 08/2024-25 by April 9, 2025, with counter comments due April 19, 2025. **Impact Analysis** **Airports Authority of India (AAI)** * **Impact:** Annual fees paid/payable to AAI under the OMDA will not be included as part of cost provision of aeronautical services and no pass through would be available in relation to the same in the calculations. * **Action Required:** AAI shall share information about projects and the approval status of those projects for AERA and Stakeholders to review. **Mumbai International Airport Limited (MIAL)** * **Impact:** Multi Year Tariff Proposal (MYTP) document on 6th June 2024 seeking revision of tariffs for aeronautical services at CSMIA, for the Authority's consideration and approval for the Fourth Control Period * **Action Required:** The last Date for submission of comments is 9th April 2025. The Stakeholder Consultation Meeting will be held on 25th March 2025. **Passengers** * **Impact:** Tariffs on air travel. * **Action Required:** To provide feedback on whether proposed capital expenditure projects will benefit passengers and if there are less costly alternatives. **Airlines** * **Impact:** Tariffs on airline operations. * **Action Required:** To provide feedback on whether proposed capital expenditure projects will benefit passengers and if there are less costly alternatives. Also to provide traffic growth forecasts

Key Entities Referenced

Airports Economic Regulatory Authority of India: Primary subject, the regulator responsible for determining tariffs at major airports in India. AERA Act, 2008: The law under which the Airports Economic Regulatory Authority of India operates. Chhatrapati Shivaji Maharaj International Airport, Mumbai (CSMIA): The airport for which tariffs are being determined. It is operated by MIAL. Mumbai International Airport Limited (MIAL): The airport operator that submitted the Multi Year Tariff Proposal (MYTP) for CSMIA. Operation, Management and Development Agreement (OMDA): Agreement between AAI and MIAL specifying the rights and responsibilities for operating and developing CSMIA.
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फा. सं. ऐरा /20010/एमवाईटीपी /एमआईएएल-मुम्बई /सीपी- IV/2023-24 F. No. AERA/20010/MYTP/MIAL-Mumbai/CP-IV/2023-24 परामर्श पत्र सं. 08/2024-25 Consultation Paper No: 08/2024-25 भारतीय ववमानपत् तन आवथशक वववनयामक प्राविकरण Airports Economic Regulatory Authority of India छत्रपवत वर्वाजी महाराज अंतराशष्ट्रीय हवाईअड्डा, मुम्बई (सीएसएमआईए) के संबंि में चतुथश वनयंत्रण अववि के वलए वैमावनक टैररफ वनिाशररत करने के मामले में। (01.04.2024–31.03.2029) IN THE MATTER OF DETERMINATION OF AERONAUTICAL TARIFF FOR CHHATRAPATI SHIVAJI MAHARAJ INTERNATIONAL AIRPORT, MUMBAI (CSMIA) FOR THE FOURTH CONTROL PERIOD (01.04.2024 – 31.03.2029) जारी करने की तारीख: माचश, 10 2025 Date of Issue: 10th March, 2025 ततृ ीय तल / 3rd Floor, उडान भवन/ Udaan Bhawan, सफदरजंग हवाईअड्डा/ Safdarjung Airport नई ददल् ली/ New Delhi – 110003 परामर्श पत्र संख्‍या/ Consultation Paper No: 08/2024-25 पष्ठृ 349 का 1/ Page 1 of 349STAKEHOLDERS’ COMMENTS STAKEHOLDERS’ COMMENTS Chhatrapati Shivaji Maharaj International Airport (CSMIA) is a Major Airport as per the definition outlined in Section 2 (i) of the AERA Act 2008 read with AERA (Amendment) Acts of 2019 and 2021, based on annual passenger throughput volume. It had a passenger throughput of about 52 MPPA in the FY 2023-24 and it is witnessing a steady growth in traffic post COVID-19 pandemic. CSMIA was operated by Airports Authority of India (AAI), which then entered into Operation, Management and Development Agreement (OMDA) with the current Airport Operator (Mumbai International Airport Limited) on 02nd March 2006, for the Operation, Management and Development of CSMIA for a period of 30 years from the Effective Date. As per the provisions of the OMDA, MIAL has submitted their Multi Year Tariff Proposal (MYTP) which constituted the following; • True up submission for the First Control Period, the Second Control Period and the Third Control Period. • MYTP for the Fourth Control Period from 01 April 2024 to 31 March 2029 For this Consultation Paper, the Authority has considered the audited figures submitted by MIAL for the financial years of the Third Control Period (FY 2020-24) and projections for the Fourth Control Period (FY 2025-29). The Authority, after considering the entire information currently available, the views of the Airport Operator, industry bodies such as IATA, ACI and other expert agencies on air traffic, has issued this Consultation Paper enumerating its proposals as part of the tariff determination process for the Fourth Control Period for CSMIA. The Authority shall consider written evidence-based feedback, comments and suggestions from all the stakeholders on the proposals made in the Consultation Paper and pass a suitable Order determining the Tariff for aeronautical services. The Authority would like to emphasize that the consultation process timelines are sacrosanct and hereby requests the stakeholders to provide their comments/ inputs within the timelines specified in this Consultation Paper, beyond which the same will not be considered by the Authority. As per the provisions of Section 13 (2) of the AERA Act, 2008, the tariff determined under the Tariff Order can be reviewed and revised. Thus, in accordance with the provisions of Section 13(4) of the AERA Act, 2008, the written comments on Consultation Paper No. 08/2024-25 dated 10th March, 2025 are invited from the Stakeholders, preferably in electronic form, at the following address: Director (P&S, Tariff) Airports Economic Regulatory Authority of India (AERA), 3rd Floor, Udaan Bhawan Safdarjung Airport New Delhi – 110003 Email: director-ps@aera.gov.in, rajan.gupta1@aera.gov.in, inderpal.s@aera.gov.in copy to secretary@aera.gov.in Stakeholder Consultation Meeting 25th March 2025 Last Date for submission of comments 9th April 2025 Last Date for submission of counter comments 19th April 2025 Consultation Paper No. 08/2024-25 Page 2 of 349STAKEHOLDERS’ COMMENTS Comments and Counter Comments will be posted on the Authority’s (AERA) website: www.aera.gov.in. For any clarification/information, Director (P&S, Tariff) may be contacted at Telephone Number: +91-11- 24695048. Consultation Paper No. 08/2024-25 Page 3 of 349LIST OF ABBREVIATIONS LIST OF ABBREVIATIONS Abbreviation Expansion AAI Airports Authority of India ACI Airport Council International ACS Access Control System AERA Airports Economic Regulatory Authority of India Airports Economic Regulatory Authority of India Act, 2008 (as amended by Airports AERA Act Economic Regulatory Authority of India (Amendment) Act, 2019 and 2021 Aero Aeronautical AGL Aeronautical Ground Lighting AIA Authorized Investigation Agency AMS Airport Management System AO Airport Operator AOA Airport Operator Agreement AOCC Airport Operation Control Centre AODB Airport Operations Data Base ARR Aggregate Revenue Requirement ASQ Airport Service Quality ATC Air Traffic Control ATM Air Traffic Movement β Levered Beta βL Re-levered Beta βU Unlevered Beta BCAS Bureau of Civil Aviation Security BG Bank Guarantee BHS Baggage Handling System BIAL Bangalore International Airport Limited BOQ Bill of Quantities BTP Bag Tag Printer CAGR Compounded Annual Growth Rate Capex Capital Expenditure CAPM Capital Asset Pricing Model CARE CARE Advisory Research and Training Ltd CCTV Closed Circuit Television CISF Central Industrial Security Force CP Consultation Paper CPI Consumer Price Index CPI – IW Consumer Price Index – Industrial Workers Cr Crore CSMIA Chhatrapati Shivaji Maharaj International Airport CUSS Common User Self Service CUTE Common User Terminal Equipment CWIP Capital Work in Progress D Depreciation on Aeronautical Assets D/E Debt Equity Ratio DF Development Fee DIAL Delhi International Airport Limited EMRP Equity Market Risk Premium Consultation Paper No. 08/2024-25 Page 4 of 349LIST OF ABBREVIATIONS Abbreviation Expansion FAR Fixed Assets Register FCP First Control Period FIDS Flight Information Display System FRoR Fair Rate of Return FTC Fuel Throughput Charges FY Financial Year FoCP Fourth Control Period GA General Aviation GoI Government of India GST Goods and Services Tax HIAL Hyderabad International Airport Limited HRAB Hypothetical Regulatory Asset Base i Number of years in the regulatory control period IATA International Air Transport Association IB Information Broker ICAO International Civil Aviation Organization IDC Interest During Construction i.e. That is IT Information Technology ITP Fuel Into Plane JV Joint Venture JVC Joint Venture Company KMP Key Managerial Personnel LOA Letter of Authorization LOI Letter of Intent LOS Level of Service MAG Minimum Annual Guarantee MAT Minimum Alternate Tax MCDA Multi-Criteria Decision Analysis MDF Metro Development Fee MDP Major Development Plan MERC Maharashtra Electricity Regulatory Commission MIAL Mumbai International Airport Limited MLCP Multi-Level Car Park MMRC Mumbai Metro Rail Corporation Limited MMRDA Mumbai Metropolitan Region Development Authority Mn Million MoCA Ministry of Civil Aviation MOU Memorandum of Understanding MYTP Multi Year Tariff Proposal NAR Non-Aeronautical Revenue Non aero Non-Aeronautical NOTAM Notice to Airmen NPV Net Present Value O&M Operations & Maintenance OMC Oil Marketing Company OMDA Operation, Management and Development Agreement Consultation Paper No. 08/2024-25 Page 5 of 349LIST OF ABBREVIATIONS Abbreviation Expansion Order No. 35/2017-18 dated 12.01.2018 as amended by virtue of amendment dated Order 35 09.04.2018 Pax Passengers PCN Pavement Classification Number PIDS Perimeter Intrusion Detection System PSF (SC) Passenger Service Fee (Security Component) PQC Pavement Quality Concrete QTY Quantity R&M Repairs and Maintenance RAB Regulatory Asset Base RB Regulatory Base pertaining to Aeronautical Assets RBI Reserve Bank of India RCC Reinforced Cement Concrete RET Rapid Exit Taxiways Rd Cost of Debt RE Return on Equity Ref Reference Rf Risk Free Rate Rm Returns from market ROU Assets Right Of Use Assets RRSD Return on Refundable Security Deposits Rs. Rupees RSD Refundable Security Deposit RWY Runway S 30% of the Gross Revenue generated from the Revenue Share Assets SCP Second Control Period SCN Self-Contained Note SEIS Service Exports from India Scheme SSA State Support Agreement T Corporate taxes on earnings pertaining to Aeronautical Services TCP Third Control Period 3rd CP Third Control Period TCP Order Third Control Period Tariff Order No. 64/2020-21 TDSAT Telecom Disputes Settlement and Appellate Tribunal TR Target Revenue TWY Taxiway UDF User Development Fee UPS Uninterrupted Power Supply VAT Value Added Tax VIP Very Important Person VOIP Voice Over Internet Protocol VRS Voluntary Retirement Scheme Wipro Wipro Limited WDV Written Down Value WPI Wholesale Price Index YoY Year-on-Year Units of measurement KL Kilolitre Consultation Paper No. 08/2024-25 Page 6 of 349LIST OF ABBREVIATIONS Abbreviation Expansion KM Kilometre KwH Kilowatt Hours MT Metric Ton SQM / SQMT Square Meters Consultation Paper No. 08/2024-25 Page 7 of 349TABLE OF CONTENT TABLE OF CONTENT STAKEHOLDERS’ COMMENTS .............................................................................................................................. 2 LIST OF ABBREVIATIONS ....................................................................................................................................... 4 TABLE OF CONTENT ................................................................................................................................................ 8 LIST OF TABLES ....................................................................................................................................................... 12 LIST OF FIGURES ..................................................................................................................................................... 24 1. BACKGROUND ..................................................................................................................................................... 26 1.1 INTRODUCTION ............................................................................................................................26 1.2 PROFILE OF CHHATRAPATI SHIVAJI MAHARAJ INTERNATIONAL AIRPORT (CSMIA) ..........................................................................................................................................................27 1.3 FUEL FARM SERVICES AND INTO PLANE SERVICES ..........................................................28 1.4 TARIFF SETTING PRINCIPLES ...................................................................................................29 1.5 AUTHORITY’S ORDERS APPLIED IN THE TARIFF PROPOSALS IN THIS CONSULTATION PAPER (CP) .....................................................................................................32 1.6 SEQUENCE OF SIGNIFICANT PAST EVENTS IN THE TARIFF DETERMINATION PROCESS .........................................................................................................................................32 1.7 HON’BLE SUPREME COURT DIRECTIONS REGARDING THE DECISIONS TAKEN BY THE AUTHORITY FOR THE FIRST CONTROL PERIOD .........................................................33 1.8 HON’BLE TDSAT DIRECTIONS REGARDING THE DECISIONS TAKEN BY THE AUTHORITY FOR THE SECOND AND THE THIRD CONTROL PERIOD .............................34 1.9 MULTI YEAR TARIFF PROPOSAL SUBMISSIONS BY MIAL FOR THE FOURTH CONTROL PERIOD ........................................................................................................................34 1.10 CONSTRUCT OF THIS CONSULTATION PAPER .....................................................................39 2. TRUE UP OF THE FIRST CONTROL PERIOD .............................................................................................. 41 2.1 ISSUES RAISED BY MIAL PERTAINING TO THE TRUE UP FOR THE FIRST CONTROL PERIOD ............................................................................................................................................41 2.2 TRUE UP OF REGULATORY ASSET BASE (RAB) ...................................................................41 2.3 TRUE UP OF DEPRECIATION ON REGULATORY ASSET BASE (RAB) ..............................44 2.4 TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND S FACTOR.....................45 2.5 TRUE UP OF AERONAUTICAL TAX ..........................................................................................48 2.6 TRUE UP OF THE TARGET REVENUE OF THE FIRST CONTROL PERIOD ........................51 2.7 AUTHORITY’S PROPOSALS REGARDING TRUE UP FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD ............................................................................................................................................53 3. TRUE UP OF THE SECOND CONTROL PERIOD ......................................................................................... 54 3.1 ISSUES PERTAINING TO THE TRUE UP FOR THE SECOND CONTROL PERIOD .............54 3.2 TRUE UP OF REGULATORY ASSET BASE (RAB) ...................................................................55 3.3 TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE ...............................................57 3.4 TRUE UP OF DEPRECIATION ON REGULATORY ASSET BASE ..........................................58 3.5 TRUE UP OF FAIR RATE OF RETURN .......................................................................................61 3.6 TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND ‘S’ FACTOR ..................62 3.7 TRUE UP OF THE AERONAUTICAL TAX .................................................................................64 3.8 TRUE UP OF OPERATING EXPENSES .......................................................................................66 3.9 TRUE UP OF TARGET REVENUE FOR THE SECOND CONTROL PERIOD .........................68 Consultation Paper No. 08/2024-25 Page 8 of 349TABLE OF CONTENT 3.10 AUTHORITY PROPOSALS REGARDING TRUE UP FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD ........................................................................................................................71 4. TRUE UP OF THE THIRD CONTROL PERIOD ............................................................................................. 72 4.1 BACKGROUND ..............................................................................................................................72 4.2 ISSUES RAISED BY MIAL PERTAINING TO TRUE UP FOR THE THIRD CONTROL PERIOD ............................................................................................................................................72 4.3 TRUE UP OF TRAFFIC ..................................................................................................................73 4.4 TRUE UP OF REGULATORY ASSET BASE ...............................................................................75 4.5 TRUE UP OF ASSET ALLOCATION ...........................................................................................87 4.6 TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE ...............................................92 4.7 TRUE UP OF DEPRECIATION .....................................................................................................94 4.8 TRUE UP OF FAIR RATE OF RETURN .......................................................................................96 4.9 TRUE UP OF OPERATING EXPENSES .....................................................................................101 4.10 TRUE UP OF NON-AERONAUTICAL REVENUE ...................................................................127 4.11 TRUE UP OF AERONAUTICAL TAX ........................................................................................135 4.12 TRUE UP OF AERONAUTICAL REVENUE .............................................................................137 4.13 TRUE UP OF THE TARGET REVENUE FOR THE THIRD CONTROL PERIOD ..................139 4.14 AUTHORITY’S PROPOSALS REGARDING TRUE UP FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD ........................................................................................................................................................142 5. TRAFFIC FOR THE FOURTH CONTROL PERIOD .................................................................................... 145 5.1 MIAL SUBMISSIONS ON TRAFFIC FOR THE THIRD CONTROL PERIOD FOR THE FOURTH CONTROL PERIOD .....................................................................................................145 5.2 AUTHORITY’S EXAMINATION REGARDING THE TRAFFIC FOR THE FOURTH CONTROL PERIOD ......................................................................................................................146 5.3 AUTHORITY’S PROPOSALS REGARDING TRAFFIC PROJECTIONS FOR THE FOURTH CONTROL PERIOD ......................................................................................................................149 6. CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD ...................................................................................................... 150 6.1 BACKGROUND ............................................................................................................................150 6.2 MASTER PLAN 2024 ...................................................................................................................151 6.3 CAPITAL EXPENDITURE FOR THE FOURTH CONTROL PERIOD .....................................159 6.4 ASSET ALLOCATION OF CAPEX FOR THE FOURTH CONTROL PERIOD .......................261 6.5 DEPRECIATION FOR THE FOURTH CONTROL PERIOD .....................................................266 6.6 HRAB FOR THE FOURTH CONTROL PERIOD .......................................................................269 6.7 REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD ...................272 6.8 AUTHORITY’S PROPOSAL REGARDING CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................273 7. FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD ....................................................... 274 7.1 MIAL SUBMISSIONS ON FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................274 7.2 AUTHORITY’S EXAMINATION RELATING TO FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD .....................................................................................................276 Consultation Paper No. 08/2024-25 Page 9 of 349TABLE OF CONTENT 7.3 AUTHORITY’S PROPOSALS RELATING TO FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD ......................................................................................................................278 8. INFLATION FOR THE FOURTH CONTROL PERIOD ............................................................................... 279 8.1 BACKGROUND ............................................................................................................................279 8.2 MIAL’S SUBMISSIONS REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD ........................................................................................................................................................279 8.3 AUTHORITY’S EXAMINATION REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................279 8.4 AUTHORITY’S PROPOSAL REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................279 9. OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD .................... 280 9.1 MIAL’S SUBMISSION REGARDING OPERATING AND MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD ............................................................................................280 9.2 AUTHORITY’S EXAMINATION REGARDING O&M EXPENSES FOR THE FOURTH CONTROL PERIOD ......................................................................................................................283 9.3 AUTHORITY’S EXAMINATION REGARDING THE AERONAUTICAL PORTION OF O&M EXPENSES FOR THE FOURTH CONTROL PERIOD ..............................................................306 9.4 AUTHORITY’S PROPOSALS REGARDING AERONAUTICAL O&M EXPENSES FOR THE FOURTH CONTROL PERIOD .....................................................................................................313 10. NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD .......................... 314 10.1 MIAL SUBMISSION REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD ......................................................................................................................314 10.2 AUTHORITY’S EXAMINATION REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD ............................................................................................318 10.3 AUTHORITY’S PROPOSALS REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD .....................................................................................................325 11. TAXATION FOR THE FOURTH CONTROL PERIOD ................................................................................ 327 11.1 MIAL’S SUBMISSION ON TAXATION FOR THE FOURTH CONTROL PERIOD ...............327 11.2 AUTHORITY’S EXAMINATION REGARDING TAXATION FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................327 11.3 AUTHORITY’S PROPOSAL REGARDING THE AERONAUTICAL TAXES FOR THE FOURTH CONTROL PERIOD .....................................................................................................329 12. QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD .......................................................... 330 12.1 MIAL’S SUBMISSION REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD ......................................................................................................................330 12.2 AUTHORITY’S EXAMINATION REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD ......................................................................................................................330 12.3 AUTHORITY’S PROPOSAL REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD ......................................................................................................................332 13. TARGET REVENUE FOR THE FOURTH CONTROL PERIOD ................................................................ 333 13.1 MIAL’S SUBMISSION ON TARGET REVENUE FOR THE FOURTH CONTROL PERIOD 333 13.2 AUTHORITY’S EXAMINATION OF TARGET REVENUE FOR THE FOURTH CONTROL PERIOD ..........................................................................................................................................333 13.3 AUTHORITY’S PROPOSAL REGARDING TARGET REVENUE FOR THE FOURTH CONTROL PERIOD ......................................................................................................................337 14. SUMMARY OF AUTHORITY’S PROPOSALS .............................................................................................. 338 Consultation Paper No. 08/2024-25 Page 10 of 349TABLE OF CONTENT CHAPTER 2: TRUE-UP OF THE FIRST CONTROL PERIOD ...........................................................338 CHAPTER 3: TRUE-UP OF THE SECOND CONTROL PERIOD ......................................................338 CHAPTER 4: TRUE-UP OF THE THIRD CONTROL PERIOD ..........................................................338 CHAPTER 5: TRAFFIC FOR THE FOURTH CONTROL PERIOD ....................................................339 CHAPTER 6: CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD ............................................................339 CHAPTER 7: FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD .........................339 CHAPTER 8: INFLATION FOR THE FOURTH CONTROL PERIOD ...............................................339 CHAPTER 9: OPERATION & MAINTENANCE (O&M) EXPENSES FOR THE FOURTH CONTROL PERIOD ......................................................................................................................339 CHAPTER 10: NON-AERONAUTICAL REVENUES FOR THE FOURTH CONTROL PERIOD ...339 CHAPTER 11: TAXATION FOR THE FOURTH CONTROL PERIOD ..............................................339 CHAPTER 12: QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD .........................340 CHAPTER 13: TARGET REVENUE (TR) FOR THE FOURTH CONTROL PERIOD ......................340 15. STAKEHOLDERS’ CONSULTATION TIMELINE ....................................................................................... 341 16. ANNEXURES ....................................................................................................................................................... 342 16.1 ANNEXURE - 1 – ASSETS IDENTIFIED IN THE SELF-CONTAINED NOTE BY THE AUTHORIZED INVESTIGATION AGENCY .............................................................................342 17. APPENDIX ........................................................................................................................................................... 349 17.1 APPENDIX 1 – MINUTES OF THE AIRPORTS’ USERS CONSULTATION COMMITTEE (AUCC) ..........................................................................................................................................349 Consultation Paper No. 08/2024-25 Page 11 of 349LIST OF TABLES LIST OF TABLES Table 1: Shareholding pattern of MIAL ................................................................................................................... 26 Table 2: Actual Traffic achieved in the Third Control Period - as submitted by MIAL .......................................... 27 Table 3: Technical and Terminal Building details – as submitted by MIAL ........................................................... 27 Table 4: Tariff Orders issued by the Authority for MIAL........................................................................................ 33 Table 5: Timeline of Various Submissions made by MIAL .................................................................................... 35 Table 6: Related Parties of MIAL from July 2021 (managed by Adani Group) ...................................................... 36 Table 7: Related Parties of MIAL from April 2019 to July 2021 (managed by GVK Group) ................................. 37 Table 8: Comparison of adjustment to RAB as per the Authority and as per the audited accounts ......................... 42 Table 9: Closing RAB of the First Control Period computed by MIAL as per the audited DF capitalization schedule .................................................................................................................................................................... 42 Table 10: Computation of asset allocation of FY 2013-14 by MIAL ...................................................................... 42 Table 11: Computation of closing RAB of FY13-14 by changing aeronautical allocation from 83.97% to 86.17% - as submitted by MIAL .............................................................................................................................................. 43 Table 12: Computation of asset allocation of FY 2013-14 by the Authority in the Second Control Period Order .. 43 Table 13: RAB proposed to be considered by the Authority for the True up of the First Control Period ............... 44 Table 14: Depreciation for the First Control Period considering change in DF assets capitalization schedule and 86.17% aeronautical allocation for FY 2013-14 ...................................................................................................... 44 Table 15: Depreciation on RAB computed by the Authority for the First Control Period in the Second Control Period Order ............................................................................................................................................................. 45 Table 16: Computation of revised ‘S’ factor of the First Control Period in line with the Hon’ble TDSAT Order – as submitted by MIAL .............................................................................................................................................. 47 Table 17: ‘S’ Factor as proposed by the Authority for the True up of the First Control Period .............................. 48 Table 18: Computation of ‘T’ for the First Control Period as submitted by MIAL - in line with the Hon’ble Supreme Court and Hon’ble TDSAT Order ............................................................................................................. 49 Table 19: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the First Control Period .......................................................................................................................................................... 50 Table 20: Computation of ‘T’ for the True up of the First Control Period as proposed by the Authority as a part of the Tariff Determination exercise for the Fourth Control Period ............................................................................. 50 Table 21: Computation of Target Revenue of the First Control Period as submitted by MIAL for the MYTP of the Fourth Control Period ............................................................................................................................................... 51 Table 22: True up of the Target Revenue of the First Control Period as decided in the Tariff Order for the Third Control Period .......................................................................................................................................................... 51 Table 23: True up of the Target Revenue for the First Control Period as proposed by the Authority as a part of the Tariff Determination exercise for the Fourth Control Period ................................................................................... 52 Table 24: RAB as submitted by MIAL for the true up of the Second Control Period in the MYTP for the Fourth Control Period .......................................................................................................................................................... 55 Table 25: RAB as considered by the Authority for the Second Control Period in the Third Control Period Order 56 Consultation Paper No. 08/2024-25 Page 12 of 349LIST OF TABLES Table 26: RAB as proposed by the Authority for the True up of Second Control Period ........................................ 56 Table 27: Value of the Assets identified from the Fixed Asset Register (FAR) in the Self-Contained Note .......... 57 Table 28: HRAB as submitted by MIAL for True up of the Second Control Period ............................................... 57 Table 29: HRAB as decided by the Authority for the Second Control Period in the Third Control Period Order .. 57 Table 30: HRAB proposed by the Authority for the True up of the Second Control Period as part of the Tariff Determination for the Fourth Control Period ........................................................................................................... 58 Table 31: Depreciation on Revised RAB as submitted by MIAL for the True up of the Second Control Period.... 58 Table 32: Depreciation on HRAB as submitted by MIAL for the True up of the Second Control Period .............. 59 Table 33: Depreciation on RAB as decided by the Authority for True up of the Second Control Period in the Third Control Period Order ................................................................................................................................................ 59 Table 34: Depreciation on HRAB of MIAL as proposed by the Authority for True up of the Second Control Period in the Third Control Period Order ................................................................................................................. 59 Table 35: Aeronautical Depreciation as computed by the Authority for the Second Control Period on the assets identified in the SCN of AIA .................................................................................................................................... 60 Table 36: Depreciation on RAB of MIAL as proposed by the Authority for True up of the Second Control Period as part of the Tariff Determination exercise for the Fourth Control Period ............................................................. 60 Table 37: Depreciation on HRAB of MIAL as proposed by the Authority for True up of the Second Control Period as part of the Tariff Determination exercise for the Fourth Control Period .................................................. 60 Table 38: FRoR decided by the Authority for the True up for the Second Control Period in the Third Control Period Order ............................................................................................................................................................. 61 Table 39: Computation of revised ‘S’ factor for the true up of the Second Control Period in line with TDSAT Judgement as submitted by MIAL............................................................................................................................ 63 Table 40: Non-Aeronautical Revenue as decided by the Authority for the True up of the Second Control Period in the Third Control Period Order ................................................................................................................................ 63 Table 41: ‘S’ factor as proposed by the Authority for the true up of the Second Control Period ............................ 64 Table 42: Computation of ‘T’ for true up of the Second Control Period in line with SC and TDSAT Judgement as submitted by MIAL .................................................................................................................................................. 64 Table 43: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the Second Control Period .......................................................................................................................................................... 65 Table 44: Computation of ‘T’ for the True up of the Second Control Period as proposed by the Authority ........... 65 Table 45: O&M expenses for the Second Control Period submitted by MIAL for True up .................................... 66 Table 46: Additional Operating expenses for the Second Control Period submitted by MIAL for True up ............ 67 Table 47: Year wise Adjusted Aeronautical Operating and Maintenance Expenses as decided by the Authority for True up of the Second Control Period in the Third Control Period .......................................................................... 67 Table 48: Computation of Target Revenue of the Second Control Period after incorporating changes in various Building Blocks ........................................................................................................................................................ 68 Table 49: True up of the Target Revenue for the Second Control Period as decided in the Third Control Period Order ......................................................................................................................................................................... 68 Consultation Paper No. 08/2024-25 Page 13 of 349LIST OF TABLES Table 50: Change in Return on RAB for the Second Control Period as proposed by the Authority based on the SCN .......................................................................................................................................................................... 69 Table 51: True up of Target Revenue as proposed by the Authority for the True up of the Second Control Period .................................................................................................................................................................................. 70 Table 52: MIAL's submission for True up of Traffic for the Third Control Period in MYTP for the Fourth Control Period ........................................................................................................................................................................ 73 Table 53: Passenger/ATM Traffic considered by the Authority during tariff determination for the Third Control Period ........................................................................................................................................................................ 73 Table 54: Comparison of Traffic as per MIAL submission and as per data in AAI website for the Third Control Period ........................................................................................................................................................................ 74 Table 55: Variance between Traffic approved in the Third Control Period Order with the Traffic submitted by MIAL for true-up for the Tariff Determination of the Fourth Control Period ......................................................... 75 Table 56: MIAL’s submission on CAPEX incurred during the Third Control Period ............................................. 75 Table 57: MIAL’s submission on proportionate capitalization and RAB for the true up of the Third Control Period .................................................................................................................................................................................. 76 Table 58: RAB as approved by the Authority in the Third Control Period Tariff Order ......................................... 76 Table 59: Summary of variance in capex approved by the Authority in the Third Control Period and Capex incurred by MIAL in the Third Control Period as submitted in the MYTP of the Fourth Control Period ............... 78 Table 60: Projects executed with a scope change ..................................................................................................... 78 Table 61: Projects completed at a lower cost ........................................................................................................... 80 Table 62: Projects Carried Forwarded to the Next Control Period .......................................................................... 81 Table 63: Projects which were approved in the Third Control Period Order on an incurrence basis ...................... 83 Table 64: Additional projects undertaken in the Third Control Period .................................................................... 83 Table 65: Projects not undertaken ............................................................................................................................ 85 Table 66: Cost incurred by MIAL in the Third Control Period towards Runway Recarpeting Works .................... 86 Table 67: Comparison of cost submitted by MIAL and proposed by Authority for the True-up of the Third Control Period .......................................................................................................................................................... 86 Table 68: Value of the Assets identified to be adjusted from the Third Control Period additions in the Self- Contained Note extracted from the FAR of MIAL as on 1st April 2024 .................................................................. 87 Table 69: Cumulative Summary of Area occupied / to be occupied for Commercial (Non-Aeronautical) Use in Terminal 2, Terminal 1 and GA Terminal ................................................................................................................ 88 Table 70: Asset Allocation used by MIAL for the assets capitalized in the Third Control Period .......................... 89 Table 71: Ratio of Gross Fixed Assets (also used allocation of Common Assets outside the Terminal Building) for the Third Control Period as computed by MIAL ..................................................................................................... 89 Table 72: Revised allocation ratios proposed by the Authority for assets capitalized in the Third Control Period . 89 Table 73: Ratio of Gross Fixed Assets (also used allocation of Common Assets outside the Terminal Building) for the Third Control Period as proposed by the Authority ........................................................................................... 91 Table 74: Aeronautical CAPEX as proposed by The Authority for True up of Third Control Period ..................... 91 Consultation Paper No. 08/2024-25 Page 14 of 349LIST OF TABLES Table 75: RAB as proposed by the Authority for True up of the Third Control Period ........................................... 91 Table 76: Statement of Proportionate Addition during the Third Control Period .................................................... 91 Table 77: HRAB as submitted by MIAL for True up of the Third Control Period .................................................. 92 Table 78: HRAB Computation by the Authority for the Second Control Period after the removal of the old Terminal 2 ................................................................................................................................................................ 93 Table 79: HRAB as decided by the Authority during the tariff determination of the Third Control Period order .. 93 Table 80: HRAB Computation for the Second Control Period after the removal of the old Terminal 2 based on Revised Depreciation................................................................................................................................................ 93 Table 81: HRAB proposed by the Authority for the True up of the Third Control Period ...................................... 93 Table 82: Depreciation on RAB and HRAB as submitted by MIAL for the true up of the Third Control Period ... 94 Table 83: Depreciation on RAB and HRAB decided by the Authority during Tariff determination for the Third Control Period .......................................................................................................................................................... 94 Table 84: Aeronautical Depreciation as computed by the Authority on the assets identified in SCN for the Third Control Period .......................................................................................................................................................... 95 Table 85: Asset class-wise summary of Differential Depreciation between depreciation rates claimed by MIAL and in the Order No. 35 ............................................................................................................................................ 95 Table 86: Depreciation on RAB as proposed by the Authority for the True up of the Third Control Period as a part of the Tariff Determination exercise for the Fourth Control Period ......................................................................... 95 Table 87: Depreciation on HRAB as proposed by the Authority for True up of the Third Control Period as part of the Tariff Determination exercise for the Fourth Control Period ............................................................................. 96 Table 88: Computation of weighted average cost of debt for the Third Control Period – as submitted by MIAL .. 97 Table 89: Computation of weighted average cost of debt if MIAL had continued with existing debt facility throughout the Third Control Period – as submitted by MIAL ................................................................................ 98 Table 90: Computation of FRoR for the Third Control Period as submitted by MIAL ........................................... 98 Table 91: Computation of FRoR for the true up of the Third Control Period as submitted by MIAL ..................... 99 Table 92: O&M expenses submitted by MIAL for the true up of the Third Control Period .................................. 101 Table 93: Comparison of Costs Centers being used by MIAL for segregation purposes ...................................... 105 Table 94: Aeronautical allocation ratios of O&M expenses submitted by MIAL in the Third Control Period ..... 105 Table 95: Aeronautical O&M expenses submitted by MIAL for the true-up of the Third Control Period ............ 105 Table 96: Aeronautical Operating and Maintenance Expenditure decided by the Authority during the tariff determination of the Third Control Period ............................................................................................................. 106 Table 97: Employee Count as submitted by MIAL for True up of the Third Control Period ................................ 107 Table 98 : Comparison of Employee Cost as submitted by MIAL for true-up and as approved by the Authority in the Third Control Period ......................................................................................................................................... 108 Table 99: Average Employee Cost as submitted by MIAL .................................................................................... 108 Table 100: Electricity Cost as submitted by MIAL for the True up of the Third Control Period .......................... 109 Table 101: Water Cost as submitted by MIAL for the True up of the Third Control Period ................................. 109 Consultation Paper No. 08/2024-25 Page 15 of 349LIST OF TABLES Table 102: Comparison of Utilities Expenses as submitted by MIAL for True up and as approved by the Authority for the Third Control Period ................................................................................................................................... 109 Table 103: Comparison of Repairs and Maintenance Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order .......................................................................................................... 110 Table 104:Comparison of Rents, Rates and Taxes Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order .............................................................................................................................. 111 Table 105: Comparison between advertisement cost as submitted by MIAL for True up and as Approved in the Third Control Period Order .................................................................................................................................... 112 Table 106: Comparison between Administrative Expenses submitted by MIAL for True up and as approved by the Authority in the Third Control Period .............................................................................................................. 112 Table 107: Administrative Expenses proposed by the Authority for True up of the Third Control Period ........... 113 Table 108: Comparison of Airport Operator Fees as submitted by MIAL for true up and as approved in the Third Control Period ........................................................................................................................................................ 114 Table 109: Comparison of Insurance Expenses as submitted by MIAL for True up and as approved in the Third Control Period ........................................................................................................................................................ 114 Table 110: Comparison of Consumable Stores Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order .............................................................................................................................. 115 Table 111: Comparison of Operating Contract Expenses as submitted by MIAL for true up and as approved in the Third Control Period............................................................................................................................................... 116 Table 112: Working Capital Interest Requirement Computation by Authority for Analysis ................................ 117 Table 113: Working Capital Loan and Interest as submitted by MIAL for the Third Control Period True up ..... 117 Table 114: Comparison between Financing Charges as submitted by MIAL for True up and as approved in the Third Control Period Order .................................................................................................................................... 118 Table 115: Breakup of Financing Charges as submitted by MIAL for True up of the Third Control Period ........ 118 Table 116: Financing Charges as proposed by the Authority for the True up of the Third Control Period .......... 119 Table 117: Comparison of Runway Recarpeting Cost as submitted by MIAL for True up and as approved in the Third Control Period Order .................................................................................................................................... 120 Table 118: Carrying Cost on Runway Recarpeting as submitted by MIAL ........................................................... 120 Table 119: Runway Recarpeting and Carrying Cost on Runway Recarpeting as proposed by the Authority for True up of the Third Control Period ....................................................................................................................... 120 Table 120: Carrying Cost on Runway Recarpeting computation by the Authority ................................................ 120 Table 121: Cost Allocation from AAHL as submitted by MIAL ........................................................................... 121 Table 122: Cost Allocation from AEL as submitted by MIAL .............................................................................. 122 Table 123: Corporate Cost as submitted by MIAL for True up of the Third Control Period ................................. 122 Table 124: Corporate Cost as proposed by the Authority for the True up of the Third Control Period ................. 123 Table 125: Other Expenses as submitted by MIAL for the True up of the Third Control Period .......................... 123 Table 126: Operating Expenses as proposed by the Authority for True up of the Third Control Period ............... 124 Consultation Paper No. 08/2024-25 Page 16 of 349LIST OF TABLES Table 127: Segregation Logic proposed by the Authority for allocation of Operating and Maintenance expenses for the True up of the Third Control Period ........................................................................................................... 124 Table 128: Aeronautical allocation of O&M expenses as proposed by the Authority for the Third Control Period ................................................................................................................................................................................ 126 Table 129: Aeronautical Operating and Maintenance Expenditure proposed by the Authority for the True up of the Third Control Period ......................................................................................................................................... 126 Table 130: Revenue from Revenue Share Assets as submitted by MIAL for the True up of the Third Control Period ...................................................................................................................................................................... 127 Table 131: Computation of ‘S’ factor for True up of the Third Control Period as submitted by MIAL ................ 128 Table 132: Non-aeronautical revenues as decided by the Authority in the Third Control Period Tariff Order ..... 128 Table 133: Comparison of Retail Licenses NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order.......................................................................................... 130 Table 134: Comparison of Rents and Services NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order.......................................................................................... 131 Table 135: Comparison of Cargo NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order ............................................................................................................. 132 Table 136: Total Non-Aeronautical Revenue as submitted by MIAL for the True up of the Third Control Period ................................................................................................................................................................................ 133 Table 137: Total Non-Aeronautical Revenue proposed by the Authority for the True up of the Third Control Period ...................................................................................................................................................................... 133 Table 138: Non-Aeronautical Revenue as proposed by the Authority for the True up of the Third Control Period ................................................................................................................................................................................ 134 Table 139: Computation of Aeronautical Tax for the True up of the Third Control Period as submitted by MIAL ................................................................................................................................................................................ 135 Table 140: Income Tax Re-imbursement considered by the Authority during the tariff determination of the Third Control Period ........................................................................................................................................................ 135 Table 141: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the Third Control Period ........................................................................................................................................................ 136 Table 142: Computation of the ‘T’ element for the True up of the Third Control Period as proposed by the Authority ................................................................................................................................................................ 136 Table 143: Aeronautical Revenue as submitted by MIAL for the True up of the Third Control Period ............... 137 Table 144: Aeronautical Revenue as approved by the Authority during the Tariff determination of the Third Control Period Tariff Order .................................................................................................................................... 137 Table 145: Comparison between Aeronautical Revenue as submitted by MIAL for true up and as approved in the Third Control Period............................................................................................................................................... 138 Table 146: Aeronautical Revenue as proposed by the Authority for the true up of the Third Control Period ....... 138 Table 147: Computation of Target Revenue for the true up of the Third Control Period as submitted by MIAL . 139 Table 148: Target Revenue as decided by the Authority in the Tariff Order of the Third Control Period ............ 139 Consultation Paper No. 08/2024-25 Page 17 of 349LIST OF TABLES Table 149: Change in Return on RAB for the Third Control Period as proposed by the Authority ...................... 140 Table 150: Computation of Target Revenue for the True up of the Third Control Period as proposed by the Authority ................................................................................................................................................................ 141 Table 151: Historical Traffic at Mumbai Airport as submitted by MIAL .............................................................. 145 Table 152: Projected Traffic for the Fourth Control Period as submitted by MIAL .............................................. 146 Table 153: Details of Passengers and ATMs for the First, Second and Third Control Periods along with CAGR ................................................................................................................................................................................ 146 Table 154: Passenger/ATM Traffic as proposed by the Authority for the Fourth Control Period ......................... 149 Table 155: Summary of Capital Expenditure projects submitted by MIAL for CSMIA for the Fourth Control Period ...................................................................................................................................................................... 160 Table 156: Project wise CAPEX as submitted by MIAL for CSMIA for the Fourth Control Period .................... 161 Table 157: Summary of Projects proposed by MIAL for Airside Improvement Works (A): ................................ 164 Table 158: Cost proposed by the Authority towards Recarpeting of RWY 09-27 ................................................. 166 Table 159: Cost proposed by the Authority towards Taxiway West to RWY 14-32 ............................................ 170 Table 160: Cost proposed by the Authority towards Construction of Additional Aircraft Parking Stand (V1+ V2) ................................................................................................................................................................................ 171 Table 161: Cost proposed by the Authority for Reconstruction of Apron C (Tier1) and Taxiway W6 ................ 173 Table 162: Cost proposed by the Authority for Construction of Additional stands on southern side of RWY 09-27 ................................................................................................................................................................................ 175 Table 163: Cost proposed by the Authority for Reconstruction of Perimeter Road .............................................. 176 Table 164: Cost proposed by the Authority for Reconstruction of Airside Drain ................................................. 179 Table 165: Cost proposed by the Authority for Aircraft Maintenance Hangar ..................................................... 181 Table 166: Airside improvement works less than Rs. 50 Crores not proposed to be considered as part of CAPEX by the Authority ...................................................................................................................................................... 183 Table 167: Airside improvement works less than Rs. 50 Crores partly proposed to be considered as part of CAPEX by the Authority ........................................................................................................................................ 183 Table 168: Airside improvement works less than Rs. 50 Crores proposed to be considered as part of CAPEX by the Authority, subject to certain adjustments in cost .............................................................................................. 184 Table 169: Inflation-adjusted normative rate considered for Apron and taxiway .................................................. 188 Table 170: Cost proposed by the Authority for Airside Improvement Works ...................................................... 188 Table 171: Cost proposed by MIAL for Passenger Terminal & Associated works ............................................... 190 Table 172: Area of Terminal 1 Building as submitted by MIAL and as proposed by the Authority .................... 198 Table 173: Details of Inflation-adjusted Normative rates derived by the Authority for Passenger Terminal Building .................................................................................................................................................................. 199 Table 174: Cost proposed by the Authority for Reconstruction of Terminal T1: ................................................. 200 Table 175: Cost proposed by the Authority for Terminal 2 NW Pier extension, Terminal 2 NW Pier Bus Boarding Gate (V3) and Terminal 2 Expansion Project ......................................................................................... 203 Consultation Paper No. 08/2024-25 Page 18 of 349LIST OF TABLES Table 176: Cost proposed by the Authority for E-6 Crew Terminal ...................................................................... 203 Table 177: Cost proposed by the Authority for Passenger Terminal & Associated works ................................... 205 Table 178: Cost Proposed by MIAL for Kerbside Improvement Works .............................................................. 205 Table 179: Cost proposed by the Authority for External Landscape & Horticulture with irrigation system including new trees, transplantation of trees and removal of trees ......................................................................... 209 Table 180: Cost proposed by the Authority for At-Grade Road widening for International Airport Road .......... 210 Table 181: Cost proposed by the Authority for Kerbside Improvement Works: .................................................. 211 Table 182: Cost proposed by MIAL for External Connectivity Improvement Works .......................................... 211 Table 183: Cost proposed by the Authority for External Connectivity Improvements ......................................... 214 Table 184: Cost proposed by MIAL for Ancillary Building Development Works ............................................... 214 Table 185: Area proposed by the Authority for Airport Management Corporate Office Building ....................... 217 Table 186: Cost proposed by the Authority for Construction of Airport Management Corporate Office Building ................................................................................................................................................................................ 218 Table 187: Cost proposed by the Authority for Ancillary Building Development Works .................................... 222 Table 188: Cost proposed by the Authority for Refurbishment of Washrooms at Terminal 2 ............................. 227 Table 189: Category wise operational capex proposed by MIAL for the Fourth Control Period for projects costing less than Rs. 50 Crores ........................................................................................................................................... 230 Table 190: Operational Capex proposed by MIAL for the Fourth Control Period (for projects costing less than Rs. 50 crores) ................................................................................................................................................................ 230 Table 191: Authority’s evaluation of certain projects proposed under the category “Safety” ............................... 246 Table 192: Capital Expenditure proposed by the Authority for operational capex under category "Safety" ......... 248 Table 193: Authority’s evaluation of certain projects proposed under the category “Information Technology” .. 248 Table 194: Capital Expenditure proposed by the Authority for operational capex under category "Information Technology" ........................................................................................................................................................... 249 Table 195: Capital Expenditure proposed by the Authority for operational capex under category "E&M" .......... 249 Table 196: Capital Expenditure proposed by the Authority for operational capex under category "BHS, Airside operations and Terminal operations" ...................................................................................................................... 249 Table 197: Capital Expenditure proposed by the Authority for operational capex under Rs. 50 Crores ............... 250 Table 198: Cost proposed by the Authority for Operational Capex ....................................................................... 250 Table 199: Cost proposed by MIAL towards indexation, technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses and interest during construction .................................................... 251 Table 200: Projects for which the Authority proposes not to consider indexation ................................................. 251 Table 201: Capital Expenditure proposed by the Authority for the Fourth Control Period ................................... 253 Table 202: Capital Expenditure proposed by the Authority on an incurrence basis, subject to cost efficiency and reasonableness, for the Fourth Control Period: ...................................................................................................... 258 Table 203: GST Input Tax Credit proposed by the Authority for the Fourth Control Period: ............................... 259 Consultation Paper No. 08/2024-25 Page 19 of 349LIST OF TABLES Table 204: Capital Expenditure proposed by the Authority for the Fourth Control Period after adjusting GST Input Tax Credit: .................................................................................................................................................... 260 Table 205: Asset category-wise total Capital Expenditure Cash Flow Phasing proposed by the Authority for the Fourth Control Period ............................................................................................................................................. 260 Table 206: Broad basis for Asset Allocation ratios considered by MIAL for the Fourth Control Period ............. 261 Table 207: Changes to asset allocation proposed by the Authority ........................................................................ 261 Table 208: Aeronautical capital expenditure proposed by the Authority for the Fourth Control Period ............... 263 Table 209: Depreciation submitted by MIAL for CSMIA for the Fourth Control Period ..................................... 266 Table 210: Comparison of technical useful life assessment by the valuer vis-a-vis that as per Order 35/2017-18 ................................................................................................................................................................................ 267 Table 211: Aeronautical Depreciation as computed by the Authority for the Fourth Control Period on the assets identified in the SCN .............................................................................................................................................. 268 Table 212: Depreciation proposed by the Authority for the Fourth Control Period ............................................... 268 Table 213: HRAB for the Fourth Control Period as submitted by MIAL .............................................................. 270 Table 214: Terminal area and Airside proportion in HRAB pre-demolition of T2 ................................................ 271 Table 215: Computation of Closing HRAB as proposed by the Authority on account of the Terminal 1 demolition ................................................................................................................................................................................ 271 Table 216: HRAB as proposed by the Authority for the Fourth Control Period .................................................... 272 Table 217: RAB submitted by MIAL for CSMIA for the Fourth Control Period .................................................. 272 Table 218: RAB proposed to be considered by the Authority for the Fourth Control Period ................................ 273 Table 219: RAB and HRAB proposed to be considered by the Authority for the Fourth Control Period ............. 273 Table 220: Risk Factor as computed by MIAL ...................................................................................................... 274 Table 221: Cost of Equity for different gearing ratios as determined by MIAL .................................................... 274 Table 222: External Commercial Borrowing and cost of its debt for the Fourth Control Period........................... 275 Table 223: Intercompany loan and cost of its debt for the Fourth Control Period ................................................. 275 Table 224: MIAL’s Calculation of Weighted Average Cost of Debt for the Fourth Control Period ..................... 275 Table 225: Computation of weighted average cost of debt by MIAL if it had continued with existing debt facility throughout the Third Control Period ...................................................................................................................... 275 Table 226: FRoR as submitted by MIAL ............................................................................................................... 276 Table 227: Authority's proposal for FRoR for the Fourth Control Period ............................................................. 277 Table 228: CPI index used for Control Periods ...................................................................................................... 279 Table 229: Inflation rates proposed by the Authority for the Fourth Control Period ............................................. 279 Table 230: Terminal Area Details .......................................................................................................................... 280 Table 231: Area to be used for Cost Computation ................................................................................................. 280 Table 232: Total Operating and Maintenance (O&M) expenditure submitted by MIAL for the Fourth Control Period ...................................................................................................................................................................... 280 Consultation Paper No. 08/2024-25 Page 20 of 349LIST OF TABLES Table 233: MIAL’s estimation, rationale and growth on Operating Expenses for the Fourth Control Period ...... 281 Table 234: Aeronautical O&M expenses submitted by MIAL for the Fourth Control Period ............................... 282 Table 235: Comparison of Actual CAGR for the Second & the Third Control Periods vis-à-vis estimated CAGR for the Fourth Control Period ................................................................................................................................. 284 Table 236: Employee Count for the Fourth Control Period as submitted by MIAL .............................................. 285 Table 237: Employee Expenses as submitted by MIAL for the Fourth Control Period ......................................... 286 Table 238: Employee Expenses proposed by the Authority for the Fourth Control Period ................................... 286 Table 239: Electricity expenses as submitted by MIAL for the Fourth Control Period ......................................... 287 Table 240: Comparison of per unit electricity rate between Adani Electricity and Tata Power ............................ 287 Table 241: Electricity Cost as proposed by the Authority for the Fourth Control Period ...................................... 288 Table 242: Water expenses as submitted by MIAL for the Fourth Control Period ................................................ 288 Table 243: Water Charges proposed by the Authority for the Fourth Control Period ........................................... 289 Table 244: Repairs & Maintenance Expenses as submitted by MIAL for the Fourth Control Period ................... 289 Table 245: Repairs & Maintenance Expenses proposed by the Authority for the Fourth Control Period ............. 290 Table 246: Repairs & Maintenance Expenses comparison with the standard method vs proposed by the Authority for the Fourth Control Period ................................................................................................................................. 290 Table 247: Rents, Rates & Taxes as submitted by MIAL for the Fourth Control Period ...................................... 291 Table 248: Rents, Rates & Taxes proposed by the Authority for the Fourth Control Period ................................. 292 Table 249: Operating Contract Expenses as submitted by MIAL for the Fourth Control Period .......................... 292 Table 250: Operating Contract Expenses proposed by the Authority for the Fourth Control Period .................... 293 Table 251: Administrative Expenses as submitted by MIAL for the Fourth Control Period ................................. 293 Table 252: Administrative Expenses as proposed by the Authority for the Fourth Control Period ....................... 294 Table 253: Advertisement Expenses as submitted by MIAL for the Fourth Control Period ................................. 294 Table 254: Advertisement Expenses proposed by the Authority for the Fourth Control Period ............................ 295 Table 255: Consumable Stores Expenses as submitted by MIAL for the Fourth Control Period .......................... 295 Table 256: Consumable Stores Expenses proposed by the Authority for the Fourth Control Period .................... 295 Table 257: Insurance Expenses submitted by MIAL for the Fourth Control Period .............................................. 295 Table 258: Insurance Expenses proposed by the Authority for the Fourth Control Period .................................... 296 Table 259: Total Working Capital Interest as submitted by MIAL for the Fourth Control Period ........................ 296 Table 260: Working Capital Interest proposed by the Authority for the Fourth Control Period ........................... 297 Table 261: Financing Charges as submitted by MIAL for the Fourth Control Period ........................................... 298 Table 262: ECB Loan Details ................................................................................................................................. 299 Table 263: Amortization Schedule for transaction Cost of USD of 14.06 Mn (Rs. 107.52 Crs) based on EIR method .................................................................................................................................................................... 299 Table 264: Upfront Fees of 1.50% on Future Debts (Drawdown for Capex Projected) ........................................ 299 Consultation Paper No. 08/2024-25 Page 21 of 349LIST OF TABLES Table 265: Financing Charges as proposed by the Authority for the Fourth Control Period ................................. 300 Table 266: Runway Recarpeting Cost as submitted by MIAL for the Fourth Control Period ............................... 300 Table 267: Runway Recarpeting Cost proposed by the Authority for the Fourth Control Period ......................... 300 Table 268: Carrying Cost on Runway Recarpeting as submitted by MIAL for the Fourth Control Period ........... 301 Table 269: Carrying Cost on Runway Recarpeting proposed by the Authority for the Fourth Control Period ..... 301 Table 270: Corporate Cost as submitted by MIAL for the Fourth Control Period ................................................. 301 Table 271: Corporate Cost proposed by the Authority for the Fourth Control Period ........................................... 302 Table 272: Digitalization Costs submitted by MIAL for the Fourth Control Period ............................................. 303 Table 273: Digitalization Costs as proposed by the Authority for the Fourth Control Period ............................... 305 Table 274: Other Expenses proposed by the Authority for the Fourth Control Period .......................................... 306 Table 275: Operating and Maintenance Expenditure computed by the Authority for the Fourth Control Period . 306 Table 276: Employee Cost - Aeronautical Allocation as proposed by the Authority ............................................ 307 Table 277: Digitalization Costs submitted by MIAL ............................................................................................. 308 Table 278: Digitalization Cost Allocation – Multi Criteria Decision Analysis Approach – Score card based on functionalities available in Adani One App ........................................................................................................... 309 Table 279: Digitalization Cost Allocation – Reasoning for the Scores provided under the Multi Criteria Decision Analysis Approach ................................................................................................................................................. 309 Table 280: Digitalization Cost Aeronautical Allocation as proposed by the Authority ......................................... 310 Table 281: Allocation of Digitalization Costs as computed by the Authority........................................................ 311 Table 282: Rationale behind Aeronautical % of Operating Expenses.................................................................... 311 Table 283: Aeronautical Portion of Total Operating and Maintenance Expenditure proposed by the Authority for the Fourth Control Period ....................................................................................................................................... 312 Table 284: Terminal Area Details .......................................................................................................................... 314 Table 285: Passenger Traffic Projected for the Fourth Control Period .................................................................. 314 Table 286: Retail licenses revenue -Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP .......................................................................................................................................... 315 Table 287: Rent & Services Revenue - Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP .......................................................................................................................................... 315 Table 288: Retail licenses revenue - Cargo – Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP ............................................................................................................................ 316 Table 289: Non-Aeronautical Revenue/ Revenue Share Assets projections submitted by MIAL for the Fourth Control Period ........................................................................................................................................................ 316 Table 290: ‘S’-Factor projections submitted by MIAL for the Fourth Control Period .......................................... 317 Table 291: Growth rates assumed by MIAL for Non-Aeronautical Revenue ........................................................ 317 Table 292: CAGR for all the Four Control Periods as submitted by MIAL in the MYTP of the Fourth Control Period ...................................................................................................................................................................... 319 Consultation Paper No. 08/2024-25 Page 22 of 349LIST OF TABLES Table 293: Retail Licenses Revenue - Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period ................ 319 Table 294: Rent & Services Revenue -Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period ................ 320 Table 295: Cargo Revenue - Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period ....................................... 321 Table 296: Growth rates considered by the Authority for the Non-Aeronautical Revenue ................................... 322 Table 297: Non-Aeronautical Revenues as proposed by the Authority for the Fourth Control Period .................. 324 Table 298: ‘S’-Factor as proposed by the Authority for the Fourth Control Period .............................................. 325 Table 299: Aeronautical Taxation as submitted by MIAL for the Fourth Control Period ..................................... 327 Table 300: Interest Expenses as proposed by the Authority for the Fourth Control Period ................................... 328 Table 301: Aeronautical Taxation as proposed by the Authority for the Fourth Control Period ........................... 328 Table 302: ASQ Rating achieved by MIAL from CY 2019-2024 ......................................................................... 331 Table 303: Target Revenue submitted by MIAL for the Fourth Control Period .................................................... 333 Table 304: Change in Return on RAB for the Fourth Control Period as proposed by the Authority based on the SCN ........................................................................................................................................................................ 334 Table 305: Summary of Impact on Depreciation and Return on RAB based on the request of Authorized Investigation Agency .............................................................................................................................................. 335 Table 306: Target Revenue as proposed by the Authority for the Fourth Control Period ..................................... 335 Table 307: List of the Assets identified in the SCN in the Second Control Period ................................................ 342 Table 308: List of the Assets identified in the SCN in the Third Control Period ................................................... 348 Consultation Paper No. 08/2024-25 Page 23 of 349LIST OF FIGURES LIST OF FIGURES Figure 1 – Ownership Structure ............................................................................................................................... 27 Figure 2 - SBI – 1 Year MCLR ranging from March 2019 to September 2024 ..................................................... 100 Figure 3 – Repair and Maintenance Expenses – Comparison what was done in the Third Control Period Order to how it should have been done ................................................................................................................................ 111 Figure 4 – Existing CSMIA Land Use Plan ........................................................................................................... 154 Figure 5 – Proposed CSMIA Land Use Plan .......................................................................................................... 154 Figure 6 – MIAL’s response letter to MoCA (1/3) ................................................................................................ 157 Figure 7 – MIAL’s response letter to MoCA (2/3) ................................................................................................ 158 Figure 8 – MIAL’s response letter to MoCA (3/3) ................................................................................................ 158 Figure 9 – Proposed location of Eastern Taxiway (between E5 & E7) parallel to RWY 14-32 (labeled 1-1) ....... 167 Figure 10 – Closer view of the land required for construction of Taxiway M extension (East Side) including Taxiway bridge over Mithi river (labeled 1-2) ....................................................................................................... 168 Figure 11 – Proposed location of Taxiway West to RWY 14-32 (labeled 1-10) ................................................... 169 Figure 12 – Apron C (Tier1) and Taxiway W6 (labeled 1-8)................................................................................. 172 Figure 13 – Proposed location of Reconstruction of Additional Aircraft Parking Stands in the Southern side of RWY 09-27 (labeled 1-19) ..................................................................................................................................... 174 Figure 14 – Location and alignment of Airside Tunnel ......................................................................................... 177 Figure 15 – Location of Aircraft Maintenance Hangar (labeled 1-28) ................................................................... 180 Figure 16 – Overview of the existing T1 ................................................................................................................ 191 Figure 17 – Indicative layout of proposed T1 building .......................................................................................... 193 Figure 18 – Indicative floor plan at Arrival Level .................................................................................................. 193 Figure 19 - BMA Area of existing T1-B Building ................................................................................................. 194 Figure 20 – BMA Area and AHU Room of existing T1-B Building ..................................................................... 194 Figure 21 – Terrace and Mezzanine Floor of existing T1-B Building ................................................................... 194 Figure 22 –First Floor and Canteen of existing T1-B Building.............................................................................. 195 Figure 23 – Demolished T1-B in 2019-20 as per Struckwel Report ...................................................................... 195 Figure 24 – T1 B – Check-in area .......................................................................................................................... 195 Figure 25 – T1 A – Departure Area (First Floor) ................................................................................................... 196 Figure 26 – T1 A – Arrival Area (Ground Floor) ................................................................................................... 196 Figure 27 – T1 A – Arrival (GF), AHU (Terrace) .................................................................................................. 196 Figure 28 – Proposed expansion of T2 ................................................................................................................... 201 Figure 29 – Indicative Plan of T2 NW Pier & Crew Terminal with Level 1 (2,160 sqm), Level 2 (2,160 sqm) and Level 3 (2,160 sqm) ................................................................................................................................................ 202 Figure 30 – Indicative Plan of Expansion of T2 ..................................................................................................... 202 Figure 31 –Proposed location GA Terminal (labeled 2-1) ..................................................................................... 204 Consultation Paper No. 08/2024-25 Page 24 of 349LIST OF FIGURES Figure 32 –Location access roads to T1 (labeled 4-1) ............................................................................................ 206 Figure 33 – Proposed location of at-grade road development over existing nallah in front of T2 MLCP (labeled 4- 3) ............................................................................................................................................................................. 207 Figure 34 –Proposal for external landscape and horticulture with irrigation system including new trees, transplantation of trees and removal of trees .......................................................................................................... 208 Figure 35 –Location of at-grade International Airport Road (labeled 4-4) ............................................................ 209 Figure 36: Proposed Overpass (labeled 5-1) .......................................................................................................... 212 Figure 37: Proposed Underpass (labeled 5-2) ........................................................................................................ 213 Figure 38: Another view of proposed overpass and underpass .............................................................................. 213 Figure 39: Details of Airport Management Corporate Office Building as submitted by MIAL ............................ 215 Figure 40: Planned location of Airport Management Corporate Office building (labeled 3-1) ............................. 216 Figure 41: 5-year Corporate Bond Spread – Data Source: FIMMDA .................................................................... 277 Figure 42: Trendline depicting growth in major cost heads in the last 15 years .................................................... 284 Figure 43: MIAL’s estimation vis-à-vis actual incurrence of cost for the Third Control Period ........................... 284 Figure 44: Digitalization App – Overview of the Services Offered ....................................................................... 303 Figure 45: Category wise NAR for the 1st CP, 2nd CP and 3rd CP .......................................................................... 318 Figure 46: Comparison of Projected and Actual Non-Aeronautical Revenue........................................................ 318 Figure 47: Category wise Non-Aeronautical Revenue for the Fourth Control Period ........................................... 319 Figure 48: ASQ Rating achieved at CSMIA in the last few years as submitted by MIAL .................................... 330 Consultation Paper No. 08/2024-25 Page 25 of 349BACKGROUND 1. BACKGROUND 1.1 INTRODUCTION 1.1.1 Mumbai International Airport was incorporated as a special purpose vehicle on 2nd March 2006 with AAI retaining 26% stake in it. A consortium led by the GVK Group was awarded the contract for operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing the Chhatrapati Shivaji Maharaj International Airport (CSMIA) at Mumbai with 74% equity stake holding being acquired by members of the consortia. 1.1.2 The GVK consortia comprised of GVK Airport Holding Pvt Ltd, ACSA Global Limited and Bid Services Division (Mauritius) Ltd. On 4th April 2006, MIAL signed the Operation, Management and Development Agreement (OMDA) with AAI, whereby AAI granted to MIAL the exclusive right and authority during the term to undertake the functions of operations, maintenance and development of the CSMIA and to perform services and activities constituting aeronautical services and non-aeronautical services excluding reserved activities, defined in OMDA. MIAL took over the operations of CSMIA on 3rd May 2006. The OMDA has a term of 30 years, wherein MIAL has been granted the right to extend the agreement for a further period of 30 years, subject to its satisfactory performance under various provisions governing the arrangement between MIAL and AAI. 1.1.3 In addition to the OMDA, MIAL also entered into State Support Agreement (SSA) dated 26th April 2006 with the Government of India acting through the Ministry of Civil Aviation (MoCA) and MIAL, which outlined the support from the GoI. Besides the OMDA and the SSA, MIAL also entered into Shareholder Agreement, CNS-ATM Agreement, Airport Operator Agreement, State Government Support Agreement, Lease Deed, Substitution Agreement and the Escrow Agreement. MIAL took over operations at CSMIA on 3rd May 2006. 1.1.4 Adani Airport Holdings Limited (AAHL), a wholly owned subsidiary of Adani Enterprises Limited (AEL), took over the management control of MIAL from GVK Group on 13th July 2021. The current shareholding pattern and ownership structure of MIAL is given below: Table 1: Shareholding pattern of MIAL Shareholder Ref No. of Shares % Shareholding Adani Airport Holdings Limited (AAHL) - Directly or through a Subsidiary GVK Airport Holdings Limited (Immediate Holding Company) - Owned by AAHL through its subsidiary A 60,60,00,000 50.50% GVK Airport Developers Ltd Adani Airport Holdings Limited - Directly Held B 28,20,00,000 23.50% Adani Airports Holding Company (AAHL) - Total C = A+B 88,80,00,000 74.00% Shareholding Airports Authority of India D 31,20,00,000 26.00% Total E = C+D 1,20,00,00,000 100.00% * Refer ownership structure in Figure 1 Consultation Paper No. 08/2024-25 Page 26 of 349BACKGROUND Figure 1 – Ownership Structure Adani Enterprises Limited Airport Authority of India (AEL) (AAI) 100% 26% Adani Airport Holdings Mumbai International 23.50% Limited (AAHL) Airport (MIAL) 97.97% 50.50% GVK Airport Developers 100% GVK Airport Holdings Limited Limited 1.1.5 Currently, the Chhatrapati Shivaji Maharaj International Airport serves several Domestic and International Destinations, making it the 2nd busiest airport in India, by both passengers handled and cargo traffic. 1.2 PROFILE OF CHHATRAPATI SHIVAJI MAHARAJ INTERNATIONAL AIRPORT (CSMIA) 1.2.1 CSMIA having a designated capacity of 55 MPPA (T1 – 15 MPPA & T2 – 40 MPPA) achieved a total passenger traffic of 52.82 MPPA in FY 2023-24, approximately 73% of which constitutes domestic passenger traffic. It is the 2nd busiest airport in India, by both passengers handled and cargo traffic. Table 2: Actual Traffic achieved in the Third Control Period - as submitted by MIAL Passenger (in Millions) ATM (in 000's) Year Domestic International Total Domestic International Total FY20 33.57 12.36 45.92 228.68 75.99 304.68 FY21 9.84 1.22 11.05 91.81 23.18 114.98 FY22 18.56 3.18 21.75 150.75 34.90 185.65 FY23 32.72 11.21 43.92 221.86 67.78 289.64 FY24 38.50 14.32 52.82 241.81 83.15 324.96 Total 133.19 42.28 175.47 934.90 285.01 1,219.91 1.2.2 Technical and Terminal Building details of CSMIA submitted by MIAL are provided in the table below: Table 3: Technical and Terminal Building details – as submitted by MIAL Particulars Details Total Airport Land Area 1,951.84 Acres Consultation Paper No. 08/2024-25 Page 27 of 349BACKGROUND Particulars Details Terminal 1 – 1,03,131 sqm Terminal Building Area Terminal 2 – 4,48,432 sqm GA Terminal – 890 sqm T1 – 15 MPPA Designated Passenger Handling Capacity T2 – 40 MPPA T1 – 4,403 Peak Hour Passenger (two-way) T2 – 9,910 Runway Orientation & Length – 09/27 3,448 x 60m Runway Orientation & Length – 14/32 2,871 x 45m Taxiway 49 Nos. No. of Apron Bays 131 Nos. Boarding Gates/Aero Bridges 51 Nos. Check-in Counters 205 Nos. Emigration 80 Nos. Emigration / Immigration Counters Immigration- 60 Nos. Custom Counters 3 Nos. Departure Conveyor 22 Nos. Arrival Conveyor 19 Nos. Security Gates 51 Nos. 1.3 FUEL FARM SERVICES AND INTO PLANE SERVICES Fuel farm services 1.3.1 MAFFFL was incorporated for the purpose of taking over and managing the aviation fuel facilities of the Oil PSUs, creating an integrated aviation fuel facility at that time for the Airport on an “open access” model. Mumbai Aviation Fuel Farm Facility Private Limited (MAFFFL) is a Joint Venture Company (JVC) floated by Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and Mumbai International Airport Limited (MIAL), each having equal ownership. The License Agreement between MAFFFL and MIAL, dated 30th December 2014, is valid until 2nd May 2036. MAFFPL operates the following facilities in CSMIA: The Integrated Facility mainly consists of: (i) Fuel Hydrant system, (ii) Connector pipeline between Integrated fuel farm & Hydrant System, (iii) 5 nos. above ground JET A1 fuel storage tanks with total capacity of 47,500 KL, (iv) Receipt facility of JET A1 through pipelines and /or tank trucks, (v) Delivery facilities of JET A1 from the fuel farm to the aircraft through the Hydrant network as well as through refuellers, (vi) Fully automated Fuel Farm Facility. The revenue earned from the Fuel Farm Facility for FY 2024 is Rs 8.59 crores, which is also a component of the Aeronautical revenue. Into plane services 1.3.2 There are two concessionaires handling the Into Plane Services in MIAL, namely, Bharat Stars Services Private Limited (BSSPL) and Indian Oil Skytanking Private Limited (IOSPL), both involved in Consultation Paper No. 08/2024-25 Page 28 of 349BACKGROUND implementing in “Open Access” model in Fuel Farm Operations and Single Man Refueling India. The revenue earned from the Into Plane Services for FY 24 is Rs 3.02 crores. 1.3.3 Both these concessionaires are in the business of handling Jet Fuel for Airlines on behalf of the suppliers and have started providing Into Plane Services from FY 2015 onwards at CSMIA. 1.3.4 The Into Plane Revenues, as submitted by MIAL, have been incorporated into the Target Revenue computation of MIAL as a component of Aeronautical Revenues. 1.4 TARIFF SETTING PRINCIPLES 1.4.1 Airports Economic Regulatory Authority of India (AERA) was established by the Government of India vide notification No. GSR 317(E) dated May 12th, 2009. The function of AERA, in respect of Major Airports, are specified in section 13(1) of The Airports Economic Regulatory Authority of India Act, 2008 (‘AERA Act’ or ‘the Act’) read with AERA (Amendment) Act 2019 and 2021, which are as below: (i) To determine the tariff for aeronautical services taking into consideration: a) The capital expenditure incurred and timely investment in improvement of airport facilities. b) The service provided, its quality and other relevant factors. c) The cost for improving efficiency. d) Economic and viable operation of Major Airports. e) Revenue received from services other than the Aeronautical services. f) The concession offered by the Central Government in any agreement or memorandum of understanding or otherwise; and g) Any other factor which may be relevant for the purpose of the Act. Provided that different tariff structures may be determined for different airports having regard to all or any of the above considerations specified in sub-clauses (i) to (vii). (ii) To determine the amount of the development fees in respect of Major Airports. (iii) To determine the amount of the passengers’ service fee levied under Rule 88 of the Aircraft Rules, 1937 made under the Aircraft Act, 1934. (iv) To monitor the set performance standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any authority authorized by it in this behalf. (v) To call for any such information as may be necessary to determine the tariff for Aeronautical services; and (vi) To perform such other functions relating to the tariff, as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of the Act, 2008. 1.4.2 As per the AERA Act, 2008, the following are the Aeronautical services for which tariff is determined by the Authority: (i) Aeronautical services provided by the Airport Operators. (ii) Cargo Facility, Ground Handling and Fuel Supply Services. Consultation Paper No. 08/2024-25 Page 29 of 349BACKGROUND (iii) Air Navigation Services. 1.4.3 AAI shall be handling the Air Navigation Systems (ANS) at MIAL. Tariff for ANS is presently regulated by the Ministry of Civil Aviation. All the assets, expenses and revenues pertaining to ANS are considered separately by the Ministry while determining tariff for ANS services. Further, the tariff for ANS services is determined at the Central level by the Ministry of Civil Aviation to ensure uniformity across the Airports in the Country. Hence, AERA determines tariff for Aeronautical services of the Airport Operator, by excluding the assets, expenses, and revenues from ANS. 1.4.4 In so far as CSMIA is concerned, the provisions regarding “Tariff and Regulation” have been made in Chapter XII of OMDA and principles of tariff determination are further detailed out in the Schedule 1 read with clause 3.1 of the State Support Agreement (SSA) which is a part of OMDA. 1.4.5 Relevant extracts of Chapter XII of OMDA is provided below: “12.1 Tariff 12.1.1 For the purpose of this Agreement, the charges to be levied at the Airport by the JVC for the provision of Aeronautical Services and consequent recovery of costs relating to Aeronautical Assets shall be referred to as Aeronautical Charges. 12.1.2 The JVC shall at all times ensure that the Aeronautical Charges levied at the Airport shall be as determined as per the provisions of the State Support Agreement. It is hereby expressly clarified that any penalties or damages payable by the JVC under any of the Project Agreements shall not form a part of the Aeronautical Charges and not be passed on to the users of the Airport. 12.4 Passenger Service Fees 12.4.1 The Passenger Service Fees shall be collected and disbursed in accordance with the provisions of the State Support Agreement”. 1.4.6 Relevant extracts of Clause 3.1 of SSA are provided below: “GOI’s intention is to establish an independent airport economic regulatory authority (the “Economic regulatory authority”) which will be responsible for certain aspects of regulation (including regulation of aeronautical charges) of certain airports in India. GOI agrees to use reasonable efforts to have the Economic Regulatory Authority established and operating within two (2) years from the Effective Date. GOI further confirms that, subject to applicable law, it shall make reasonable endeavors to procure that Economic Regulatory Authority shall regulate and set/re-set aeronautical charges, in accordance with the draft principal set out in schedule one appended here to. Provided however, the upfront fee and the annual fees paid/payable by the JVC to AAI under the OMDA shall not be included as part of cost provision of aeronautical services and no pass through would be available in relation to the same.” 1.4.7 The Authority has been following the framework after analyzing the provisions of SSA as well as other relevant documents viz. OMDA etc. The Authority examined the covenants of SSA and OMDA in respect of MIAL for its implications on principles and mechanics of tariff fixation and has accordingly considered these provisions while determining the aeronautical tariff in respect of CSMIA. The Authority’s examination of these covenants has been detailed in its Order No. 32/2012-13 dated 15th January 2013 and Order No. Consultation Paper No. 08/2024-25 Page 30 of 349BACKGROUND 13/2016-17 dated 23rd September 2016 in the matter of Determination of Aeronautical Tariff in respect of CSMI Airport for the First and the Second Control Periods respectively. 1.4.8 In line with the above approach, the Authority proposes to determine the Target Revenue (TR) by aggregating terms in the following formula: 𝑻𝑹=𝑹𝑩×𝑾𝑨𝑪𝑪+𝑶𝑴+𝑫+𝑻−𝑺 i i i i i i i where, • TR = target revenue • RB = regulatory base pertaining to Aeronautical Assets and any investments made for the performance of Reserved Activities etc. which are owned by MIAL after incorporating efficient capital expenditure but does not include capital work in progress to the extent not capitalized in fixed assets. It is further clarified that penalties and liquidated damages, if any, levied as per the provisions of OMDA would not be allowed for capitalization in the regulatory base. It is further clarified that the Upfront Fee and any pre-operative expenses incurred by the successful bidder towards bid preparation will not be allowed to be capitalized in the regulatory base. • FRoR = nominal post-tax weighted average cost of capital, calculated using the marginal rate of corporate tax • OM = efficient operation and maintenance cost pertaining to Aeronautical Services. It is clarified that penalties and liquidated damages, if any, levied as per the provisions of OMDA would not be allowed as part of operation and maintenance cost. • D = Depreciation charged on aeronautical assets calculated in the manner as prescribed in Schedule XIV of the Indian Companies Act, 1956 (and now amended under the Companies Act, 2013). In the event, the Depreciation rates for certain assets are not available in the aforesaid Act, then the Depreciation rates as provided in the Income Tax Act for such asset as converted to straight line method from the written down method will be considered. In the event, such rates are not available in either of the Acts then Depreciation rates as per generally accepted Indian accounting standards may be considered. • T = Corporate taxes on earnings pertaining to Aeronautical Services • S = 30% of the Gross Revenue generated from the Revenue Share Assets, which are defined to include: o Non-Aeronautical Assets; and o Assets required for provision of aeronautical related services arising at the Airport and not considered in revenues from Non-Aeronautical Assets (e.g. Public admission fee etc.) • i = time period (year) i 𝑅𝐵 = 𝑅𝐵−1− 𝐷+ 𝐼 i i i i where, For the 1st regulatory period, RB would be the sum total of o the Book Value of the Aeronautical Assets in the books of MIAL and Consultation Paper No. 08/2024-25 Page 31 of 349BACKGROUND o the Hypothetical Regulatory Base computed using the then prevailing tariff and the revenues, operation and maintenance cost, corporate tax pertaining to Aeronautical Services at the Airport, during the financial year preceding the date of such computation. o I = Investment undertaken in the period. 1.5 AUTHORITY’S ORDERS APPLIED IN THE TARIFF PROPOSALS IN THIS CONSULTATION PAPER (CP) 1.5.1 Normative approach to Building Blocks in Economic Regulation of Major Airports – Capital Costs Reg. (i) The Authority issued Order No. 07/2016-17 dated 06th June 2016, in the matter of Normative Approach to Building Blocks in Economic Regulation of Major Airports – Capital Costs Reg. (ii) Normative Approach Order is applicable to CSMIA as it is a major airport and will be appropriately applied by the Authority in tariff determination process. 1.5.2 Determination of useful life of airport assets (i) The Authority issued Order No. 35/2017-18 dated 12th January 2018 and Amendment No.1 to Order No.35/2017-18 dated 9th April 2018, in the matter of determination of useful life of airport assets. (ii) The Authority proposes to consider Order No. 35/2017-18 along with amendment in its determination of aeronautical tariff in respect of CSMIA. 1.6 SEQUENCE OF SIGNIFICANT PAST EVENTS IN THE TARIFF DETERMINATION PROCESS 1.6.1 Pursuant to the AERA Act, 2008, the Authority issued guidelines for determining aeronautical tariffs at major airports. MIAL submitted Multi-Year Tariff Proposals (MYTP) for the control periods, based on which the Authority determined the aeronautical tariffs as detailed below: (i) For the First Control Period (1st April 2009 – 31st March 2014), the Authority determined the aeronautical tariff vide Order No. 32/2012-13 dated 15th January 2013. The Authority determined the X-factor for the First Control Period at -154.89% on the aeronautical tariff. a) The Tariff Order No. 32/2012-13 was challenged by MIAL before the Hon’ble TDSAT tribunal in the AERA Appeal No. 4 of 2013 and the same was decided by the Tribunal. b) The order passed by the Tribunal was further challenged before the Hon’ble Supreme Court of India in Civil Appeal No. 5401 of 2019 under Section 31 of the AERA Act in respect to the Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai. The appeal was decided by the Hon’ble Supreme Court on the 11th of July 2022. (ii) For the Second Control Period (1st April 2014 – 31st March 2019), the Authority issued multiple interim orders extending the First Control Period tariffs. The aeronautical tariff was finalized vide Order No. 13/2016-17 dated 23rd September 2016, effective from 1st November 2016. The Authority determined the X-factor for the Second Control Period at +9.65% on the aeronautical tariff. a) The Tariff Order No. 13/2016-17 was challenged by MIAL before the Hon’ble TDSAT tribunal in the AERA Appeal No. 9 of 2016 and the same was decided by the Tribunal and the outcome was pronounced on the 6th of October 2023. Consultation Paper No. 08/2024-25 Page 32 of 349BACKGROUND (iii) For the Third Control Period (1st April 2019 – 31st March 2024), MIAL submitted its initial MYTP in 2019, later revised in 2020. Following stakeholder consultations, the aeronautical tariff was finalized vide Order No. 64/2020-21 dated 27th February 2021, effective from 1st April 2021. a) The Tariff Order No. 64/2020-21 was challenged by MIAL before the Hon’ble TDSAT tribunal in the AERA Appeal No. 2 of 2021 and the same was decided by the Tribunal and the outcome was pronounced on the 6th of October 2023. (iv) Apart from the Three Control Period Orders, the Authority also issued the following Orders in respect of Development Fee (DF) to be levied at the CSMIA: a) Order No. 29/2012-13 dated 21st December 2012 in the matter of the levy of Development Fee by MIAL at CSMIA. b) Order No. 46/2015-16 dated 28th January 2016 in the matter of the levy of Development Fee in respect of the Metro Connectivity Project for CSMIA. 1.6.2 The following are the tariff orders issued by the Authority for MIAL: Table 4: Tariff Orders issued by the Authority for MIAL Tariff Orders Applicability Period Pertaining To Order no 32/2012-13 dated 15th w.e.f. 1st April 2009 to 31st March 2014 First Control Period January, 2013 Order no 13/2016-17 dated 23rd w.e.f. 1st April 2014 to 31st March 2019 Second Control Period September, 2016 Order no 64/2020-21 dated 27th w.e.f. 1st April 2019 to 31st March 2024 Third Control Period February, 2021 Interim Tariff Extension Order no 40/2023-24 Interim w.e.f. 1st April 2024 to 30th September Order for the Fourth Control Tariff Extension Order 2024 Period Interim Tariff Extension Order no 09/2024-25 Interim w.e.f. 1st October 2024 to 31st March Order for the Fourth Control Tariff Extension Order 2025 Period 1.7 HON’BLE SUPREME COURT DIRECTIONS REGARDING THE DECISIONS TAKEN BY THE AUTHORITY FOR THE FIRST CONTROL PERIOD 1.7.1 MIAL filed Civil Appeal in the Hon’ble Supreme Court against the Hon’ble TDSAT judgements dated 15th November 2018 in the matter of the Tariff Order for the First Control Period issued on 15th January 2013. The Hon’ble Supreme Court pronounced its judgement regarding these matters on 11th July 2022 post issuance of the Tariff Order for the Third Control Period by the Authority. 1.7.2 The Hon’ble Supreme Court vide its judgement dated 11th July 2022, has dismissed the Civil Appeal filed by MIAL against the Hon’ble TDSAT judgement dated 15th November 2018 except on the issue relating to corporate tax on earnings pertaining to aeronautical services. 1.7.3 As per the decision of the Hon’ble Supreme Court Order, the corporate taxes on earnings pertaining to Aeronautical services has to be computed solely on regulatory accounts prepared by the Authority for the Target Revenue. Article 3.1.1 of the SSA mandates that Annual Fee paid/payable to AAI shall not be Consultation Paper No. 08/2024-25 Page 33 of 349BACKGROUND considered as a cost in relation to provision of Aeronautical Services. Thus, Annual Fee payable by MIAL shall not be treated as an expense while calculating the corporate taxes on earnings pertaining to aeronautical services. 1.8 HON’BLE TDSAT DIRECTIONS REGARDING THE DECISIONS TAKEN BY THE AUTHORITY FOR THE SECOND AND THE THIRD CONTROL PERIOD 1.8.1 MIAL filed Appeal No. 9/2016 and 2/2021, against the Tariff Orders issued by the Authority for the Second and the Third Control Period, respectively. The Hon’ble TDSAT vide its judgement dated 6th October 2023 has disposed these Appeals. Additionally, the Hon’ble TDSAT also vide its order dated 21st July 2023 has disposed of the Appeals filed by DIAL against the Tariff Orders issued by the Authority for the Second and the Third Control Periods. Further, the Hon’ble TDSAT vide its order dated 14th February 2024 has disposed of the Appeals filed by GHIAL against the Tariff Order issued by the Authority for the Third Control Period. In all these judgements, certain issues have been decided in favor of the Airport Operators and certain issues have been decided in favor of the Authority. The decisions of the Hon’ble TDSAT decided in favor of the Airport Operators (MIAL, DIAL and GHIAL) have been factored by MIAL in the Multi Year Tariff Proposal (MYTP) submission for the Fourth Control Period. 1.9 MULTI YEAR TARIFF PROPOSAL SUBMISSIONS BY MIAL FOR THE FOURTH CONTROL PERIOD 1.9.1 MIAL submitted the Multi Year Tariff Proposal (MYTP) document on 6th June 2024 seeking revision of tariffs for aeronautical services at CSMIA, for the Authority’s consideration and approval for the Fourth Control Period (from 1st April 2024 to 31st March 2029). MIAL has factored in the decisions of the Hon’ble TDSAT on various issues and of Hon’ble Supreme Court judgement on the issue of corporate tax pertaining to earnings from Aeronautical services. These decisions have an impact on the First, Second and Third Control Period along with the treatment of Regulatory Building Blocks for the Fourth Control Period. 1.9.2 However, the Authority has challenged the decisions of the Hon’ble TDSAT by filing Civil Appeals in the Hon’ble Supreme Court under Section 31 of AERA Act, 2008. These Civil Appeals were opposed by MIAL and DIAL on the ground that AERA, being a Tariff determining Authority, is a quasi-judicial body and therefore, it cannot file Appeal against the judgement of Hon’ble TDSAT which is an appellate Authority. 1.9.3 The Hon’ble Supreme Court vide its judgement dated 18th October 2024 has rejected the contentions of MIAL and DIAL and has held that the appeals filed by the Authority under Section 31 of the AERA Act, 2008, against the Hon’ble TDSAT orders are maintainable on the ground that AERA is a necessary party in the Appeals filed before the Hon’ble TDSAT and the Authority is the custodian of public interest and for protecting public interest it can file Civil Appeal under Section 31 of the AERA Act, 2008. The Hon’ble Supreme Court has now listed these Civil Appeals filed by the Authority for hearing on merit and are pending before the Hon’ble Supreme Court for final settlement and thus are sub-judice. 1.9.4 The Authority has carefully examined the issue of implementation of the above-mentioned orders of the Hon’ble TDSAT. The Authority has utmost regards for the directions of the Appellate Authority. However, the Authority has challenged these orders in Hon’ble Supreme Court under section 31 of AERA Act, 2008, and Hon’ble Supreme Court is presently hearing the matter. Thus, the issues raised in the Civil Appeal filed by the Authority are not finally settled and the Hon’ble Supreme Court is seized up of the matter. Therefore, the Authority notes that under such circumstances if it decides to implement the Hon’ble TDSAT order without finally settling the issues before the Hon’ble Supreme Court and increase in tariff is effected Consultation Paper No. 08/2024-25 Page 34 of 349BACKGROUND considering MIAL’s submissions on the basis of Hon’ble TDSAT judgments for the Fourth Control Period, then it shall lead to a significant increase in Aeronautical tariff which will have to be borne by the Airport users as MIAL will start recovery of increased tariff from the Airport users. If at a later stage, the Civil Appeals filed by the Authority are upheld or decided in its favor, then it will not be possible to refund the excess charges collected from the Airport users during this period on account of the increase in tariff. Due to all these factors, MIAL would have unjust enrichment at the cost of Airport users. All these factors clearly establish that considering MIAL submissions of giving effects to Hon’ble TDSAT judgements without finally settling the issues before Hon’ble Supreme Court, is not in public interest, more so when the Hon’ble Supreme Court is seized up of all these issues and is hearing these Civil Appeals. On the contrary, public interest would be better served if Authority takes the decisions on the basis of final decision of Hon’ble Supreme Court of India on these issues. 1.9.5 Considering the above and in public interest, the Authority proposes to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period. The final decision regarding the issues raised by the Authority in the Civil Appeal will be taken once the matter attains finality in the proceedings before the Hon’ble Supreme Court. 1.9.6 The Authority, as mentioned in para 1.7.3, proposes to implement the Hon’ble Supreme Court judgment dated 11th July 2022 with regard to corporate taxes on earnings pertaining to Aeronautical services and compute the Aeronautical Taxes based on the regulatory accounts by not treating the Annual Fee pertaining to Aeronautical Revenues as an expense while computing the Aeronautical Taxes as per the directions contained in the said judgement of the Hon’ble Supreme Court. 1.9.7 The Authority has appointed an Independent Consultant, M/s PKF Sridhar & Santhanam LLP, to assess the MYTP submitted by MIAL for CSMIA for the Fourth Control Period. The independent consultant assisted the Authority in verifying the data from various supporting documents submitted by MIAL such as audited financial statements, Fixed Assets Register (FAR), construction contracts, expense register and submissions made on the basis of various judgements of Hon’ble TDSAT and Hon’ble Supreme Court. The independent consultant also assisted the Authority in ensuring that the treatment provided to various Regulatory Building Blocks is consistent with the Authority’s methodology and approach. 1.9.8 The Authority, through its Independent Consultant, has examined the MYTP submitted by MIAL, including obtaining clarifications on the information shared by MIAL from time to time, to review the appropriateness of the classification of assets, the reasonableness of the proposed Capital Expenditure, Operation & Maintenance expenditure and other building blocks, for finalizing this Consultation Paper. 1.9.9 MIAL has sought a TR of Rs. 38,724.19 crores (translating to an of NPV of Rs. 32,156.61 crores) for 5 years and one time increase of 675.72% for determination of aeronautical tariffs in the first year with an annual inflationary adjustment at the CPI (as per OMDA) inflation rate of 4.50% for each subsequent year. 1.9.10 The timelines of various submissions made by MIAL with regards to the Multi Year Tariff Proposal are as below: Table 5: Timeline of Various Submissions made by MIAL S. No Activity Date 1 MYTP Submission 6th June 2024 2 Introductory Meeting with MIAL 14th June 2024 3 Initial Set of Queries Sent to MIAL 2nd July 2024 4 Online Discussion presentation by MIAL Team on Capex 10th July 2024 Consultation Paper No. 08/2024-25 Page 35 of 349BACKGROUND S. No Activity Date 5 Submission of Audited General Purpose Financial Statements by MIAL 22nd July 2024 Discussion Operating Expenses data related queries and additional data 6 26th July 2024 requirement (In person) Discussion Capital Expenditure data related queries and Capital Expenditure 7 8th Aug 2024 of the Fourth Control Period plan discussion (In Person) Discussion on pending information and Operating Expenses related queries 8 24th Aug 2024 with MIAL (Virtual meeting) 9 Clarifications with respect to Capital Expenditure 28th Aug 2024 30th Aug 2024 and 31st 10 Site visit for Capital Expenditure inspection Aug 2024 11 Clarification relating to Capital Expenses 10th Sep 2024 12 Clarifications related to Operating Expenses 19th Sep 2024 Clarifications relating to Operating Expenses and Non-Aeronautical 13 15th Oct 2024 Revenues 14 Clarifications relating to Legal Expenses 28th Oct 2024 15 Clarification relating to Related Party Transactions 30th Oct 2024 16 Discussion on Digitalization App (Virtual meeting) 5th Nov 2024 17 Clarifications related to Operating Expenses 12th Nov 2024 18 NATS Study Report 18th Jan 2025 19 GST ITC Details 3rd Feb 2025 1.9.11 After reviewing the various submissions made by MIAL along with MYTP, the Authority is releasing this Consultation Paper to initiate the Stakeholder Consultation as part of the tariff determination process. RELATED PARTY TRANSACTIONS 1.9.12 The Authority, through its Independent Consultant, obtained details of the related parties with whom the airport operator has engaged, for rendering or receiving services. The list of such related parties and the nature of services rendered during the five years of the Third Control Period are provided in the table below: Table 6: Related Parties of MIAL from July 2021 (managed by Adani Group) S. No. Nature of Services Name of Related Party Description of Relationship 1 Duty Free Income Mumbai Travel Retail Pvt Ltd Fellow Subsidiary Mumbai Airport Lounge Services 2 Lounge Services Joint Venture Pvt Ltd 3 Car Parking Management Adani Airport Holdings Ltd Intermediate Holding Company Mumbai Aviation Fuel Farm 4 Fuel Farm Facility (Aero) Joint Venture Facility Private Ltd 5 Cargo Services Rajputana Smart Solution Ltd Fellow Subsidiary 6 Utilities Charges Adani Electricity Mumbai Ltd Entities Controlled by Directors Loan Interest Accrued/ 7 AAHL Intermediate Holding Company Corporate Cost 8 Corporate Cost AEL Ultimate Holding Company Reimbursement of 9 NMIAL Subsidiary Expenses 10 Digital Service Adani Digital Lab Pvt Ltd Fellow Subsidiary 11 Annual Fees paid to AAI Airports Authority of India (AAI) Joint Venture Adani Total Energies E-Mobility 12 Energy Solutions Entities Controlled by Directors Limited Ahmedabad International Airport 13 Cost Allocation Fellow Subsidiary Limited Lucknow International Airport 14 Cost Allocation Fellow Subsidiary Limited Consultation Paper No. 08/2024-25 Page 36 of 349BACKGROUND S. No. Nature of Services Name of Related Party Description of Relationship 15 Aero Sales Karnavati Aviation Private Limited Entities Controlled by Directors Adani Institute for Education and 16 Training Related Services Entities Controlled by Directors Research Table 7: Related Parties of MIAL from April 2019 to July 2021 (managed by GVK Group) S. No. Nature of Services Name of Related Party Description of Relationship Revenue Share & Utility from 1 Adaa Traders Pvt Ltd Entities Controlled by Directors Retail Concessionaire Revenue Share & Utility from Greenwood Palaces & Resorts 2 Entities Controlled by Directors Taj Santacruz Pvt Ltd GVK Power & Infrastructure 3 Corporate Cost Ultimate Holding Company Ltd Shareholder / Consortium 4 Technical Services ACSA Global Ltd Member in the Joint Venture Reimbursement of Travel 5 Ticket Cost/Credit Note Orbit Travel & Tours Pvt Ltd Entities Controlled by Directors Received for Earlier Years Crescent EPC Project and 6 Infrastructure Services Technical Services Limited Entities Controlled by Directors (CPTSL) 1.9.13 The Authority noted that MIAL has put in place a policy approved by its Board with respect to the matters pertaining to Related Party Transactions as required under Section 188 of Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. As per the policy: (i) Every Related Party Transaction and subsequent modifications shall be subject to the prior approval of the Audit Committee of the Board of MIAL whether at a meeting or by a resolution by circulation. Further, only those members of the Audit Committee who are independent directors shall approve Related Party Transactions. (ii) Further, if the Audit Committee of the Board of MIAL determines that a Related Party Transaction should be brought before the Board, or where Audit Committee does not approve of the transaction, it shall make its recommendation to the Board, or if the Board in any case decides to review any such matter or it is mandatory under any law for Board to approve the Related Party Transaction, then the Board shall consider and approve the Related Party Transaction. 1.9.14 The Authority notes the following as per Clause 8.5.7 with regards to Contracts, Leases and Licenses from the OMDA signed between MIAL and AAI as below: “Contracts, Leases and Licenses i. Sub-Contracting, Sub-Leasing and Licensing a. Any activity may be sub-contracted by the JVC, provided always that notwithstanding the sub- contract, the JVC retains overall management, responsibility, obligation and liability in relation to the sub-contracted Airport Service. Any such subcontracting shall not relieve the JVC from any of its obligations in respect of the provision of such Airport Services under this Agreement. It is clarified that JVC shall remain liable and responsible for any acts, omissions or defaults of any sub-contractor, and shall indemnify AAI in respect thereof. Provided however that any sub-contract involving foreign manpower or materials shall be subject to the political sensitivities of GOI. Consultation Paper No. 08/2024-25 Page 37 of 349BACKGROUND b. AAI hereby recognizes the right of JVC to sub-lease and license any part (but not whole) of the Airport Site to third parties for the purpose of performance of its obligations hereunder. c. Before entering into contracts or granting any sub-lease or license, the JVC will: d. Without prejudice to the foregoing, every contract entered into by the JVC shall be on an arms- length basis (and comply with contracting procedures set forth in Schedule 12), and shall contain an express provision allowing the transfer of the rights and obligations of the JVC under such contract to the AAI in the event of termination or expiry hereof. Every contract (including any sub-lease or license arrangement) entered into by the JVC shall contain an express provision recognizing the right of the AAI to acquire the Transfer Assets and the Non-Transfer Assets (including reversion of underlying land) in the manner provided herein, and contain an undertaking by the counter-party (ies), licensee/ sub-lessees, or owners of the relevant asset, as the case may be to transfer the relevant Transfer Asset and/ or the Non-Transfer Asset (including the reversion of the underlying land), as the case may be, upon the exercise of such right by AAI. JVC shall further procure that any contracts entered into by any counter-party (ies), licensees/ sub-lessees, as the case may be and relatable to any Transfer Asset and/ or the Non- Transfer Asset shall also recognize the right of the AAI to acquire the Transfer Assets and the Non-Transfer Assets in the manner provided herein, and contain an undertaking by the counter- party (ies), sub-licensee, sub-sub-lessees, as the case may be to transfer the relevant Transfer Asset and/ or the Non-Transfer Asset, as the case may be, upon the exercise of such right by AAI. e. JVC shall ensure that any sub-contract, license or sub-lease granted in relation to the Airport expires on the thirtieth (30th) anniversary of Effective Date. JVC shall further procure that any contracts entered into by any counter-party (ies), licensees/ sub-lessees, as the case may be and relatable to the Airport shall also expire on the thirtieth (30th) anniversary of Effective Date. f. The JVC shall prior to entering into or modifying any contract with a Group Entity of the JVC or any of its shareholders (other than AAI), inform AAI about the key terms of such contract and disclose the draft contract to the AAI. In relation to such contracts, AAI shall have the right to object to any key terms that it can reasonably demonstrate are not equitable, are inconsistent with or contrary to the letter or spirit of this Agreement or not on arms-length, and the JVC shall address the reasonable concerns of AAI prior to execution of such contracts. The JVC shall further ensure that any contract with a Group Entity of the JVC or any of its shareholders (other than AAI) shall only be entered into after the board of directors of the JVC (the “Board”) duly approves such contract itself and the same is not approved by any sub-committee of the Board or by delegation to any person whatsoever. The Board shall have the right to consider and comment on the terms and conditions of such contracts and suggest modifications thereto. The Board shall be entitled to seek a report on the terms of contracts from the Independent Engineer. The Board shall approve any such contract only if it is satisfied that the terms thereof are no less favorable to the JVC than those which could have been obtained from bona fide non- Group Entities/ non-shareholders on arms-length commercial basis. The rights and obligations of the Board hereunder shall be incorporated into the Articles of Association of the JVC prior to Effective Date.” Consultation Paper No. 08/2024-25 Page 38 of 349BACKGROUND 1.9.15 Reference is also drawn to Schedule 12 of the OMDA, which states that: “…Where a shareholder of the JVC (or any of its Group Entities) intends to tender for the contract, an independent probity auditor must be appointed to review and monitor the tender to ensure a complete arm’s length arrangement. It is clarified that the independent probity auditor shall not be a Group Entity of JVC or any of its shareholders. JVC shall agree to the appropriate terms of reference and the selection procedure of the independent probity auditor as laid down by AAI…” 1.9.16 The Authority observed that as per the provisions of OMDA mentioned above: (i) For any contract entered into by MIAL with a Group Entity, AAI shall have the right to object to any key terms if it can reasonably demonstrate that they are not equitable, are inconsistent with or contrary to the letter or spirit of this agreement or are not on an arm’s-length basis. (ii) Any contract with a Group Entity or any of its shareholders (excluding AAI) shall only be executed after obtaining approval from MIAL’s Board. The Board shall approve such contracts only if it is satisfied that the terms are on an arm’s-length commercial basis. (iii) MIAL shall ensure that transactions with Related Parties adhere to arm’s-length pricing principles and comply with the contracting procedures outlined in Schedule 12 of the OMDA. 1.9.17 The Authority, through its Independent Consultant, has also sought and reviewed few probity audit reports for Related Party Transactions during the Third Control Period. 1.9.18 The Authority also noted that the Board of Directors of MIAL comprise two nominee directors from AAI and one nominee director from MoCA. 1.9.19 Further, the Authority observed that as per the Notes to the Audited Financial Statements (signed by Statutory Auditors also) of MIAL for FY 2024: “The transactions with related parties are made on terms of equivalent to those that prevail in arms’ length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.” 1.9.20 Based on the above, the Authority expects the Board of Directors of MIAL and the AAI to exercise their rights and/or obligations under the Companies Act 2013, SEBI Regulations 2015 and OMDA to ensure that the contracts with Related Parties are at arm’s length basis and that the Related Party has experience of providing similar service in other places to ensure protection of interest of all stakeholders, which may be followed in letter and spirit. 1.10 CONSTRUCT OF THIS CONSULTATION PAPER 1.10.1 This Consultation Paper has been developed in the order of the events and as explained above. Chapter-wise details have been summarized as follows: (i) Chapter 1 (this chapter) provides background information pertaining to CSMIA, including terminal and technical details. Additionally, it also discusses the framework for tariff determination, elaborating on the sequence of past events, the directions issued by the Hon’ble Supreme Court and Hon’ble TDSAT, and the timelines associated with the determination of tariffs for the Fourth Control Period. Consultation Paper No. 08/2024-25 Page 39 of 349BACKGROUND (ii) Chapter 2 sets forth MIAL’s submissions as part of the current MYTP regarding various issues related to the true-up for the First Control Period. The chapter outlines the Authority’s earlier analysis and decisions in the Third Control Period Tariff Order, followed by the Authority’s current examination and proposals concerning the true-up for the First Control Period as part of the Fourth Control Period tariff determination. (iii) Chapter 3 presents MIAL’s submissions related to the true-up for the Second Control Period. The Authority’s earlier analysis and decisions, as documented in the Third Control Period Tariff Order, are detailed alongside the Authority’s current examination and proposals for the true-up for the Second Control Period as part of the Fourth Control Period Tariff Determination. (iv) Chapter 4 lists MIAL’s submissions regarding the true-up for the Third Control Period, focusing on specific issues. The chapter also summarizes the Authority’s analysis and decisions regarding the building blocks for the Third Control Period as per the Third Control Period Tariff Order, followed by the Authority’s current examination and proposals on the same issues as part of the Fourth Control Period tariff determination. (v) Chapter 5 addresses the submissions made by MIAL concerning traffic projections for the Fourth Control Period. The chapter includes the Authority’s examination of these submissions and its proposals on traffic projections for the Fourth Control Period. (vi) Chapter 6 includes MIAL’s submissions regarding Capital Expenditure (CAPEX), Depreciation, Hypothetical Regulatory Asset Base (HRAB) and the Regulatory Asset Base (RAB) for the Fourth Control Period. The chapter outlines the Authority’s detailed examination, adjustments, rationalization, and proposals regarding aeronautical CAPEX, depreciation, HRAB and RAB for the Fourth Control Period. (vii) Chapter 7 to 12 includes MIAL’s submissions on various regulatory building blocks for the Fourth Control Period, including the Fair Rate of Return, inflation, operating and maintenance expenses, non-aeronautical revenue, taxation, and quality of service. Each chapter also incorporates the Authority’s examination and proposals regarding these matters. (viii) Chapter 13 provides the Authority’s determination of Target Revenue for the Fourth Control Period, derived from its examination of the regulatory building blocks and proposals outlined in preceding chapters. (ix) Chapter 14 summarizes the Authority’s proposals put forward for consultation. (x) In Chapter 15, the Authority invites views from all the stakeholders regarding proposals put forward for tariff determination for the Fourth Control Period in the Consultation Paper. Consultation Paper No. 08/2024-25 Page 40 of 349TRUE UP OF THE FIRST CONTROL PERIOD 2. TRUE UP OF THE FIRST CONTROL PERIOD 2.1 ISSUES RAISED BY MIAL PERTAINING TO THE TRUE UP FOR THE FIRST CONTROL PERIOD 2.1.1 MIAL raised the following issues relating to the First Control Period for the True up in MYTP for the Fourth Control Period: (i) Regulatory Asset Base: DF Assets Capitalization, Aeronautical Asset Allocation Ratio (ii) Depreciation changes consequent to changes in RAB (iii) Revenue from Revenue Share Assets: Other Income, Revenue from Existing Assets and Annual Fees in the demised premises and annual fees paid to AAI should be excluded in the computation of ‘S’ Factor (iv) Aeronautical Tax to be recomputed as per the Hon’ble Supreme Court and TDSAT Orders 2.1.2 MIAL has raised these issues after factoring in the decisions of the Hon’ble TDSAT on various issues and of the Hon’ble Supreme Court judgement on the issue of corporate tax pertaining to earnings from Aeronautical services. 2.1.3 For each of the issues raised, the Authority has analyzed submissions made by MIAL issue-wise in the following order: (i) Recording and understanding MIAL's submission in the MYTP (ii) Recap of decision taken by the Authority for these matters as part of the True up for the First Control Period (iii) Examination and proposal regarding these matters as part of tariff determination for the current control period 2.1.4 In view of the Authority’s analysis provided in para’s from 1.9.2 to 1.9.5, with regards to the issues raised by the Authority in the Civil Appeal against the judgements of the Hon’ble TDSAT, the Authority is of the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court. 2.1.5 Further, the Authority proposes implementing the Hon’ble Supreme Court judgement dated 11th July 2022 as detailed in para 1.7.3 and recomputing the Aeronautical Taxes based on the regulatory accounts. This will involve not treating the Annual Fee paid to AAI during the control period as an expense while computing the Aeronautical Taxes. The following paragraphs explain these issues in detail: 2.2 TRUE UP OF REGULATORY ASSET BASE (RAB) MIAL'S SUBMISSION ON THE TRUE UP OF RAB FOR THE FIRST CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 2.2.1 The Authority, in the Second Control Period tariff order adjusted the entire DF amount of Rs. 3,400 crores (as allowed by the Authority vide Order No. 32/2012-13) by FY 2013-14 while calculating RAB for the First Control Period. It is to be noted that only a part of the new Terminal 2 was commissioned in FY 2013- 14, while other facilities and balance Terminal 2 were commissioned only in FY 2015-16. Consultation Paper No. 08/2024-25 Page 41 of 349TRUE UP OF THE FIRST CONTROL PERIOD 2.2.2 The Hon’ble TDSAT vide order dated 6th October 2023 directed the Authority to adjust the Development Fee based on actual amount of assets funded through Development Fee while calculating RAB, as per the Auditor’s Certificate/Annual Accounts till FY 2015-16 when the project got completed because other facilities and balance portion of Terminal 2 was commissioned only in FY 2015-16. Table 8: Comparison of adjustment to RAB as per the Authority and as per the audited accounts (Rs. in crores) Particulars FY10 FY11 FY12 FY13 FY14 Total DF adjustment as per audited accounts 26.87 72.93 77.08 126.40 3,038.87 3,342.15 DF adjustment as per the Authority 51.86 142.98 193.18 318.35 3,400.00 4,106.37 Variance (DF adjustment as per the Authority being higher than as per 24.99 70.05 116.10 191.95 361.13 764.22 audited accounts) 2.2.3 MIAL has given effect to the above directions of the Hon’ble TDSAT in the current MYTP. Higher adjustment of DF, as considered by the Authority, has a direct impact on reducing the RAB of all the years of the First Control Period. 2.2.4 Based on the above, revised RAB of the First Control Period computed by MIAL considering DF adjustment as per the audited accounts is given below: Table 9: Closing RAB of the First Control Period computed by MIAL as per the audited DF capitalization schedule (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Opening RAB A 827.80 1,144.99 1,572.54 1,968.13 2,241.29 Pro Rata Additions B 63.86 321.84 358.74 260.36 963.75 1,968.54 during the year Balance Additions C 308.11 193.03 150.08 145.54 2,476.66 3,273.41 Less: Depreciation D 54.78 87.31 113.23 132.74 150.80 538.86 E = A + B + Closing RAB 1,144.99 1,572.54 1,968.13 2,241.29 5,530.90 C – D Average RAB F= A+B-D 836.88 1,379.52 1,818.06 2,095.75 3,054.24 2.2.5 Further, the Hon’ble TDSAT vide its order dated 6th October 2023 directed the Authority to consider asset allocation of 86.17% for FY 2013-14 by applying asset allocation ratio only to common assets of Terminal 2. The Authority had computed asset allocation at 83.97% by applying the ratio to the total cost of Terminal 2 in the First Control Period. 2.2.6 It is to be noted that MIAL commissioned a study by the Indian Register of Shipping (IRS) which carried out an independent verification of areas built at new T2 and submitted that total non-aeronautical Services area is 14.43% of the total area of new T2. Using this allocation ratio to allocate the common assets between Aeronautical Assets and Non-Aeronautical Assets already identified, the overall asset allocation was 86.17% as shown below: Table 10: Computation of asset allocation of FY 2013-14 by MIAL (Rs. in crores) Asset Allocation as per MIAL Ref Total Assets Asset Allocation Aero Assets Terminal 2 Assets Aero a 1,578 100.00% 1,578 Non-Aero b 30 0.00% - Common c 4,583 85.60% 3,922 Consultation Paper No. 08/2024-25 Page 42 of 349TRUE UP OF THE FIRST CONTROL PERIOD Asset Allocation as per MIAL Ref Total Assets Asset Allocation Aero Assets Other Assets Aero a1 3,583 100.00% 3,583 Non-Aero b1 814 0.00% - Common c1 377 84.10% 317 Total Assets Aero A=a+a1 5,161 5,211* Non-Aero B=b+bl 845 - Common C=c+cl 4,960 4,239 Total A+B+C 10,966 9,450 Asset Allocation 86.17% *Additional 49.80 Crs asset reclassified by AERA to aeronautical, is classified as non-aero in ICWAI MARF study. 2.2.7 MIAL submits that if aeronautical asset allocation is changed from 83.97% to 86.17%, closing RAB of FY 2013-14 will change from Rs. 5,531 crores (computed in Table 10 above) to Rs. 5,766 crores and consequently the same will become the opening RAB of FY 2014-15. Table 11: Computation of closing RAB of FY13-14 by changing aeronautical allocation from 83.97% to 86.17% - as submitted by MIAL (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Opening RAB A 827.80 1,144.99 1,572.54 1,968.13 2,241.29 Pro Rata Additions B 63.86 321.84 358.74 260.36 963.75 1,968.54 during the year Balance Additions C 308.11 193.03 150.08 145.54 2,476.66 3,273.41 Less: Depreciation D 54.78 87.31 113.23 132.74 156.74 544.80 E = A + B + Closing RAB 1,144.99 1,572.54 1,968.13 2,241.29 5,530.90 C – D Average RAB F= A+B-D 836.88 1,379.52 1,818.06 2,095.75 3,054.24 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE FIRST CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE SECOND CONTROL PERIOD 2.2.8 The Authority in the Second Control Period Order had adjusted the entire DF amount of Rs. 3,400 crores by FY 2013-14 while calculating RAB for the First Control Period and considered asset allocation ratio of 85.57% (aeronautical) for Terminal 2 and re-computed the overall asset allocation ratio for FY 2013-14 to 83.97%. The Authority did not true up this matter in the Third Control Period Order for reasons mentioned in the Third Control Period Order. Table 12: Computation of asset allocation of FY 2013-14 by the Authority in the Second Control Period Order (Rs. in crores) Asset Allocation as per the Authority Ref Total Assets Asset Allocation Aero Assets Terminal 2 Assets Aero a 1,578 85.60% 1,351 Non-Aero b 30 85.60% 26 Common c 4,583 85.60% 3,923 Other Assets Aero a1 3,583 100.00% 3,583 Non-Aero b1 814 0.00% - Common c1 377 84.10% 317 Total Assets Consultation Paper No. 08/2024-25 Page 43 of 349TRUE UP OF THE FIRST CONTROL PERIOD Asset Allocation as per the Authority Ref Total Assets Asset Allocation Aero Assets Aero A=a+a1 5,161 4,984* Non-Aero B=b+bl 845 26 Common C=c+cl 4,960 4,240 Total A+B+C 10,966 9,250 Asset Allocation 83.97% * Additional 49.8 Crs asset reclassified by AERA to aeronautical, is classified as non-aero in ICWAI MARF study. AERA has added Rs. 49.8 Crs to aero assets, but inadvertently has not reduced it from non-aero assets, increasing total assets from Rs. 10,966 Crs to Rs. 11,016 Crs. AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF RAB FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 2.2.9 The Authority noted that MIAL has submitted the revised values for RAB consequent to the adjustment in DF assets as per the audited financial statements, and recalculating the overall asset allocation ratio for FY 2013-14 by considering asset allocation ratio to only Common Assets. 2.2.10 With regards to the change in RAB due to DF adjustment and the changes in Asset Allocation, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 2.1.4 of this Consultation Paper. 2.2.11 Consequently, after excluding the TDSAT impact factored in by MIAL, the RAB for the First Control Period is as follows: Table 13: RAB proposed to be considered by the Authority for the True up of the First Control Period (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Opening RAB A 827.80 1,120.98 1,506.94 1,861.94 2,069.77 Pro Rata Additions B 59.39 292.64 325.32 211.72 916.34 1,805.41 during the year Balance Additions C 287.48 177.16 137.12 118.32 2,354.54 3,074.63 Depreciation D 53.69 83.84 107.43 123.22 141.88 510.06 Closing RAB A+B+C-D 1,120.98 1,506.94 1,861.94 2,068.76 5,198.78 Average RAB A+B-D 833.51 1,329.78 1,724.83 1,950.45 2,844.24 2.2.12 In view of the above, the Authority proposes to consider the same RAB as considered in the Third Control Period Tariff Order (as mentioned in Table 13 above) for the True up of the First Control Period. 2.3 TRUE UP OF DEPRECIATION ON REGULATORY ASSET BASE (RAB) MIAL’S SUBMISSION ON THE TRUE UP OF DEPRECIATION ON RAB FOR THE FIRST CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 2.3.1 As explained above, due to the change in adjustment of DF in RAB, and considering aeronautical asset allocation of 86.17%, MIAL has submitted the depreciation for the First Control Period as follows: Table 14: Depreciation for the First Control Period considering change in DF assets capitalization schedule and 86.17% aeronautical allocation for FY 2013-14 (Rs. in crores) Particulars FY10 FY11 FY12 FY13 FY14 Total Revised Depreciation on RAB as per MIAL 54.78 87.31 113.23 132.74 156.74 544.80 Consultation Paper No. 08/2024-25 Page 44 of 349TRUE UP OF THE FIRST CONTROL PERIOD RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE FIRST CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE SECOND CONTROL PERIOD 2.3.2 The Authority in the Second Control Period Order had calculated depreciation based on adjustment of entire DF amount of Rs. 3,400 crores by FY 2013-14 and considering 83.97% as asset allocation ratio for FY 2013-14. The same was followed during the tariff determination of the Third Control Period as well. Table 15: Depreciation on RAB computed by the Authority for the First Control Period in the Second Control Period Order (Rs. in crores) Particulars FY10 FY11 FY12 FY13 FY14 Total Depreciation on RAB 53.69 83.84 107.43 123.22 141.88 510.06 AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF DEPRECIATION ON RAB FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 2.3.3 With regards to the change in RAB due to DF adjustment and the changes in Asset Allocation, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same as mentioned in para 2.1.4 of this Consultation Paper. 2.4 TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND S FACTOR MIAL’S SUBMISSION ON THE TRUE UP OF REVENUE SHARE ASSETS AND S FACTOR FOR THE FIRST CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 2.4.1 As per the definition mentioned in SSA, Revenue Share Assets are defined as below: “Revenue Share Assets” shall mean (a) Non-Aeronautical Assets; and (b) assets required for provision of aeronautical related services arising at the Airport and not considered in revenues from Non-Aeronautical Assets (e.g. Public admission fees, etc.) 2.4.2 MIAL in their MYTP for the Fourth Control Period has excluded Other Income, Revenue from Existing Assets and Annual Fee payable to AAI from the calculation of ‘S’ factor. MIAL has followed Hon’ble TDSAT orders dated 21st July 2023 for the Second Control Period and Third Control Period for DIAL, while computing S factor and the relevant TDSAT order excerpt is shown below: Other Income as part of Revenue from Revenue Share Assets “The definition of “Revenue Share Assets” defines “shall mean” meaning thereby to that, it is an exhaustive definition. The definition is not extensive. It would cover only those assets which are defined as Revenue Share Assets. Thus addition is not permissible. This aspect has not been properly appreciated by AERA while treating “other income” as part of revenue, generated from revenue share assets. In view of the aforesaid reasons, “Other income” cannot be a part of revenue from Revenue Share Assets and consequently, in calculation of “S” factor in target revenue formula which is TR = RB X WACC + OM + D + T – S. Since other income is not generated from sources allowed under contract, it should not be considered as part of Revenue from Revenue Share Assets. Consultation Paper No. 08/2024-25 Page 45 of 349TRUE UP OF THE FIRST CONTROL PERIOD Annual fee in the calculation of Revenue from Revenue Share Assets Annual fee payable to Airport Authority of India (AAI) is not a cost, because the cost is an amount paid to acquire the revenue. Cost is that amount which the entrepreneur pays for procuring the revenue. The cost is an expenditure incurred by any company or firm to produce the goods or services for sale. The cost is an amount that is incurred to earn that revenue prior to such revenue is being earned. Annual fees accrues to AAI after “Revenue” has been earned by MIAL. Hence Annual fee is not included in the calculation of determination of “S” – factor. “2. Establishment of Escrow Account and Declaration of Trust 2.1 Establishment of the Accounts The Company and the Escrow Bank confirm that the Escrow Bank has established, in the name of the Company at the Escrow Bank's New Delhi branch, an account titled the "Escrow Account". The Escrow Account shall have the following sub accounts, maintained, controlled and operated by the Escrow Bank for the purposes of this Agreement, namely: (a) a sub account maintained, controlled and operated by the Escrow Bank, titled the "Receivables Account"; (b) a sub account maintained, controlled and operated by the Escrow Bank, titled the "Proceeds Account" which shall have the following sub accounts: (i) a sub-account maintained, controlled and operated by the Escrow Bank, titled the "Statutory Dues Account”; (ii) a sub-account maintained, controlled and operated by the Escrow Bank, titled the "AAI Fee Account”; and (iii) a sub-account maintained, controlled and operated by the Escrow Bank, titled the "Surplus Account".” As per Clause – 3 thereof, it appears that revenue comes in the hands of the JVC only in the “Surplus account”. Clause 3.2 of the Escrow Account Agreement makes it explicitly clear that the revenue meant for this appellant is in “Surplus account”. Thus, out of total “gross revenue”, amount equal to Annual Fee never comes in the hands of or in the account meant for appellant and, therefore, while calculating gross revenue generated by JVC from the Revenue Share Assets, the amount of annual fee ought to be excluded. Revenue accruing from Existing assets / Demised premises considered as part of revenue from Revenue Share Assets “The definition of “Revenue Share Assets”, as stated hereinabove it shall mean a Non-Aeronautical Assets and the assets required for provision of aeronautical related services arising at the Airport and not considered in revenues from Non-Aeronautical Assets. Looking to the definition of Non-Aeronautical Assets, all the assets required or necessary for the performance of Non-Aeronautical Assets at the Airport as listed in Part-I of Schedule – 6 of OMDA as located at the Airport irrespective of whether they are owned by JVC or any third party to the extent such assets are located within or form part of any terminal building or are conjoined to any other Aeronautical assets, asset including in Paragraph (i) above, and such assets are incapable of independent access and independent existence or are prominently serving/catering any terminal complex/categorically complex and shall specifically include all the additional land (other than Consultation Paper No. 08/2024-25 Page 46 of 349TRUE UP OF THE FIRST CONTROL PERIOD demised premises), property and structures thereupon acquired or leased during the Term in relation to such non-aeronautical assets. Non-Aeronautical Services are the services which are listed in Part- I and Part-II of Schedule – 6 of OMDA. In view of the aforesaid definition of Revenue Share Assets, Non-Aeronautical Assets and Non-Aeronautical Services, it is explicitly clear that Non-Aeronautical Revenue accruing from existing premises/ demised premises could not be considered as part of revenue from “Revenue Share Assets” and consequently it cannot be used for cross subsidization.” 2.4.3 As per the above submissions taken in the Hon’ble TDSAT Order dated October 6th, 2023: (i) MIAL has excluded "Other Income" from the computation of revenue derived from Revenue Share Assets. (ii) The Hon’ble TDSAT ruled that revenue generated from existing assets or demised premises by the appellant cannot be considered as part of revenue from "Revenue Share Assets" for the determination of the ‘S’ factor – To take the effect of the mentioned order on Existing Assets, MIAL appointed a firm to calculate the Revenue accruing from the Existing Assets from ‘S’ factor in determining the Target Revenue. (iii) The Hon’ble TDSAT has also directed the Authority to exclude the Annual Fee paid to AAI on Gross Revenue generated by the JVC from Revenue Share Assets in the calculation of the ‘S’ factor. 2.4.4 Based on the above, the revised ‘S’ factor submitted by MIAL is as below: Table 16: Computation of revised ‘S’ factor of the First Control Period in line with the Hon’ble TDSAT Order – as submitted by MIAL (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Non-Aero Revenues including other income (AERA Order A 515.35 688.14 801.50 851.39 883.12 3,739.51 No.13/2016-17 Table 10) Other Income (AERA Order B 6.91 4.70 6.61 4.20 12.90 35.31 No.13/2016-17 Table 10) Revenues from existing assets C 505.41 655.87 760.41 784.17 755.09 3,460.95 (As per Independent Study) Revenues from RSA D=A-B-C 3.03 27.57 34.49 63.02 115.13 243.25 Annual Fee on above E=38.7%*D 1.17 10.67 13.35 24.39 44.56 94.14 Revenues from RSA after F=D-E 1.86 16.90 21.14 38.63 70.57 149.11 annual fee paid to AAI ‘S’ Factor G=30%*F 0.56 5.07 6.34 11.59 21.17 44.73 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE FIRST CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 2.4.5 The Authority, vide its decision in para 7.7.4 of the Third Control Period Order, had included other income while computing Revenue from Revenue Share Assets, used for computation of ‘S’ Factor. It was decided to be trued up in the next control period. 2.4.6 The Authority, in the Third Control Period Order, has included the revenue from existing assets / demised premises as part of the Revenue from Revenue Share Assets and had not excluded the Annual Fee paid to AAI on Gross Revenue in its computation of the ‘S’ Factor. Consultation Paper No. 08/2024-25 Page 47 of 349TRUE UP OF THE FIRST CONTROL PERIOD AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF REVENUE SHARE ASSETS AND ‘S’ FACTOR FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 2.4.7 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 2.1.4 of this Consultation Paper. 2.4.8 Consequently, the Authority proposes the following for the calculation of the ‘S’ factor: (i) Not to exclude Other Income (ii) Not to reduce the revenue from existing assets (iii) Not to exclude the annual fee paid to AAI. 2.4.9 Accordingly, the Authority proposes the ‘S’ factor for the true up of the First Control Period as per the table below: Table 17: ‘S’ Factor as proposed by the Authority for the True up of the First Control Period (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Non-Aero Revenues including other income (AERA Order A 515.35 688.14 801.50 851.39 883.12 3,739.51 No.13/2016-17 Table 10) ‘S’ Factor B=30%*A 154.61 206.44 240.45 255.42 264.94 1,121.85 2.4.10 In view of the above, the Authority proposes to consider the same ‘S’-Factor as considered in the Third Control Period Tariff Order (as mentioned in Table 17 above) for the True up of the First Control Period. 2.5 TRUE UP OF AERONAUTICAL TAX MIAL’S SUBMISSION ON THE TRUE UP OF AERONAUTICAL TAX FOR THE FIRST CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 2.5.1 As per MIAL, the Hon’ble Supreme Court vide its judgment dated 11th July 2022 has decided that Component ‘T’ in the formula of Target Revenue (TR) in SSA has to be computed based solely on regulatory accounts for the TR formula. Corporate Tax has to be calculated based on provisions of the SSA, and Annual Fees paid to AAI needs to be excluded from the Aeronautical Expenses to compute aeronautical tax. 2.5.2 Further TDSAT vide its order dated 6th October 2023 has held that amount equal to “S factor” partakes the color of aeronautical revenue and also looking to the definition of ‘T’ in SSA, which is, “Corporate taxes is on earnings pertaining to aeronautical services” and it is not on Target Revenue. Accordingly, TDSAT has directed ‘S’ factor should be added to aeronautical revenues to compute ‘T’. 2.5.3 In addition to the above, MIAL has claimed depreciation as per the Companies Act for the tax computation in the First Control Period True up and has adjusted for the Interest cost based on the allowances for Return on RAB, i.e., RAB * Actual Gearing Ratio * Cost of Debt. 2.5.4 Based on the above Hon’ble Supreme Court and Hon’ble TDSAT Judgements and additional submissions, MIAL has revised the calculation of Aeronautical Tax for the First Control Period as shown below: Consultation Paper No. 08/2024-25 Page 48 of 349TRUE UP OF THE FIRST CONTROL PERIOD Table 18: Computation of ‘T’ for the First Control Period as submitted by MIAL - in line with the Hon’ble Supreme Court and Hon’ble TDSAT Order (Rs. in crores) Particulars FY10 FY11 FY12 FY13 FY14 Total Aero Revenues (AERA 476.44 486.11 507.16 621.84 1,280.26 3,371.81 order 13/2016-17 table 10) Add: ‘S’ Factor (30% of 0.56 5.07 6.34 11.59 21.17 44.73 RSA) Total Revenues 476.99 491.18 513.50 633.43 1,301.43 3,416.54 Less: Aero Expenses (AERA order 13/2016-17 374.97 190.58 311.45 382.19 502.21 1,761.40 table 10) Less: Aero Depreciation 54.78 87.31 113.23 132.74 156.74 544.80 Less: Interest Cost* 57.71 91.84 130.57 157.19 235.37 672.69 Net Profit (10.47) 121.45 (41.74) (38.69) 407.10 437.66 Tax Rate 33.99% 33.22% 32.45% 32.45% 33.99% Aero Taxation - 40.34 - - 138.37 178.72 *Interest Cost = RAB X Gearing X Cost of Debt RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE FIRST CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 2.5.5 The Authority vide its decision for computation of the true up of tax for the First Control Period in the Third Control Period Order had: (i) Considered the annual fees paid to AAI as an expense. (ii) Not considered the ‘S’ factor for revenue computation. (iii) Considered Depreciation as per the Income Tax Act. (iv) Calculated Interest expense at the actual interest paid on the existing debt. 2.5.6 Based on the above, the tax for the true up of the First Control Period in the Third Control Period Order was decided as “NIL” by the Authority. AUTHORITY'S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF AERONAUTICAL TAX FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 2.5.7 The Authority examined the submissions made by MIAL for the true up of aeronautical taxes and noted that MIAL has considered ‘S’ Factor as part of the revenue base (based on the Hon’ble TDSAT order dated 21st July 2023) and has not considered Annual Fee paid to AAI as an expense for the purpose of determination of Aeronautical PBT and consequently the Aeronautical Taxes (based on the Hon’ble Supreme Court order dated 11th July 2022). 2.5.8 With regards to the submissions made by MIAL, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 2.1.4 of this Consultation Paper with regards to the treatment of ‘S’ Factor for computation of Aeronautical Taxes. Consultation Paper No. 08/2024-25 Page 49 of 349TRUE UP OF THE FIRST CONTROL PERIOD 2.5.9 As mentioned in para 2.1.5 of this Consultation Paper, the Authority proposes to implement the Hon’ble Supreme Court judgement dated 11th July 2022, and recompute the Aeronautical Taxes based on the regulatory accounts by not treating the Annual Fee pertaining to Aeronautical Revenues as an expense towards True Up of the First Control Period as per the directions contained in the judgement of Hon’ble Supreme Court. 2.5.10 Therefore, the Authority proposes to re-compute the tax for the First Control Period as below: Table 19: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the First Control Period (Rs. in crores) Particulars Ref FY 10 FY 11 FY 12 FY 13 FY 14 Total Average RAB A 833.51 1,329.78 1,724.83 1,950.45 2,844.25 Gearing Ratio (D/E) B 67.60% 68.00% 70.90% 69.71% 70.07% Interest Rate C 10.20% 9.79% 10.13% 10.76% 11.02% Aeronautical Interest D=A*B*C 57.48 88.53 123.87 146.30 219.62 635.79 Expense Table 20: Computation of ‘T’ for the True up of the First Control Period as proposed by the Authority as a part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars Ref FY 10 FY 11 FY 12 FY 13 FY 14 Total Aeronautical Revenue A 476.44 486.11 507.16 621.84 1,280.26 3,371.81 Aeronautical Operating B 374.98 190.58 311.46 382.04 502.71 1,761.76 Expenses EBITDA C=A-B 101.45 295.53 195.70 239.81 777.55 1,610.04 Depreciation D 53.69 83.84 107.43 123.22 141.88 510.06 Interest Expense- 57.48 88.53 123.87 146.30 219.62 635.79 aeronautical E Profit Before Tax F=C-D-E (9.71) 123.16 (35.61) (29.70) 416.05 464.19 Opening Accumulated G - (9.71) - (35.61) (65.31) (Losses) Current (Losses) H (9.71) - (35.61) (29.70) Current Year Set Off I - 123.16 - - 416.05 Closing Accumulated J=G+H-I (9.71) 113.45 (35.61) (65.31) 350.74 (Losses) Profit for Taxation K - 113.45 - - 350.74 464.19 Tax Rate L 33.99% 33.22% 32.45% 32.45% 33.99% Tax M=K*L - 37.68 - - 119.22 156.90 Note: As per the order of the Hon’ble Supreme Court, the Annual Fee has not been treated as an expense (Refer para 2.1.5). 2.5.11 In view of the above, the Authority proposes to consider the Aeronautical Taxes amounting to Rs. 156.90 Crores towards True up for the First Control Period. Consultation Paper No. 08/2024-25 Page 50 of 349TRUE UP OF THE FIRST CONTROL PERIOD 2.6 TRUE UP OF THE TARGET REVENUE OF THE FIRST CONTROL PERIOD MIAL’S SUBMISSION ON THE TRUE UP OF TARGET REVENUE OF THE FIRST CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 2.6.1 Based on the above-mentioned changes in various building blocks, revised TR for the First Control Period is as below: Table 21: Computation of Target Revenue of the First Control Period as submitted by MIAL for the MYTP of the Fourth Control Period (Rs. in crores) Particulars FY 10 FY 11 FY 12 FY 13 FY 14 Total Return on RAB and HRAB 217.02 277.63 325.21 353.20 464.86 1,637.92 Add: Operating Expenses 374.97 190.58 311.45 382.19 502.21 1,761.40 Add: Depreciation 96.99 134.99 161.25 180.53 180.53 754.29 Add: Aeronautical Taxes - 40.34 - - 138.37 178.72 Less: 30% Revenue Share Assets (0.56) (5.07) (6.34) (11.59) (21.17) (44.73) Target Revenue 688.42 638.48 791.57 904.33 1,264.80 4,287.60 Actual Aero Revenues 476.44 486.11 507.16 621.84 1,280.26 3,371.81 True-up/True-down 211.98 152.37 284.41 282.48 (15.45) 915.79 Carrying Cost @12.18% 12.18% 12.18% 12.18% 12.18% 12.18% Years 5.00 4.00 3.00 2.00 1.00 Factor 1.78 1.58 1.41 1.26 1.12 True-up with Carrying Cost 376.59 241.29 401.50 355.48 (17.34) 1,357.53 AUTHORITY'S RECAP REGARDING THE TRUE UP OF THE TARGET REVENUE OF THE FIRST CONTROL PERIOD AS PER TARIFF ORDER FOR THE THIRD CONTROL PERIOD 2.6.2 The True up which was approved by the Authority for the First Control Period in the Third Control Period Order is as follows: Table 22: True up of the Target Revenue of the First Control Period as decided in the Tariff Order for the Third Control Period (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Landing Charges A 268.72 285.21 298.07 341.43 624.41 1,817.84 Parking Charges B 16.18 11.01 9.03 11.41 33.53 81.16 Passenger X- Ray C 20.11 - - - - 20.11 Charges PSF D 98.25 109.93 117.11 96.33 2.19 423.81 Aerobridge Charges E - - - 4.15 29.88 34.03 UDF F - - - 67.07 482.79 549.86 Unauthorised Overstay G - - - 5.70 5.81 11.51 Aircraft Refuelling H 73.17 79.96 82.95 95.76 101.66 433.49 Into Plane Revenue I - - - - - - Total Aeronautical J=Sum(A:I) 476.44 486.11 507.16 621.84 1,280.26 3,371.81 Revenues Target Revenue Regulatory Base Avg. Regulatory Base K 833.51 1,329.78 1,724.83 1,950.45 2,844.24 Avg. HRAB L 944.93 899.98 852.12 804.22 768.43 Total M=K+L 1,778.44 2,229.76 2,576.95 2,754.67 3,612.67 FRoR N 12.18% 12.18% 12.18% 12.18% 12.18% Return on RAB O=M*N 216.61 271.58 313.87 335.52 440.02 1,577.61 Consultation Paper No. 08/2024-25 Page 51 of 349TRUE UP OF THE FIRST CONTROL PERIOD Particulars Ref FY10 FY11 FY12 FY13 FY14 Total O&M - Operation & P 374.98 190.58 311.46 382.04 502.71 1,761.77 Maintenance Cost Depreciation - RAB Q 53.69 83.84 107.43 123.22 141.88 510.06 Depreciation - HRAB R 42.21 47.69 48.03 47.79 23.79 209.49 Total Depreciation S=Q+R 95.90 131.53 155.46 171.00 165.67 719.55 Tax T - - - - - - Share of Revenue from U 154.61 206.44 240.45 255.41 264.92 1,121.83 Revenue Share Assets Target Revenue V 532.89 387.24 540.34 633.15 843.47 2,937.10 Determination of true up amount Under Recovery / (Over W=V-J 56.45 (98.86) 33.18 11.31 (436.78) (434.71) Recovery) Under Recovery / (Over X 100.29 (156.57) 46.84 14.23 (489.98) Recovery) on PV Terms True Up for the First Control Period as on Y=Sum(X) (485.20) 01.04.2014 AUTHORITY'S EXAMINATION REGARDING THE TRUE UP OF TARGET REVENUE FOR THE FIRST CONTROL PERIOD AS PART OF THE TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 2.6.3 Since the Authority is not considering the changes submitted by MIAL as mentioned in para 2.1.4 of this Consultation Paper except for the direction from the Hon’ble Supreme Court as mentioned in para 2.1.5 of this Consultation Paper, the Authority proposes to True up the First Control Period only to that extent, which is as follows: Table 23: True up of the Target Revenue for the First Control Period as proposed by the Authority as a part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Total Aeronautical A 476.44 486.11 507.16 621.84 1,280.26 3,371.81 Revenues Regulatory Base Avg. Regulatory Base B 833.51 1,329.78 1,724.83 1,950.45 2,844.24 Avg. HRAB C 944.93 899.98 852.12 804.22 768.43 Total D=B+C 1,778.44 2,229.76 2,576.95 2,754.67 3,612.67 FRoR E 12.18% 12.18% 12.18% 12.18% 12.18% Return on RAB F=D*E 216.61 271.58 313.87 335.52 440.02 1,577.61 O&M - Operation & G 374.98 190.58 311.46 382.04 502.71 1,761.77 Maintenance Cost Depreciation - RAB H 53.69 83.84 107.43 123.22 141.88 510.06 Depreciation - HRAB I 42.21 47.69 48.03 47.79 23.79 209.49 Total Depreciation J=H+I 95.90 131.53 155.46 171.00 165.67 719.55 Tax K - 37.68 - - 119.22 156.90 Share of Revenue from L 154.61 206.44 240.45 255.40 264.93 1,121.84 Revenue Share Assets Target Revenue M=F+G+J-L 532.89 424.93 540.34 633.16 962.69 3,094.00 Determination of true up amount N (at FRoR Future Value Factor 1.78 1.58 1.41 1.26 1.12 of 12.18%) Consultation Paper No. 08/2024-25 Page 52 of 349TRUE UP OF THE FIRST CONTROL PERIOD Particulars Ref FY10 FY11 FY12 FY13 FY14 Total Under Recovery / O=M-A 56.45 (61.18) 33.18 11.32 (317.57) (277.81) (Over Recovery) Under Recovery / (Over Recovery) on PV P 100.28 (96.89) 46.84 14.24 (356.25) Terms as on 01.04.2014 True Up for the First Control Period as on Q=Sum(P) (291.78) 01.04.2014 2.6.4 Based on the above, the over-recovery of Rs. 291.78 Crores for the First Control Period as determined by the Authority is proposed to be considered for true up in the subsequent Control Periods as part of tariff determination process for the Fourth Control Period. 2.7 AUTHORITY’S PROPOSALS REGARDING TRUE UP FOR THE FIRST CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its examination, the Authority proposes the following regarding True up for the First Control Period: 2.7.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 2.7.2 To consider True up of Aeronautical Taxes as per Table 20. 2.7.3 To consider the True up for the First Control Period as per Table 23. 2.7.4 To consider the over-recovery of Rs. 291.78 crores during the True up for the First Control Period as part of the tariff determination exercise for the Fourth Control Period. Consultation Paper No. 08/2024-25 Page 53 of 349TRUE UP OF THE SECOND CONTROL PERIOD 3. TRUE UP OF THE SECOND CONTROL PERIOD 3.1 ISSUES PERTAINING TO THE TRUE UP FOR THE SECOND CONTROL PERIOD 3.1.1 MIAL raised the following issues relating to the Second Control Period for True up in MYTP for the Fourth Control Period: (i) Regulatory Asset Base (ii) Hypothetical Regulatory Asset Base (iii) Depreciation (iv) Fair Rate of Return (v) Revenue from Revenue Share Assets (vi) Aeronautical Tax (vii) Operating Expenditure 3.1.2 MIAL has raised these issues after factoring in the decisions of the Hon’ble TDSAT on various issues and of the Hon’ble Supreme Court judgement on the issue of corporate tax pertaining to earnings from Aeronautical services. 3.1.3 The Authority has analyzed submissions made by MIAL issue-wise in the following order in the subsequent paragraphs: (i) Recording and understanding MIAL's submission in the MYTP; (ii) Recap of decision taken by the Authority for these matters as part of True up for the Second Control Period; (iii) Examination and proposal regarding these matters as part of tariff determination for the current control period. 3.1.4 In view of the Authority’s analysis provided in para from 1.9.2 to 1.9.5, with regards to the issues raised by the Authority in the Civil Appeal against the judgements of the Hon’ble TDSAT, the Authority is of the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court. 3.1.5 Further, the Authority proposes implementing the Hon’ble Supreme Court judgement dated 11th July 2022 and recomputing the Aeronautical Taxes based on the regulatory accounts as detailed in para 1.7.3 of this Consultation Paper. This will involve not treating the Annual Fee associated with Aeronautical Revenues as an expense while computing the Aeronautical Taxes. 3.1.6 Additionally, the Authority has received a letter dated 30.08.2023 with a Self-Contained Note (“SCN”) from the Authorized Investigation Agency (AIA). In the said SCN, AIA has intimated the completion of the investigation and has requested AERA to adjust the excess amount of tariff claimed by MIAL. The relevant para 12 of the aforesaid SCN is reproduced as below: “In view of the aforesaid facts revealed during investigation, you are hereby requested to kindly adjust the excess amount of tariff of Rs. 305 /- Crores claimed by M/s. MIAL in the 3rd Control Period (01.04.2019 to 31.03.2024). The same has to be trued up during the tariff determination of M/s MIAL (Airport Operator of CSMIA, Mumbai) for the 4th Control Period which will be starting from 1st April 2024.” Consultation Paper No. 08/2024-25 Page 54 of 349TRUE UP OF THE SECOND CONTROL PERIOD As per the extract of para 48 of the notes to special purpose standalone financial statements of MIAL of FY 2023-24 as reproduced below: “… The management has received legal advice that the observations / allegations in the chargesheet are not to be treated as conclusive, final or binding till the time it is confirmed by the Court...” Accordingly, the Authority, through its Independent Consultant, in compliance of the above mentioned SCN, has given effect to this request by adjusting the excess amounts of tariff claimed by MIAL under the heads Depreciation (Refer Table 35) and Return on RAB (Refer Table 50) in the True Up of the Second Control Period and subsequent control periods subject to the final outcome in the matter. 3.2 TRUE UP OF REGULATORY ASSET BASE (RAB) MIAL'S SUBMISSION ON THE TRUE UP OF RAB FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.2.1 The True-Up of RAB as discussed in the First Control Period True up with respect to DF assets and revised aeronautical allocation will have an impact on RAB of the Second Control Period as well. 3.2.2 Further, MIAL submits that the calculation of Proportionate closing RAB done by the Authority in Table 52 of the Third Control Period Order is based on proportionate addition of assets considering the actual date of capitalization, but disposal of assets has been considered on first day of the year without considering the actual date of disposal of assets. 3.2.3 MIAL has mentioned in their MYTP that during the course of hearings of the Third Control Period matters before TDSAT, the Authority has clarified that the true up of the return on disposed of assets would be carried out proportionately in the subsequent control period. 3.2.4 Based on the above-mentioned changes, MIAL has computed closing RAB for the Second Control Period as follows: Table 24: RAB as submitted by MIAL for the true up of the Second Control Period in the MYTP for the Fourth Control Period (Rs. in crores) Particulars FY15 FY16 FY17 FY18 FY19 Total Opening RAB 5,766.19 5,180.36 5,533.15 6,309.83 6,129.97 Add: Additions (223.19) 908.12 1,224.19 299.59 262.03 2,470.74 Less: Depreciation (349.54) (369.23) (447.51) (479.44) (495.02) (2,140.74) Closing RAB (A) 5,193.46 5,719.25 6,309.83 6,129.97 5,896.98 Proportionate RAB addition (on account of disposal of asset - TDSAT 65.66 0.40 0.01 0.20 1.93 68.20 judgement related) (B) Revised RAB for the 2nd Control Period as per revised calculation 5,259.12 5,719.65 6,309.84 6,130.17 5,898.91 (A+B) RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.2.5 The Authority during the true up of the Second Control Period in the Third Control Period Order has approved the following RAB. Consultation Paper No. 08/2024-25 Page 55 of 349TRUE UP OF THE SECOND CONTROL PERIOD Table 25: RAB as considered by the Authority for the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Opening RAB A 5,198.78 4,636.61 5,329.57 6,107.86 5,929.70 Add: Proportionate Capitalization B (216.01) 851.31 197.53 239.79 110.19 1,182.81 during the year Balance to be carried forward for C 211.56 1,026.66 59.80 151.84 150.89 1,600.76 the year Add: Brought forward balance to D - 211.56 1,026.66 59.80 151.84 1,449.86 be added to RAB Less: Depreciation E 348.16 367.91 445.90 477.74 493.18 2,132.89 Proportionate F=A+B+D- 4,634.61 5,331.57 6,107.86 5,929.70 5,698.56 Closing RAB E AUTHORITY'S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF RAB FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 3.2.6 The Authority noted that the submission by MIAL for revised values for the Second Control Period true up of RAB is based on the adjustment in DF assets and asset allocation ratio made in the First Control Period. MIAL has also adjusted the proportionate RAB on account of disposal of assets for computation of the closing RAB. 3.2.7 The revision in the values for true up of the Second Control Period of RAB by MIAL is based on the TDSAT Order AERA Appeal No. 9 of 2016 dated 6th October 2023. 3.2.8 With regards to the change in RAB due to DF adjustment and the changes in Asset Allocation, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach as mentioned in para 3.1.4 of this Consultation Paper. 3.2.9 Thus, the Authority is retaining the RAB for the True up of the Second Control Period except for giving adjustment to the depreciation expenses (Refer Table 36) as per the SCN as mentioned in para 3.1.6. Table 26: RAB as proposed by the Authority for the True up of Second Control Period (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Opening RAB A 5,198.79 4,640.61 5,342.80 6,129.58 5,961.56 Add: Proportionate Capitalization B (216.01) 851.31 197.53 239.79 110.19 1,182.81 during the year Balance to be carried forward for C 211.56 1,026.66 59.80 151.84 150.89 1,600.75 the year Add: Brought forward balance to D - 211.56 1,026.66 59.80 151.84 1,449.86 be added to RAB Less: Depreciation E 342.17 360.68 437.40 467.60 482.52 2,090.38 (Refer Table 36) Proportionate F=A+B+D- 4,640.61 5,342.80 6,129.58 5,961.56 5,741.07 Closing RAB E Consultation Paper No. 08/2024-25 Page 56 of 349TRUE UP OF THE SECOND CONTROL PERIOD Treatment of Assets identified in the Self-Contained Note of AIA: 3.2.10 The Authority has recomputed the gross fixed asset, and the depreciation thereon based on the details provided in the SCN as given below: Table 27: Value of the Assets identified from the Fixed Asset Register (FAR) in the Self-Contained Note (Rs. in crores) As per SCN Order Dated Considered based on FAR Particulars C=B-A 30.08.2023 (A) (B) Assets identified as non- 642.43 689.56* 47.13 existent *The difference between the value in FAR and the value derived in the SCN is because of the carrying cost attached to the value of the asset in the FAR. A list of these assets is enclosed in Annexure 1 (Refer 16.1). 3.2.11 In compliance to para 12 of SCN dated 30.08.2023 referred at above para 3.1.6, the Authority, through its Independent Consultant, has computed and accordingly adjusted the impact on account of the excess amount of tariff resulting from Return on RAB and Depreciation as reflected in Table 51. 3.2.12 In view of the above, the Authority proposes to consider the RAB as per Table 26 for the True up of the Second Control Period. 3.3 TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE MIAL'S SUBMISSION ON TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.3.1 MIAL has submitted HRAB for the Second Control Period as follows: Table 28: HRAB as submitted by MIAL for True up of the Second Control Period (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Opening HRAB A 756.54 696.72 648.26 592.53 537.12 Depreciation B 59.82 48.46 55.73 55.41 53.31 272.73 Closing HRAB C = A-B 696.72 648.26 592.53 537.12 483.81 Average HRAB D = (A+C)/2 726.63 672.49 620.40 564.83 510.47 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.3.2 The following table shows the value of HRAB computed by the Authority for the Second Control Period. Table 29: HRAB as decided by the Authority for the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Opening HRAB A 756.54 696.72 648.26 592.53 537.12 Depreciation B 59.82 48.46 55.73 55.41 53.31 272.73 Closing HRAB C = A-B 696.72 648.26 592.53 537.12 483.81 Average HRAB D = (A+C)/2 726.63 672.49 620.40 564.83 510.47 Consultation Paper No. 08/2024-25 Page 57 of 349TRUE UP OF THE SECOND CONTROL PERIOD AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE FOR THE THIRD CONTROL PERIOD AS PART OF THE TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 3.3.3 The Authority observes that MIAL has submitted the HRAB for the true up of Second Control Period as decided by the authority in the Third Control Period. 3.3.4 The Authority complying with the directions of the Authorized Investigation Agency as explained in para 3.1.6. has adjusted the depreciation computation as mentioned in para 3.4.8. This adjustment has subsequently impacted the HRAB, as shown in the table below: Table 30: HRAB proposed by the Authority for the True up of the Second Control Period as part of the Tariff Determination for the Fourth Control Period (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Opening HRAB A 756.54 697.75 650.24 595.57 541.33 Depreciation (Refer B 58.79 47.51 54.67 54.23 52.16 267.36 Table 37) Closing HRAB C = A-B 697.75 650.24 595.57 541.33 489.17 Average HRAB D = (A+C)/2 727.14 673.99 622.91 568.46 515.26 3.3.5 In view of the above, the Authority proposes to consider the HRAB as per Table 30 for the True up of the Second Control Period. 3.4 TRUE UP OF DEPRECIATION ON REGULATORY ASSET BASE MIAL'S SUBMISSION ON THE TRUE UP OF DEPRECIATION FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.4.1 TDSAT Directions to the Authority as per Order dated October 6th, 2023 mentions the following: (i) To account for the impact of reclassifying the Shivaji Statue from non-aeronautical to aeronautical assets. (ii) To reflect changes in the aeronautical asset allocation of common assets in Terminal 1, based on the revised floor area of non-aeronautical activities, which has been adjusted from 10.64% to 10.03%. (iii) To treat General Aviation (GA) terminal assets as common assets within the total gross asset allocation of 82.58%, as computed by the Authority as of March 31, 2019. 3.4.2 The above orders impact on the asset allocation ratio, which gets revised from 82.58% to 82.78%. 3.4.3 MIAL has recomputed the depreciation after giving effect to the change in the asset allocation ratio as below: Table 31: Depreciation on Revised RAB as submitted by MIAL for the True up of the Second Control Period (Rs. in crores) Particulars FY15 FY16 FY17 FY18 FY19 Total Depreciation on RAB for the Second Control Period as per revised 349.54 369.23 447.51 479.44 495.02 2,140.74 calculation Consultation Paper No. 08/2024-25 Page 58 of 349TRUE UP OF THE SECOND CONTROL PERIOD Table 32: Depreciation on HRAB as submitted by MIAL for the True up of the Second Control Period (Rs. in crores) Particulars FY15 FY16 FY17 FY18 FY19 Total Depreciation on HRAB 59.82 48.46 55.73 55.41 53.31 272.73 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.4.4 The Authority during the true up of the Second Control Period in the Third Control Period Order has approved the following depreciation on RAB: Table 33: Depreciation on RAB as decided by the Authority for True up of the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Total Depreciation A 688.70 666.47 799.55 851.80 920.16 3,926.68 Depreciation on Upfront Fee B 5.14 5.14 5.14 5.14 5.14 25.70 Aeronautical assets % C 0.83 0.83 0.83 0.83 0.83 4.13 Depreciation on Aeronautical DF Funded D 211.63 171.57 198.83 201.14 206.76 989.93 Assets Depreciation on Disallowed E 2.88 4.57 5.32 5.38 5.53 23.68 Capitalized Assets Depreciation on runway recarpeting work proposed F 2.91 2.38 6.71 16.75 20.86 49.61 to be considered as part of Operating Expenditure Depreciation on RAB as G=[(A- proposed by the Authority B)*C]-D-E- 347.05 367.60 445.17 475.89 522.47 2,158.18 in CP 35 F Add: Change in Depreciation due to revision in average rate of Depreciation pursuant to H 1.11 0.30 0.74 1.85 5.87 9.87 changes in capital expenditure allowance for the Second Control Period in Tariff Order Less: Aeronautical portion of additional Depreciation claimed by MIAL based on I 35.16 35.16 technical opinion obtained by it. Aeronautical Depreciation as decided by the J=G+H-I 348.16 367.90 445.91 477.74 493.18 2,132.89 Authority Table 34: Depreciation on HRAB of MIAL as proposed by the Authority for True up of the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Aeronautical assets A 5,622.53 7,333.64 7,729.15 8,328.98 8,936.64 37,950.95 Consultation Paper No. 08/2024-25 Page 59 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Depreciation on B 348.16 367.90 445.91 477.74 493.18 2,132.89 aeronautical assets Average rate of Depreciation on C=B/A 6.19% 5.02% 5.77% 5.74% 5.52% aeronautical assets % HRAB D 966.03 966.03 966.03 966.03 966.03 Depreciation on HRAB E=D*C 59.82 48.46 55.73 55.41 53.31 272.74 AUTHORITY'S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF DEPRECIATION ON RAB FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 3.4.5 The Authority notes that MIAL has submitted revised depreciation values for the Second Control Period, reflecting changes due to change in asset allocation of aeronautical assets as per the TDSAT Order dated 6th October 2023. 3.4.6 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 3.1.4 of this Consultation Paper, except for complying with the directions of the Authorized Investigation Agency as explained in para 3.1.6. 3.4.7 The Authority has computed the adjustment to depreciation as mentioned in para 3.1.6 as below: Table 35: Aeronautical Depreciation as computed by the Authority for the Second Control Period on the assets identified in the SCN of AIA (Rs. in crores) Second Control Period - Depreciation Total Particulars FY15 FY16 FY17 FY18 FY19 Depreciation Aeronautical 5.98 7.23 8.50 10.14 10.66 42.51 Depreciation 3.4.8 Consequently, the Authority proposes to adjust the depreciation as mentioned in para 3.1.6 as given below: Table 36: Depreciation on RAB of MIAL as proposed by the Authority for True up of the Second Control Period as part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Aeronautical Depreciation as decided by the Authority in the A 348.16 367.90 445.91 477.74 493.18 2,132.89 Third Control Period Order (Refer Table 33) Aeronautical Depreciation on the non-existent assets identified B 5.98 7.23 8.50 10.14 10.66 42.51 in SCN (Refer Table 35) Final Aeronautical Depreciation C = A-B 342.17 360.68 437.40 467.60 482.52 2,090.38 proposed as true-up Table 37: Depreciation on HRAB of MIAL as proposed by the Authority for True up of the Second Control Period as part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Aeronautical assets A 5,622.53 7,333.64 7,729.15 8,328.98 8,936.64 37,950.95 Consultation Paper No. 08/2024-25 Page 60 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Depreciation on aeronautical assets (Refer B 342.17 360.68 437.40 467.60 482.52 2,090.38 Table 36) Average rate of Depreciation on C=B/A 6.09% 4.92% 5.66% 5.61% 5.40% aeronautical assets % HRAB D 966.03 966.03 966.03 966.03 966.03 Depreciation on HRAB E=D*C 58.79 47.51 54.67 54.23 52.16 267.36 3.4.9 In view of the above, the Authority proposes to consider the Depreciation as per Table 36 and Table 37 for RAB and HRAB respectively for the True up of the Second Control Period. 3.5 TRUE UP OF FAIR RATE OF RETURN MIAL'S SUBMISSION ON THE TRUE UP OF FAIR RATE OF RETURN FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.5.1 MIAL has computed the revised Fair Rate of Return (FROR) after incorporating the following changes based on the TDSAT order: (i) Profits have been recalculated by excluding the depreciation amount related to the re-carpeting of Runway/Apron/Taxiway. The Authority had previously reduced the expenditure from the Regulatory Asset Base (RAB) and increased O&M expenditure but had not adjusted the depreciation in the Profit and Loss computations. This error, which impacted the gearing ratio and FRoR computation, has now been rectified. (ii) TDSAT directed that accumulated reserves and surplus must not be adjusted against subsequent losses when determining the Fair Rate of Return (FRoR). The Authority’s earlier approach of protecting only the paid-up Equity Share Capital rather than the Net Worth (which includes equity share capital and accumulated reserves and surplus) for FRoR calculation has been set aside. (iii) As per the TDSAT order, a return equivalent to the Cost of Equity has been allowed on Refundable Security Deposits, replacing the Authority’s earlier provision of only allowing the Cost of Debt on RSD. 3.5.2 The revised FRoR for the Second Control Period, after implementing these changes, has been calculated at 12.22%, compared to the earlier 11.80% computed for the Second Control Period as part of true-up of the Second Control Period in the Third Control Period Order. RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.5.3 The FRoR decided by the Authority during the true up of the Second Control Period in the Third Control Period Order is as follows: Table 38: FRoR decided by the Authority for the True up for the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Opening Cumulative Debt Do 5,450.98 5,900.98 6,256.13 6,616.60 6,515.99 Closing Cumulative Debt Dn 5,900.98 6,256.13 6,616.60 6,515.99 6,273.60 Consultation Paper No. 08/2024-25 Page 61 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY15 FY16 FY17 FY18 FY19 D = Avg (Do, Average Cumulative Debt 5,675.98 6,078.55 6,436.37 6,566.29 6,394.79 Dn) Opening Equity Eo 2,255.32 1,888.93 1,803.90 1,644.24 1,524.76 Closing Equity En 1,888.93 1,803.90 1,644.24 1,524.76 1,586.10 E = Avg (Eo, Average Equity 2,072.12 1,846.41 1,724.07 1,584.50 1,555.43 En) Opening RSD RSDo 100.00 100.00 166.00 169.14 366.47 Closing RSD RSDn 100.00 166.00 169.14 366.47 366.47 R = Avg (RSDo, Average RSD 100.00 133.00 167.57 267.81 366.47 RSDn) Average Capital C=D+E+R 7,848.10 8,057.97 8,328.01 8,418.60 8,316.70 Employed Average Debt % D%=D/C 72.32% 75.44% 77.29% 78.00% 76.89% Average Net Worth % NW%= E/C 26.40% 22.91% 20.70% 18.82% 18.70% Average RSD % R%= R/C 1.27% 1.65% 2.01% 3.18% 4.41% Cost of Capital (%) Weighted Avg Gearing % 76.04% Weighted Avg Equity % 21.44% Weighted Avg RSD % 2.53% Cost of Debt % 11.64% 11.21% 10.93% 9.99% 9.66% Weighted Average Cost of 10.66% Debt % Cost of Equity % 16.00% Cost of RSD % 10.66% FRoR % 11.80% AUTHORITY'S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF FAIR RATE OF RETURN OF MIAL FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 3.5.4 The Authority examined the revised submission by MIAL for the Fair Rate of Return and noted that changes made by MIAL in FRoR is as per the TDSAT judgements. 3.5.5 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 3.1.4 of this Consultation Paper. 3.5.6 Consequently, the Authority proposes to consider the FROR for the true up of the Second Control Period as approved by the Authority in the Third Control Period Order as per Table 38 above. 3.6 TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND ‘S’ FACTOR MIAL'S SUBMISSION ON THE TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND ‘S’ FACTOR FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.6.1 All adjustments claimed by MIAL in the true-up of the First Control Period (Refer para 2.4.2) are claimed for the Second Control Period as well. 3.6.2 In line with the true up of the First Control Period, MIAL has excluded “Other Income” and “Revenue from Existing Assets” in the calculation of ‘S’ factor and has also not considered Annual Fee to AAI as an expense in the computation of ‘S’ factor. Therefore, the revised non-aeronautical revenues and ‘S’ Factor for the true up of the Second Control Period is as below: Consultation Paper No. 08/2024-25 Page 62 of 349TRUE UP OF THE SECOND CONTROL PERIOD Table 39: Computation of revised ‘S’ factor for the true up of the Second Control Period in line with TDSAT Judgement as submitted by MIAL (Rs. in crores) Particulars Ref FY15 FY16 FY17 FY18 FY19 Total Non-Aero Revenues including other income A 1,020.13 1,246.58 1,433.47 1,682.00 1,832.23 7,214.41 (AERA Order No 64/2020-21 Table 78) Other Income (AERA Order No 64/2020-21 B 29.74 81.47 71.36 111.92 91.70 386.18 Table 78) Revenues from existing assets (As per C 487.58 520.96 493.28 548.80 542.64 2,593.26 independent Study) Revenues from RSA D=A-B-C 502.80 644.16 868.84 1,021.28 1,197.89 4,234.97 Annual Fee on above E=38.7%*D 194.58 249.29 336.24 395.23 463.58 1,638.93 Revenues from RSA after F=D-E 308.22 394.87 532.60 626.04 734.31 2,596.03 annual fee paid to AAI ‘S’ Factor G=30%*F 92.47 118.46 159.78 187.81 220.29 778.81 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.6.3 Non-Aeronautical Revenue as considered by Authority during the true up of the Second Control Period in the Third Control Period Order is given below: Table 40: Non-Aeronautical Revenue as decided by the Authority for the True up of the Second Control Period in the Third Control Period Order (Rs. in crores) Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Retail Licences 721.37 825.53 993.12 1,162.55 1,329.13 5,031.70 Rent & Services 145.54 188.93 222.62 242.67 315.19 1,114.95 Cargo Revenue 237.57 272.76 299.05 363.14 309.73 1,482.25 Less: Revenue from Other than Revenue Share Assets (i.e. Non- (10.00) (13.92) (23.53) (29.40) (37.02) (113.88) Transfer Assets) Less: FTC Revenues (103.78) (106.65) (127.53) (167.02) (174.17) (679.15) Less: ITP Revenues (0.32) (1.53) (1.60) (1.85) (2.34) (7.64) Other Income 29.74 81.47 71.36 111.92 91.70 386.19 Total Non-aeronautical Revenue for the 2nd Control 1,020.12 1,246.58 1,433.47 1,682.01 1,832.23 7,214.41 Period AUTHORITY'S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF REVENUE FROM REVENUE SHARE ASSETS AND ‘S’ FACTOR FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 3.6.4 The Authority noted that MIAL in line with the submission made in the First Control Period has submitted the revised values for the Revenue Share Assets and ‘S’ Factor based the Hon’ble TDSAT Order AERA Appeal No. 9 of 2016 dated 6th October 2023 for the Second Control Period. Consultation Paper No. 08/2024-25 Page 63 of 349TRUE UP OF THE SECOND CONTROL PERIOD 3.6.5 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same as mentioned in para 3.1.4 of this Consultation Paper. 3.6.6 Consequently, the Authority proposes the following: (i) Not to exclude Other Income (ii) Not to reduce the revenue from existing assets. (iii) Not to exclude the annual fee paid to AAI from the calculation of the ‘S’ factor. 3.6.7 Accordingly, the Authority proposes the ‘S’ factor for the true up of the Second Control Period as per the table below: Table 41: ‘S’ factor as proposed by the Authority for the true up of the Second Control Period (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Non-aeronautical Revenue A 1,020.12 1,246.58 1,433.47 1,682.01 1,832.23 7,214.41 for the 2nd Control Period ‘S’ Factor B=30%*A 306.04 373.97 430.04 504.60 549.67 2,164.32 3.6.8 In view of the above, the Authority proposes to consider the same ‘S’ Factor as considered in the Third Control Period Tariff Order (as mentioned in Table 41 above) for the True up of the Second Control Period. 3.7 TRUE UP OF THE AERONAUTICAL TAX MIAL'S SUBMISSION ON THE TRUE UP OF AERONAUTICAL TAX FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.7.1 Impact of Hon’ble Supreme Court Judgment dated 11th July 2022, and the Hon’ble TDSAT Judgment dated 6th October 2023 on Aeronautical Tax for the Second Control Period are shown below: Table 42: Computation of ‘T’ for true up of the Second Control Period in line with SC and TDSAT Judgement as submitted by MIAL (Rs. in crores) Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Aero Revenues (AERA Order 1,376.20 1,512.03 1,640.18 1,786.55 1,896.19 8,211.14 No 64/2020-21 Table 83) Add: ‘S’ Factor (30% of RSA) 92.47 118.46 159.78 187.81 220.29 778.81 Total Revenues 1,468.66 1,630.49 1,799.96 1,974.36 2,116.48 8,989.95 Less: Aero Expenses (AERA 772.89 589.42 721.49 862.74 839.30 3,785.84 Order No 64/2020-21 Table 83) Less: Aero Depreciation 349.54 369.23 447.51 479.44 495.02 2,140.74 Less: Interest Cost* 427.44 460.41 499.24 435.52 395.00 2,217.61 Net Profit (81.21) 211.43 131.73 196.66 387.15 845.77 Profit for Tax Computation (81.21) 211.43 131.73 196.66 387.15 845.77 Tax Rate 33.99% 34.61% 34.61% 34.61% 34.94% Aero Taxation - 73.17 45.59 68.06 135.29 322.11 *Interest Cost = RAB X Gearing X Cost of Debt RECAP OF DECISION TAKEN BY THE AUTHORITY THE REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.7.2 The Authority vide its decision in para 3.10.8, for computation of the true up of tax of the Second Control Period in the Third Control Period Order has: Consultation Paper No. 08/2024-25 Page 64 of 349TRUE UP OF THE SECOND CONTROL PERIOD (i) Considered the annual fees paid to AAI as an expense. (ii) Not considered the ‘S’ factor for revenue computation. (iii) Considered Depreciation as per the Income Tax Act. (iv) Calculated Interest expense at the actual interest paid on the existing debt. 3.7.3 Based on the above, the tax for the true up of the Second Control Period in the Third Control Period Order was decided as “NIL” by the Authority. AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF AERONAUTICAL TAX OF MIAL FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 3.7.4 The Authority examined the submissions made by MIAL for the true up of aeronautical taxes and noted that MIAL has considered ‘S’ Factor as part of the revenue base (based on the Hon’ble TDSAT order dated 21st July 2023) and has not considered Annual Fee to AAI as an expense for the purpose of determination of Aeronautical PBT and consequently the Aeronautical taxes (based on the Hon’ble Supreme Court order dated 11th July 2022). 3.7.5 With regards to the submissions made by MIAL, the Authority consistent with the decisions taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 3.1.4 of this Consultation Paper with regards to the treatment of ‘S’ Factor for computation of Aeronautical Taxes. 3.7.6 As mentioned in para 3.1.5 of this Consultation Paper, the Authority proposes to implement the Hon’ble Supreme Court judgement dated 11th July 2022, and recompute the Aeronautical Taxes based on the regulatory accounts by not treating the Annual Fee pertaining to Aeronautical Revenues as an expense towards True Up of the Second Control Period as per the directions contained in the judgement of Hon’ble Supreme Court. Table 43: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the Second Control Period (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Average RAB A 4,640.61 5,342.80 6,129.58 5,961.56 5,741.07 Gearing Ratio (D/E) B 73.63% 77.12% 79.01% 79.78% 78.96% Interest Rate C 11.64% 11.21% 10.93% 9.99% 9.67% Aeronautical Interest D=A*B*C 397.74 461.82 529.59 475.22 438.37 2,302.74 Expense 3.7.7 Based on the above, the Aeronautical Taxes proposed to be considered by the Authority for true up for the Second Control Period is as follows: Table 44: Computation of ‘T’ for the True up of the Second Control Period as proposed by the Authority (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Aeronautical Revenue A 1,376.20 1,512.03 1,640.18 1,786.55 1,896.19 8,211.14 Aeronautical Operating B 820.12 592.10 721.53 858.69 788.92 3,781.37 Expenses EBITDA C=A-B 556.07 919.92 918.65 927.86 1,107.27 4,429.78 Consultation Paper No. 08/2024-25 Page 65 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Depreciation (Refer Table D 342.17 360.68 437.40 467.60 482.52 2,090.38 36) Interest Expense- E 397.74 461.82 529.59 475.22 438.37 2,302.74 Aeronautical Profit Before Tax F=C-D-E (183.84) 97.42 (48.33) (14.96) 186.37 36.65 Opening Accumulated G - (183.84) (86.43) (134.76) (149.72) (Losses) Current (Losses) H (183.84) - (48.33) (14.96) - Current Year Set Off I - 97.42 - - 186.37 Closing Accumulated Profit J=G+H+I (183.84) (86.43) (134.76) (149.72) 36.65 / (Losses) Profit for Taxation K - - - - 36.65 36.65 Tax Rate L 33.99% 34.61% 34.61% 34.61% 34.94% Tax M=K*L - - - - 12.81 12.81 Note: As per the order of the Hon’ble Supreme Court, the Annual Fee has not been treated as an expense (Refer para 3.1.5). 3.7.8 In view of the above, the Authority proposes to consider the Aeronautical Taxes as per Table 44 for the True up of the Second Control Period. 3.8 TRUE UP OF OPERATING EXPENSES MIAL’S SUBMISSION ON TRUE UP OF OPERATING EXPENSES FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.8.1 MIAL submitted the following Operating Expenses for the true up of the Second Control Period. Table 45: O&M expenses for the Second Control Period submitted by MIAL for True up (Rs. in crores) Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Employee Cost 123.73 135.39 169.28 173.34 180.73 782.46 Utilities Expenses 102.23 97.90 91.77 108.46 106.58 506.94 Repair & Maintenance Expense 76.82 72.44 91.43 105.80 129.87 476.36 Rents, Rates & Taxes 24.28 3.30 27.68 42.20 69.78 167.24 Advertisement Expense 5.58 6.51 7.84 7.13 7.68 34.74 Administrative Expenses 48.34 74.86 74.15 59.92 72.36 329.63 AOA Fees 6.69 7.28 7.29 7.34 8.01 36.61 Insurance Expense 4.25 3.82 3.25 3.43 4.08 18.83 Consumable stores 3.96 6.57 8.12 5.79 6.31 30.74 Operating cost 84.44 106.53 118.60 124.95 131.30 565.83 Bad debts written off - - - - 0.05 0.05 Working Capital Interest 5.21 8.93 15.29 5.40 7.74 42.57 Financing charges 7.38 21.35 23.70 28.33 33.49 114.26 VRS exp 17.31 16.75 16.61 16.24 15.97 82.88 Loss on scrapping of Asset 242.22 1.94 1.45 - - 245.61 Provision for PSF (exp) 9.75 - 13.59 - - 23.33 Exchange gain and loss 10.71 12.30 (16.12) 0.20 0.35 7.43 CWIP – Written off - 13.54 - - - 13.54 Runway Recarpeting - - 67.56 168.46 59.20 295.21 Carrying cost on runway recarpeting - - - 5.77 5.81 11.58 Consultation Paper No. 08/2024-25 Page 66 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Total Aeronautical Operating 772.89 589.42 721.49 862.74 839.30 3,785.84 Expenditure 3.8.2 MIAL has also submitted additional expenses for the change in Asset Allocation Ratio’s as part of the Second Control Period True up based on the Hon’ble TDSAT Order as mentioned in para 1.8.1. Table 46: Additional Operating expenses for the Second Control Period submitted by MIAL for True up (Rs. in crores) Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Total Corporate Overheads Cost as per the 47.80 108.69 58.47 74.35 96.91 386.22 Authority Change in asset allocation 0.20% 0.20% 0.20% 0.20% 0.20% Change in Corporate Overheads (A) 0.10 0.22 0.12 0.15 0.19 0.77 Total Airport Common Cost as per the 52.75 57.86 63.36 77.36 142.23 393.56 Authority Change in area asset allocation 0.13% 0.13% 0.13% 0.13% 0.13% Change in Airport Common Cost (B) 0.07 0.08 0.08 0.10 0.18 0.51 Aeronautical Operating Expenditure 772.89 589.42 721.49 862.74 839.30 3,785.84 (C) (From Grand Total of Table 45) Operating Expenditure for Target 773.06 589.71 721.69 862.99 839.68 3,787.12 Revenue (A+B+C) RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE TRUE UP FOR THE SECOND CONTROL PERIOD AT THE TIME OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 3.8.3 The Authority decided to consider the aeronautical operating and maintenance expenditure for the True up of the Second Control Period in the Third Control Period Order as per the following table: Table 47: Year wise Adjusted Aeronautical Operating and Maintenance Expenses as decided by the Authority for True up of the Second Control Period in the Third Control Period (Rs. in crores) Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Employee Cost 123.73 135.39 169.28 173.34 181.01 782.75 Utilities Expenses 102.23 97.90 91.77 110.32 108.87 511.10 Repair & Maintenance Expense 76.82 72.44 91.43 105.80 129.87 476.36 Rents, Rates & Taxes 24.28 3.30 27.68 42.20 69.73 167.19 Advertisement Expense 5.58 6.51 7.84 7.13 7.68 34.74 Administrative Expenses 48.34 74.86 74.15 59.79 73.53 330.67 AOA Fees 6.69 7.29 7.30 7.34 8.01 36.63 Insurance Expense 4.25 3.81 3.25 3.43 4.08 18.81 Consumable stores 3.96 6.57 8.12 5.79 6.31 30.74 Operating cost 84.44 106.53 118.60 124.95 131.30 565.83 Bad debts written off - - - - 0.05 0.05 Working Capital Interest 5.21 25.47 15.29 5.29 7.72 58.98 Financing charges 7.38 7.48 23.74 28.34 33.49 100.43 VRS exp 17.31 16.75 16.61 16.23 15.97 82.87 Loss on scrapping of Asset 242.22 1.94 1.45 - -1.02 244.59 Provision for PSF (exp) 9.75 - 13.59 - - 23.33 Exchange gain and loss 10.71 12.30 (16.12) 0.20 0.35 7.43 CWIP – Written off - 13.54 - - - 13.54 Runway Recarpeting 47.22 - 67.56 168.46 11.98 295.22 Consultation Paper No. 08/2024-25 Page 67 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars FY 15 FY 16 FY 17 FY 18 FY 19 Total Total Aeronautical Operating 820.12 592.10 721.53 858.69 788.92 3,781.37 Expenditure AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF OPERATING EXPENSES OF MIAL FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 3.8.4 The Authority noted that MIAL has submitted the revised values for the Operating Expenses based on the Hon’ble TDSAT Order AERA Appeal No. 9 of 2016 dated 6th October 2023 for the Second Control Period. 3.8.5 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, as mentioned in para 3.1.4 of this Consultation Paper. 3.8.6 Therefore, the Authority proposes to consider the Operating Expenses for the true up of the Second Control Period as decided in the Third Control Period Order i.e. as per Table 47. 3.9 TRUE UP OF TARGET REVENUE FOR THE SECOND CONTROL PERIOD MIAL’S SUBMISSION REGARDING TRUE UP OF TARGET REVENUE FOR THE SECOND CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 3.9.1 Based on above mentioned changes in various building blocks, revised ARR of the Second Control Period is as below: Table 48: Computation of Target Revenue of the Second Control Period after incorporating changes in various Building Blocks (Rs. in crores) Particulars FY15 FY16 FY17 FY18 FY19 Total Return on RAB and HRAB 731.23 780.88 846.61 817.88 782.98 3,959.59 Add: Operating Expenses 773.06 589.71 721.69 862.99 839.68 3,787.12 Add: Depreciation 409.36 417.69 503.24 534.85 548.33 2,413.47 Add: Aeronautical Taxes - 73.17 45.59 68.06 135.29 322.11 Less:30% Revenue Share Assets (92.47) (118.46) (159.78) (187.81) (220.29) (778.81) True up for the 1st Control 1,357.53 - - - - 1,357.53 Period Target Revenue 3,178.71 1,742.99 1,957.35 2,095.97 2,085.99 11,061.01 Actual Aero Revenues 1,376.20 1,512.03 1,640.18 1,786.55 1,896.19 8,211.14 True-up/true-down 1,802.51 230.97 317.17 309.41 189.80 2,849.86 Carrying Cost @ 12.22% 12.22% 12.22% 12.22% 12.22% 12.22% Years 5.00 4.00 3.00 2.00 1.00 True-up with carrying cost 3,207.43 366.24 448.18 389.63 212.99 4,624.47 AUTHORITY’S RECAP REGARDING THE TARGET REVENUE FOR THE SECOND CONTROL PERIOD AS PER THE TARIFF ORDER FOR THE THIRD CONTROL PERIOD 3.9.2 The Authority’s computation of true up of the Second Control Period in the Third Control Period Order is as follows: Table 49: True up of the Target Revenue for the Second Control Period as decided in the Third Control Period Order (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Landing charges A 648.17 691.95 940.09 1,335.23 1,391.30 5,006.75 Parking charges B 28.66 29.36 47.85 63.75 65.53 235.15 Consultation Paper No. 08/2024-25 Page 68 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Aerobridge C 42.10 45.92 71.67 87.14 89.56 336.39 UDF D 547.25 629.77 442.26 119.58 160.42 1,899.28 Unauthorised Overstay E 5.92 6.85 9.18 11.98 12.87 46.80 Aircraft refuelling F 103.78 106.65 127.53 167.02 174.17 679.14 Into Plane Revenue G 0.32 1.53 1.60 1.85 2.34 7.65 H = Sum Total Aero Revenue 1,376.20 1,512.03 1,640.18 1,786.55 1,896.19 8,211.15 (A:G) Target Revenue Average RAB I 4,634.61 5,329.57 6,107.86 5,929.70 5,698.56 Average HRAB J 726.63 672.49 620.39 564.82 510.46 Total K = I + J 5,361.24 6,002.06 6,728.25 6,494.52 6,209.01 FroR L 11.80% 11.80% 11.80% 11.80% 11.80% Return on RAB M = K x L 632.68 708.30 794.00 766.41 732.72 3,634.11 OM – Efficient Operation & N 820.12 592.10 721.53 858.69 788.92 3,781.37 Maintenance Cost Total Depreciation O 407.98 416.37 501.64 533.15 546.49 2,405.63 Tax P - - - - - - Non-Aeronautical Q 1,020.12 1,246.58 1,433.47 1,682.01 1,832.23 7,214.41 Revenue Share of Revenue from R = Q x 306.04 373.98 430.04 504.60 549.65 2,164.31 Revenue Share Assets 30% True up for the 1st S (485.20) - - - - (485.20) Control Period T = M + Target Revenue N + O + P 1,069.54 1,342.80 1,587.12 1,653.66 1,518.48 7,171.60 – R + S Under Recovery / U = T – H (306.65) (169.23) (53.06) (132.89) (377.70) (1,039.54) (Over Recovery) Under Recovery / (Over Recovery) on V (535.64) (264.40) (74.15) (166.11) (422.27) (1,462.58) PV Terms True Up for the Second Control S = (1,462.58) (1,462.58) Period as on Cum(V) 01.04.2019 AUTHORITY 'S EXAMINATION REGARDING THE TRUE UP OF TARGET REVENUE FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 3.9.3 The Authority has computed the Return on RAB as mentioned in para 3.1.6. Table 50: Change in Return on RAB for the Second Control Period as proposed by the Authority based on the SCN (Rs. in crores) Second Control Period - Return on RAB Particulars Ref To tal FY 15 FY 16 FY 17 FY 18 FY 19 WDV as on A 105.49 100.25 137.98 161.80 205.18 previous year WDV as on current B 100.25 137.98 161.80 205.18 194.52 year Return on RAB C = (Average(A,B))* 12.14 14.06 17.69 21.65 23.58 89.11 Impact as per SCN 11.80% (FRoR) Consultation Paper No. 08/2024-25 Page 69 of 349TRUE UP OF THE SECOND CONTROL PERIOD 3.9.4 Since the Authority is not considering the changes proposed by MIAL except for complying with the Hon’ble Supreme Court Order on Aeronautical Taxation and the directions of the Authorized Investigation Agency as explained in para 3.1.6, the Authority proposes to consider the True Up of the Second Control Period only to that extent. 3.9.5 The True Up of the Target Revenue for the Second Control Period as proposed by the Authority is as per Table 51 below: Table 51: True up of Target Revenue as proposed by the Authority for the True up of the Second Control Period (Rs. in crores) Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Landing charges A 648.17 691.95 940.09 1,335.23 1,391.30 5,006.75 Parking charges B 28.66 29.36 47.85 63.75 65.53 235.15 Aerobridge C 42.10 45.92 71.67 87.14 89.56 336.39 UDF D 547.25 629.77 442.26 119.58 160.42 1,899.28 Unauthorised Overstay E 5.92 6.85 9.18 11.98 12.87 46.80 Aircraft refuelling F 103.78 106.65 127.53 167.02 174.17 679.14 Into Plane Revenue G 0.32 1.53 1.60 1.85 2.34 7.65 H = Sum Total Aero Revenue 1,376.20 1,512.03 1,640.18 1,786.55 1,896.19 8,211.14 (A:G) Target Revenue - Average RAB I 4,640.61 5,342.80 6,129.58 5,961.56 5,741.07 Average HRAB J 727.14 673.99 622.91 568.46 515.26 Total K = I + J 5,367.75 6,016.79 6,752.49 6,530.02 6,256.34 FRoR L 11.80% 11.80% 11.80% 11.80% 11.80% Return on RAB M = K x L 633.39 709.98 796.79 770.54 738.25 3,648.96 Impact on Return on RAB due to non- N (As per 12.14 14.06 17.69 21.65 23.58 89.11 existent assets as per Table 50) SCN Net Return on RAB O = M-N 621.26 695.93 779.11 748.89 714.67 3,559.85 OM - Efficient Operation & P 820.12 592.10 721.53 858.69 788.92 3,781.37 Maintenance Cost Total Depreciation (Refer Table 36 and Q 400.96 408.19 492.07 521.84 534.68 2,357.75 Table 37) Tax R - - - - 12.81 12.81 Non-Aeronautical S 1,020.13 1,246.58 1,433.47 1,682.00 1,832.23 7,214.41 Revenue Share of Revenue from T = S x 306.04 373.98 430.04 504.60 549.67 2,164.32 Revenue Share Assets 30% True up for the 1st U (291.78) - - - - (291.78) Control Period V = O + P Target Revenue + Q + R - 1,244.53 1,322.24 1,562.66 1,624.82 1,501.41 7,255.67 T + U W (at Future Value Factor FRoR of 1.75 1.56 1.40 1.25 1.12 11.80%) Under Recovery / X = V – H (131.67) (189.78) (77.52) (161.73) (394.78) (955.48) (Over Recovery) Consultation Paper No. 08/2024-25 Page 70 of 349TRUE UP OF THE SECOND CONTROL PERIOD Particulars Ref FY 15 FY 16 FY 17 FY 18 FY 19 Total Under Recovery / (Over Recovery) on Y (229.58) (296.50) (108.32) (202.15) (441.36) PV Terms as on 01.04.2019 True Up for the Second Control Z = (1,278 .32) Period as on Sum(Y) 01.04.2019 3.9.6 Based on the above, the over-recovery of Rs. 1,278.32 Crores for the Second Control Period as determined by the Authority is proposed to be considered for true up in the subsequent Control Periods as part of tariff determination process for the Fourth Control Period. 3.10 AUTHORITY PROPOSALS REGARDING TRUE UP FOR THE SECOND CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its examination, the Authority proposes the following regarding True up for the Second Control Period: 3.10.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 3.10.2 To consider the Aeronautical Taxes as per Table 44. 3.10.3 To consider the impact on depreciation as per Table 35 and Return on RAB as per Table 50 as identified by the Self-Contained Note (SCN) issued by the Authorized Investigation Agency (AIA). 3.10.4 To True up the Target Revenue for the Second Control Period as per the Table 51. 3.10.5 To consider the over-recovery of Rs. 1,278.32 crores during the True up for the Second Control Period as part of the tariff determination exercise for the Fourth Control Period. Consultation Paper No. 08/2024-25 Page 71 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4. TRUE UP OF THE THIRD CONTROL PERIOD 4.1 BACKGROUND 4.1.1 The Authority had determined the tariff for the Third Control Period as per the Third Control Period Order setting out various regulatory building blocks after evaluating all of MIAL’s and other stakeholder comments considering MIAL’s submission on the impact on account of the COVID Pandemic. MIAL has filed an appeal against the Order which was adjudicated by a TDSAT Order in AERA Appeal/2/2021 dated 6th Oct 2023. As stated in Para 1.9.5 the order is sub-judice and therefore not considered in the current tariff computation. 4.1.2 MIAL, in the current MYTP has submitted True up workings for the Third Control Period (April 1st, 2019, to March 31st, 2024) after giving effect to the judicial orders as explained in Section’s 1.7, 1.8 and 1.9. 4.2 ISSUES RAISED BY MIAL PERTAINING TO TRUE UP FOR THE THIRD CONTROL PERIOD 4.2.1 MIAL has submitted true-up workings relating to the Third Control Period in the MYTP covering the items set out below: (i) Traffic (ii) Aeronautical Revenues (iii) Regulatory Asset Base (iv) Hypothetical Regulatory Asset Base (v) Depreciation (vi) Fair Rate of Return (vii) Operating and Maintenance Expenses (viii) Non-Aeronautical Revenue (ix) Aeronautical Taxation 4.2.2 MIAL has raised these issues after factoring in the decisions of the Hon’ble TDSAT on various issues and of the Hon’ble Supreme Court judgement on the issue of corporate tax pertaining to earnings from Aeronautical services. 4.2.3 For each of the issues raised by MIAL, the Authority examined the True up for the Third Control Period, issue wise, in the following manner in the following paragraphs: (i) Recording and understanding MIAL's submission in the MYTP; (ii) Recap of decision taken by the Authority for these matters at the time of tariff determination for the Third Control Period; (iii) Examination and proposal regarding these matters as part of tariff determination for the current control period. 4.2.4 The Authority has considered the following documents for determining true up of the Third Control Period: (i) Tariff Order for the Third Control Period (Order No. 64/2020-21) dated 27th February 2021. (ii) Multi Year Tariff Proposal (MYTP) submitted by MIAL for the Fourth Control Period. (iii) AERA Guidelines and Orders. (iv) The Authority’s decisions on the Regulatory Building Blocks as per previously issued Tariff Orders of other airports. Consultation Paper No. 08/2024-25 Page 72 of 349TRUE UP OF THE THIRD CONTROL PERIOD (v) Hon’ble Supreme Court and Hon’ble TDSAT orders. 4.2.5 In view of the Authority’s analysis provided in para from 1.9.2 to 1.9.5, with regards to the issues raised by the Authority in the Civil Appeal against the judgements of the Hon’ble TDSAT, the Authority is of the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court. 4.2.6 Further, the Authority proposes implementing the Hon’ble Supreme Court judgement dated 11th July 2022 and recomputing the Aeronautical Taxes based on the regulatory accounts. This will involve not treating the Annual Fee associated with Aeronautical Revenues as an expense while computing the Aeronautical Taxes. 4.2.7 Additionally, as explained in Para 3.1.6, the Authority has dealt with this issue identified in SCN under the True up of Regulatory Asset Base (Detailed in section 4.4). 4.3 TRUE UP OF TRAFFIC MIAL'S SUBMISSION ON TRUE UP OF TRAFFIC FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.3.1 MIAL submitted the following ATM and Passenger Traffic for the True up of the Third Control Period in MYTP: Table 52: MIAL's submission for True up of Traffic for the Third Control Period in MYTP for the Fourth Control Period Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Passenger Traffic Domestic (in millions) 33.57 9.84 18.56 32.72 38.50 133.19 International (in millions) 12.36 1.22 3.18 11.21 14.32 42.28 Total 45.92 11.05 21.75 43.92 52.82 175.47 ATM Traffic Domestic (in millions) 228.68 91.81 150.75 221.86 241.81 934.90 International (in millions) 75.99 23.18 34.90 67.78 83.15 285.01 Total 304.68 114.98 185.65 289.64 324.96 1,219.91 RECAP OF DECISION TAKEN BY THE AUTHORITY AS PART OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.3.2 The Authority had decided to “true-up the Traffic based on the actual numbers during the Third Control Period, at the time of tariff determination for the Fourth Control Period.” The traffic considered in the Third Control Period tariff computation is set out below: Table 53: Passenger/ATM Traffic considered by the Authority during tariff determination for the Third Control Period Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Passenger Traffic Domestic (in millions) 33.60 9.30 20.59 33.50 36.30 133.29 International (in millions) 12.30 1.20 7.75 12.40 13.60 47.25 Total 45.90 10.50 28.34 45.90 49.90 180.54 ATM Traffic Consultation Paper No. 08/2024-25 Page 73 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Domestic (in millions) 229.00 87.00 140.00 229.00 247.00 932.00 International (in millions) 76.00 22.00 48.00 76.00 84.00 306.00 Total 305.00 109.00 188.00 305.00 331.00 1,238.00 AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF TRAFFIC FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 4.3.3 The Authority compared the Traffic as proposed by MIAL for the Third Control Period with the actual Traffic as published in the AAI website. The comparative analysis is provided below: Table 54: Comparison of Traffic as per MIAL submission and as per data in AAI website for the Third Control Period Particulars As per Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Domestic Passengers (in MIAL A 33.57 9.84 18.56 32.72 38.50 133.19 Mn) Domestic passengers (in AAI B 33.52 9.84 18.56 32.72 38.50 133.14 Mn) Difference (in Mn) C= A-B 0.05 - - (0.01) - 0.04 % Difference D = C/B 0% 0% 0% 0% 0% 0% International Passengers (in MIAL E 12.36 1.22 3.18 11.21 14.32 42.28 Mn) International Passengers (in AAI F 12.36 1.22 3.18 11.21 14.32 42.28 Mn) Difference (in Mn) G = E-F - - - - 0.00 0.00 % Difference H = G/F 0% 0% 0% 0% 0% 0% Domestic ATMs (in '000) MIAL I 228.68 91.81 150.75 221.86 241.81 934.90 Domestic ATMs (in '000) AAI J 228.68 92.20 151.28 222.61 241.81 936.58 Difference (in '000) K= I-J - (0.39) (0.54) (0.74) - (1.68) % Difference L = K/J 0% 0% 0% 0% 0% -1% International ATM's (in MIAL M 75.99 23.18 34.90 67.78 83.15 285.01 '000) International ATM's (in AAI N 75.99 23.67 34.90 67.78 83.17 285.52 '000) Difference (in '000) O =M-N - (0.49) - - (0.02) (0.51) % Difference P=O/N 0% (2%) 0% 0% 0% (2%) 4.3.4 Based on the above table, the Authority observes that the difference between the actual Traffic as submitted by MIAL and the Traffic published in AAI's website is insignificant 4.3.5 The Authority analyzed the traffic submission of MIAL as per the MYTP towards true up for the Third Control Period and has noted the following: (i) The trend of actual recovery of Passenger traffic in the Third Control Period is broadly aligned with the traffic projections made by the Authority at the time of tariff determination for the Third Control Period. (ii) The variation in Pax Traffic between the traffic projected by the Authority at the time of tariff determination for the Third Control Period and the actual as submitted by MIAL is as shown in the table below: Consultation Paper No. 08/2024-25 Page 74 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 55: Variance between Traffic approved in the Third Control Period Order with the Traffic submitted by MIAL for true-up for the Tariff Determination of the Fourth Control Period FY ending March 31 (MPPA) FY 20 FY 21 FY 22 FY 23 FY 24 Total Total PAX Traffic Projected by the Authority 45.90 10.50 28.34 45.90 49.90 180.54 (A) Total PAX Traffic as per MIAL (B) 45.92 11.05 21.75 43.92 52.82 175.47 Variation in Traffic – Increase/(Decrease) 0.02 0.55 (5.59) (1.98) 2.92 (5.07) C = (B-A) Variation in Traffic in % – Increase/(Decrease) 0.04% 5.24% (19.72%) (4.31%) 5.85% (2.81%) D = (C/A)*100 • FY 2021-22 and FY 2022-23 were years of COVID-19 recovery, a global black swan event that disrupted economies and industries worldwide, with the aviation sector being among the hardest hit. The recovery during this period was slower than anticipated, with traffic volumes below projections due to the prolonged impact of the pandemic on travel restrictions, travel demand and passenger confidence. These years were especially affected by the disruptions in international traffic, with countries imposing strict entry and exit regulations, quarantine protocols, and temporary bans on international flights due to which the movement of passengers across borders were restricted. • Gradually, the traffic is slowly recovering to pre-pandemic levels, with the overall traffic of the Third Control Period lower than projections by only 5.07 MPPA (i.e., -2.81%). 4.3.6 The Authority notes that there is only a 2.8% variance in the overall traffic approved in the Third Control Period Order with the Traffic submitted by MIAL for true-up. 4.3.7 Based on the above, the Authority proposes to consider the Actual Traffic for the True Up of the Third Control Period as per Table 52. 4.4 TRUE UP OF REGULATORY ASSET BASE MIAL'S SUBMISSION ON TRUE UP OF REGULATORY ASSET BASE FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.4.1 MIAL, as part of the True Up of Capital Expenditure for the Third Control Period, has submitted the Capital Expenditure (CAPEX), Asset Allocation, Aeronautical Depreciation and the final RAB and HRAB. 4.4.2 MIAL has submitted that, although the execution of capex was delayed in wake of the impact of Covid-19 and change in ownership of CSMIA, the pace of execution picked up in FY 2023-24. All the critical projects required for safety, security and passenger convenience were executed in a cost-effective and time-bound manner. Table 56: MIAL’s submission on CAPEX incurred during the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Total Capitalization as per Books 518.80 3.50 160.50 212.90 847.70 1,743.40 Aero Capitalization 332.05 3.32 150.74 181.51 777.52 1,445.14 Less: Runway Recarpeting Works considered as OPEX for comparison 137.89 0.60 3.80 - 115.00 256.90 purposes Comparable Aero Capitalization 194.55 2.72 146.94 181.51 662.52 1,188.24 Consultation Paper No. 08/2024-25 Page 75 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 57: MIAL’s submission on proportionate capitalization and RAB for the true up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening RAB 5,896.98 5,654.95 5,238.96 4,858.18 4,696.13 + Addition based on proportionate 270.90 75.22 28.15 250.88 295.33 920.48 capitalization* - Depreciation 512.94 491.21 408.93 412.93 404.08 2,230.09 Closing RAB 5,654.95 5,238.96 4,858.18 4,696.13 4,587.37 (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Capitalization during the year* 194.55 3.32 150.74 181.51 777.52 1,307.64 Less: Carried forward to next year 74.54 2.64 125.22 55.86 538.05 Proportionate Capitalization during 120.01 0.68 25.51 125.65 239.47 the year Add: Brought forward balance to be 150.89 74.54 2.64 125.22 55.86 added to RAB Total Capitalization during the year 270.90 75.22 28.15 250.88 295.33 920.48 *Difference between Rs. 1,188.24 in Table 56 and Rs. 1,307.64 is due to - 0.60 3.80 - 115.00 119.40 Runway Recarpeting included as part of RAB by MIAL RECAP OF DECISION TAKEN BY THE AUTHORITY AS PART OF THE TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.4.3 The RAB as computed by the Authority in the Third Control Period Order is given below: Table 58: RAB as approved by the Authority in the Third Control Period Tariff Order (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening RAB A 5,698.56 5,789.44 5,901.90 5,860.07 5,641.51 Less: B 512.62 512.77 451.92 441.69 418.40 2,337.40 Depreciation Add: Capitalization C 452.61 625.23 410.09 223.13 219.36 1,930.42* during the year Add: Brought D 150.89 - - - - 150.89 forward projects Closing RAB E = A-B+C+D 5,789.44 5,901.90 5,860.07 5,641.51 5,442.47 Average RAB E=Avg(A+D,E) 5,819.45 5,845.67 5,880.98 5,750.79 5,541.99 *Of the total capex of Rs. 1,938.88 Crores approved by the Authority for the Third Control Period, Rs. 1,930.42 Crores pertains to aeronautical CAPEX, which has been included as part of the Regulatory Asset Base. 4.4.4 The Authority decided to True up the aeronautical additions to Regulatory Asset Base for the Third Control Period and resultant asset allocation as per the actual additions on the basis of a certificate from the statutory auditors certifying the line-by-line classification of additions into aeronautical and non-aeronautical based on the broad framework provided by the independent study undertaken for the Second Control Period. 4.4.5 The Authority also decided to re-adjust the project cost by 1% and the applicable carrying cost in the Target Revenue at the time of Tariff Determination for the Fourth Control Period in case of non-completion of the project as per the proposed timelines due reasons which are unjustified. Consultation Paper No. 08/2024-25 Page 76 of 349TRUE UP OF THE THIRD CONTROL PERIOD AUTHORITY’S EXAMINATION OF THE ISSUES RAISED BY MIAL REGARDING THE TRUE UP OF REGULATORY ASSET BASE FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD: 4.4.6 The Authority, through its Independent Consultant / Aviation Expert, has undertaken a detailed review of MIAL’s Capex true-up submissions to trace the changes between the costs approved in the Third Control Period Order and the actual amounts incurred by MIAL. The Authority sought detailed submissions from MIAL on the actual Capex incurred, along with supporting documentation and reconciliation of these figures with the Fixed Asset Register. 4.4.7 The Authority, through its independent consultant, reconciled the Capex true-up submissions line item-wise with the FAR while examining the quantum and narration of each line item in the FAR to verify their alignment with the approved scope of works and project descriptions. The Authority has also reviewed few purchase orders, work orders, contracts, and invoices to verify the costs incurred. Additionally, few physical verifications of assets were conducted during site visits. 4.4.8 The Authority notes that an amount of Rs 1,938.88 Crores was approved as capex in the Third Control Period and observes that MIAL has claimed Rs. 1,443.40 Crores as true-up of the Third Control Period as part of its MYTP submission of the Fourth Control Period. 4.4.9 The Authority, through its Independent Consultant / Aviation Expert analyzed the variance between the approved Capex in the Third Control Period and the actual expenditure incurred by MIAL by taking into consideration of the following: (i) Identifying cost escalations or reductions in completed projects and seeking justifications for the same. (ii) Scrutinizing unapproved projects to evaluate their necessity, relevance, and alignment with the airport’s operational requirements. (iii) Projects that have not been executed and reasons thereof. 4.4.10 The Authority, through its Independent Consultant / Aviation Expert, segregated MIAL’s Capex submissions into the following categories: A. Projects executed with a scope change / cost overrun: Projects where the actual expenditure incurred exceeded the approved cost estimates (Table 60). B. Projects executed at a lower cost: Projects completed at a cost lower than the approved estimates (Table 61). C. Projects carried forward to the next control period: Projects either not completed fully and carried forwarded to next control period or entirely carried forwarded to next control period (Table 62). D. Projects executed which were approved on an incurrence basis: Projects where costs were approved by the Authority on an incurrence basis during the Third Control Period (Table 63). E. Projects approved in the Third Control Period but dropped by MIAL: Projects that were approved during the Third Control Period but were subsequently not executed (Table 65). F. Additional projects executed in the Third Control Period: Projects undertaken during the Third Control Period which were not part of the proposal during the Third Control Period Order (Table 64). Consultation Paper No. 08/2024-25 Page 77 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 59: Summary of variance in capex approved by the Authority in the Third Control Period and Capex incurred by MIAL in the Third Control Period as submitted in the MYTP of the Fourth Control Period (Rs. in crores) Particulars Amount Amounts approved in 3rd CP 1,938.27* Add: Change in scope / cost overruns (refer Table 60) 184.68 Less: Projects completed at a lower cost (refer Table 61) (240.33) Less: Project Carry forward to next control period (refer Table 62) (734.69) Add: Projects approved on incurrence basis executed (refer Table 63) 21.02 Add: Additional projects executed (refer Table 64) 144.28 Less: Projects not undertaken (refer Table 65) (126.56) Cost proposed by MIAL for true-up (refer 1,186.67 Table 67) Add: Runway recarpeting works (refer Table 66) 256.73 Total 1,443.40 Note: MIAL in its MYTP has submitted an aero capitalization of Rs 1,445.14 Crores but has only submitted project-wise details for Rs 1,443.40 Crores. Accordingly, Authority proposes to only consider Rs 1,443.40 Crores for the purpose of true-up. *MIAL has only submitted a project wise CAPEX of Rs. 1,938.27 Crs against the Rs. 1,938.88 approved in the Third Control Period Tariff Order. Accordingly, the Authority proposes to only consider Rs. 1,938,27 Crores for the purpose of comparison given in this table. Authority’s examination of the matters regarding true up of cost overrun projects for the Third Control Period as part of Tariff Determination for the Fourth Control Period A. Projects executed with a scope change / cost overrun: 4.4.11 The Authority, through its independent consultant observed that there was a change in scope/cost overrun over the cost approved in the Third Control Period in the following projects of MIAL. Justifications were sought for each line item, and MIAL’s responses are provided below: Table 60: Projects executed with a scope change (Rs. in crores) Project Cost Variance approved in Actual (Cost Project Name Reason for variance provided by MIAL 3rd CP Order Cost (B) Overrun) (A) (A-B) Projects where variance is > Rs. 5 Crores The initial plan was to replace VDGS only in VDGS for Charlie, Charlie and Delta aprons. However, due to Delta & Romeo 10.00 61.92 (51.92) aircraft safety considerations, MIAL has Apron at T1 & T2 installed it in all aprons. Ground Service In the 3rd CP, the CWIP as of March 2019 was Equipment 22.58 34.45 (11.87) omitted to be included in the cost estimate Common Infra submitted by MIAL. In the Third Control Period, only the Tech refresh of replacement of 600 CCTVs were proposed. CCTV at T1, T2 16.23 31.28 (15.05) However, on account of security Customs & CA considerations, MIAL has replaced 1400 CCTVs. With the intention to increase passenger Additional SBD 6.10 25.08 (18.98) throughput inside the Terminal, MIAL has machines introduced 25 SBDs during the Third Control Consultation Paper No. 08/2024-25 Page 78 of 349TRUE UP OF THE THIRD CONTROL PERIOD Project Cost Variance approved in Actual (Cost Project Name Reason for variance provided by MIAL 3rd CP Order Cost (B) Overrun) (A) (A-B) Period. This was done for passenger convenience and operational efficiency. MIAL had introduced various EVs at airside and landside basis MOCA’s direction to be net Vehicles 1.03 21.62 (20.59) zero by 2029. A total of 104 vehicles were purchased. In the 3rd CP, the CWIP as of March 2019 was HLC Revamp 7.78 16.50 (8.72) omitted to be included in the cost estimate submitted by MIAL. To comply with the BCAS circular which Dual View X-BIS - 5.93 13.81 (7.88) mandated installation of dual view XBIS ILBS machines. GA Terminal The scope was enhanced considering the (Refurbishment/Ex 2.12 7.97 (5.85) increasing trend of using bigger Charter flights pansion) at GA Terminal. Explosive Trace On safety considerations, 36 out of life ETDs 1.84 7.41 (5.57) Detectors - ILBS were replaced in 3rd CP. In 3rd CP, the Authority had inadvertently Tech refresh of allowed Rs. 0.08 Crores instead of Rs. 8 0.08 6.26 (6.18) Desktops/ Laptops Crores. Refer Appendix 10 (Pg no. 400) in the 3rd CP Order Projects costing > Rs. 10 Crores where variance is < Rs. 5 Crores CPWD office which was located in Airport land has been relocated in Kane Nagar to make CPWD Offices - 33.00 33.38 (0.38) land available for airport development. Kanenagar Accordingly, Authority allowed in the 3rd CP. Deviation is within limits. Reconstruction 26.64 27.75 (1.11) Deviation within limits. Taxiway K3 Relocation of MT This work was taken up to comply DGCA CAR Building Civil requirement. Excess cost incurred due to a 24.29 27.73 (3.44) stores to address delay in execution of work on account of Non-Compliance Covid-19. Rapid Exit Taxiway W5 from Runway 13.94 15.28 (1.34) Deviation within limits. 32 and connecting Taxiway K3 Tech refresh of Wi- Fi, VOIP & 10.31 11.13 (0.82) Deviation within limits. Switches Tech refresh of 10.01 11.06 (1.05) Deviation within limits. FIDS – T2 Other Projects Comprising 47 projects, most of which were completed in the second half of the Control Miscellaneous 53.43 77.33 (23.90) Period due to Covid-19, which resulted in cost escalations. Total 245.31 429.99 (184.68) Consultation Paper No. 08/2024-25 Page 79 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.4.12 The Authority had perused the reasons provided by MIAL in detail. Since the justifications were reasonable, the Authority proposes to consider Rs. 429.99 Crores as a part of the true-up of the Third Control Period’s CAPEX. B. Projects Completed at a Lower Cost 4.4.13 The Authority, through its independent consultant, observed the following projects were completed at a cost lower than the cost approved in the Third Control Period. Reasons for variance were sought and MIAL’s responses are provided below: Table 61: Projects completed at a lower cost (Rs. in crores) Project Cost Variance Actual approved in (Cost Project Reason for variance Project Name Cost 3rd CP Order Saving) Status provided by MIAL (B) (A) (A-B) Reconstruction of Reduction in the scope of work 100.51 34.80 65.71 Completed Apron "A"& TWY L has resulted in cost reduction. Miscellaneous - Engineering & 66.90 62.28 4.62 Completed Deviation within limits. Maintenance Reconstruction of 52.44 51.37 1.07 Completed Deviation within limits. TWY K1 Construction of Cost reduction due to 40.39 30.84 9.55 Completed Parking Stand V3 negotiated rates. Procurement of Disabled aircraft 26.10 14.74 11.36 Completed Due to lower procurement cost. Removal kit Tech refresh of Cost reductions due to 23.52 11.03 12.49 Completed AODB infra negotiated rates. Cyber security setup Cost reduction via vendor & Tech refresh of NW 19.28 18.54 0.74 Completed negotiation and review. infra Reconstruction of The work has been executed as Access Road - T1 & 18.89 11.83 7.06 Completed per site requirement with a T2 & Elevated Road scope reduction. Reconstruction of Junction of TWY N 16.23 13.25 2.98 Completed Deviation within limits. and K1 Refurbishment of 15.28 11.57 3.71 Completed Deviation within limits. BHS-T2 Check in Counter and 13.62 1.09 12.53 Completed Reduction in scope. conveyors belts Ceremonial Lounge Cost reduction due to 13.36 8.64 4.72 Completed (Refurbishment) negotiated rates. Upgradation of 10.03 10.03 - Completed - Runway 32 beginning Comprising 128 projects where Other Projects- Less there was cost saving due to 187.35 83.57 103.78 Completed than 10 crores negotiated rates / reduction in scope. Total 603.90 363.57 240.33 Completed Consultation Paper No. 08/2024-25 Page 80 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.4.14 The Authority has noted that several projects have been completed at a cost lower than approved, due to rate negotiations and reduction in scope, and accordingly proposes to consider Rs. 363.57 Crores as a part the true-up of the Third Control Period’s CAPEX. C. Projects Carried Forwarded 4.4.15 The Authority, through its independent consultant observed the following projects have been either fully or partially carried forward to the Fourth Control Period. Reasons were sought and MIAL’s responses are provided below: Table 62: Projects Carried Forwarded to the Next Control Period (Rs. in crores) Project cost Variance Actual approved in [Unutilized / Project MIAL’s justification for Project Name Cost 3rd CP Order (Overutilized)] Status projects carried forward (B) (A) (A-B) Construction of eastern taxiway (Between E5 Carried Could not be taken up since 263.56 - 263.56 and E7) parallel to forward the land was not available. RWY 14-32 Around 6 machines CT EDS Machine- T1 Carried 153.04 63.56 89.48 provided in 3rd CP and & T2 forward balance carried forward. Reconstruction of Only part of Tier 2 is Carried parking stand of Apron 71.20 49.64 21.56 constructed, as TWY W6 forward C is used for operations. Part scope executed. Integrated security Carried BCAS has not finalized the check - T2 (Civil, 62.24 29.26 32.98 forward specifications for Body ATRS, Body Scanner) Scanners. Land was not available for Construction of Carried 51.44 1.86 49.58 construction of Parking Parking Stand V2 forward Stand V2. The existing fire station is located in the area of the proposed Taxiway M extension. This work is scheduled to commence Carried immediately prior to the New Fire Station 42.00 - 42.00 forward construction of Taxiway M extension. Since the work relating to Taxiway M extension was not taken up in 3rd CP, this was also deferred. 1 CFT was purchased, Procurement of Crash Carried other CFT’s were not 35.78 5.81 29.97 Fire Tenders (CFT’s) forward purchased since their replacements were not due. Work Partly done in the Reconstruction of Carried 34.52 22.28 12.24 Third Control Period as per Perimeter Road forward site requirement. Consultation Paper No. 08/2024-25 Page 81 of 349TRUE UP OF THE THIRD CONTROL PERIOD Project cost Variance Actual approved in [Unutilized / Project MIAL’s justification for Project Name Cost 3rd CP Order (Overutilized)] Status projects carried forward (B) (A) (A-B) Work was not taken up Construction of RET Carried 29.16 - 29.16 since land was not E6 forward available. Part of the work (related to Fire Compliance for Carried 27.47 9.83 17.64 essential items) has been T1B forward completed. Partial work was executed Installation of standby and the balance to be Carried cable for AGL of RWY 23.51 15.57 7.94 undertaken along with forward 14-32 balance recarpeting of Runway 14-32. Not taken up in the Third Control Period due to Reconstruction of Carried 22.18 - 22.18 operational constraint. Taxiway U forward Proposed to be taken up in the Fourth Control Period. Replacement of Carried Only the required trolley 16.96 3.30 13.66 Trolleys forward replacement were done. Multiple locations (in Reconstruction of Carried patches) completed as per 16.51 10.93 5.58 Compound wall forward the requirement and site conditions. Civil and Electrical Replacement of ILS Carried Infrastructure works by 15.46 6.51 8.95 RWY 09 & 14 forward MIAL completed in July 2024. Could not be taken up since Reconstruction of GA Carried 15.11 - 15.11 GA Hangars were not Apron forward removed. Tech refresh of Video Carried Partially executed and 14.23 1.35 12.88 Wall forward balance carried forward. Reconstruction of drain Carried Execution level approval 11.09 - 11.09 along TWY K1 forward from DGCA was required. Comprising 11 Projects which were only partially Other Projects- Less Carried 57.04 7.91 49.13 undertaken based on than 10 crores forward requirement and balance carried forward. Carried Total 962.50 227.81 734.69 forward 4.4.16 From the above table, the Authority notes that some projects could not be completed due to non-availability of land, and MIAL submitted that only essential CAPEX was undertaken during the Covid affected periods. Consultation Paper No. 08/2024-25 Page 82 of 349TRUE UP OF THE THIRD CONTROL PERIOD Consequently, MIAL has carried forwarded these projects to the Fourth Control Period. The Authority proposes considering Rs. 227.81 Crores as a part of the true-up of the Third Control Period’s CAPEX. D. Projects On Incurrence Basis 4.4.17 The Authority, through its independent consultant observes that the following projects which were approved on an incurrence basis in the Third Control Period were executed by MIAL, as shown below: Table 63: Projects which were approved in the Third Control Period Order on an incurrence basis (Rs. in crores) Project Cost Project Project approved in 3rd CP Actual Cost MIAL's Submission Name Reference Order NAD A small portion of barricading work was Colony Buildings / undertaken in 3rd CP and the balance is 250.85 0.77 including Improvements carried forward to the Fourth Control IDC Period (Refer Project E-2) A portion of the work (like Departure Gate Scanner Bar Code, E-gates and face Plant and Digi Yatra 51.60 20.25 pods) were undertaken in 3rd CP and the Machinery balance is carried forward to the Fourth Control Period (Refer Project 2I-4) Total 302.45 21.02 4.4.18 The Authority has reviewed MIAL’s submissions and notes that these are ongoing projects. Accordingly, the Authority proposes to allow Rs. 21.02 crores as True up for the Third Control Period. E. Additional projects undertaken in the Third Control Period 4.4.19 The Authority, through its independent consultant observes that the following projects carried out by MIAL in the Third Control Period were not approved as part of the Third Control Period Order. The Authority has sought detailed justifications for each of the additional projects, and MIAL’s submissions are given below: Table 64: Additional projects undertaken in the Third Control Period (Rs. in crores) Capitalization Actual Project Name MIAL's Submission Date Cost As per the observations from DGCA Inspection conducted in March 2021, sinking and rolling resistance Airside-RWY strip - data for Basic Strip was not maintained as per regulatory CBR Upgradation - 30-11-2023 36.22 requirements. Hence, MIAL has undertaken a project to RWY 14-32 enhance CBR (California Bearing Ratio) of RWY 14-32 to comply with DGCA CAR (Civil Aviation Requirement) 4B1 requirements. As pointed out by DGCA in their inspection in March 2021, Runway 09 RESA CBR was to be maintained as per Runway End Safety CAR. Accordingly, MIAL has upgraded the CBR value of 31-03-2024 26.92 Area Development RESA -09 to comply with DGCA CAR 4B1. The same is included by MIAL in the action report submitted to DGCA as well. PIDS are advanced sensors designed to alert security authorities to any attempts at intrusions through the PIDS Installation 31-03-2024 18.85 airport's boundary walls. BCAS AVSEC Circular No. 03/2022, dated June 6, 2022, mandated the installation of Consultation Paper No. 08/2024-25 Page 83 of 349TRUE UP OF THE THIRD CONTROL PERIOD Capitalization Actual Project Name MIAL's Submission Date Cost Perimeter Intrusion Detection Systems (PIDS) at all hyper-sensitive airports by December 31, 2023. The old arrival forecourt required a facelift due to worn- down vitrified tiles, causing frequent maintenance costs of approximately Rs. 2 lakhs per month, and water T1B Forecourt accumulation during monsoons, which inconvenienced 30-11-2023 14.32 Development passengers. MIAL undertook this redevelopment to address these issues, ensuring smooth movement for passengers and their greeters while enhancing overall usability and convenience. The project, approved by the Authority as part of the tariff determination under 3rd CP (referenced as Passenger Pax Flow Management 31-03-2024 8.97 Queue Analytics in Annexure 6 (Pg no 387) of the 3rd CP System Order), was mistakenly omitted from the total capital expenditure list. MIAL has constructed 4 MLD STP in AAI Colony since it is proposed to connect the nearby Air India hangars to Landside-4 MLD STP- this STP. Additionally, during the redevelopment of T1, sewerage treatment- 30-11-2023 8.87 temporary administrative offices for approximately 200 IAD colony people will be housed in porta cabins at this location, with the STP catering to the development's needs. Accordingly, t his project was undertaken in the 3rd CP. As part of the airport's development, MIAL constructed a grand Shivaji Smarak, including a statue of Chhatrapati Shivaji Maharaj, at the CSMIA entrance. Responding to Feature Wall - local representatives' requests and respecting community Chhatrapati Shivaji 01-09-2023 6.08 sentiments, MIAL initiated a project to add a Maratha- Statue style architectural backdrop to strengthen ties with the local community, key stakeholders in the airport's development. This facility was constructed to serve as a centralized hub for storing airside and landside maintenance materials, Central Store Utility 30-09-2023 3.97 including consumables like chemicals, fuels, and spares Building essential for daily airport operations. It also houses an underground fire tank for cargo fire services. The project is a mandatory operational requirement ARFF- involving the replacement of current vehicles, along with Customized/Fabricated 30-11-2023 2.72 an additional Rs. 1.88 Crore allocated to extend the Ambulance lifespan of Crash Fire Tenders (CFT) by five years. Projects include ESG Projects, T1- Meeting / Training Other Projects less room revamp, Airside Driving Simulator System, SAP IT Various 17.34 than 2.50 crores related projects, Vile Parle Police Station, ARFF - Forward Mobile Command Post Vehicle. Total 144.28 4.4.20 The Authority, through its Independent Consultant and Aviation Expert examined each of these projects and noted MIAL’s reasoning for the need and necessity for each of the projects. Since the justifications given by MIAL were found reasonable, relating to the safety and security of the Airport, the Authority proposes to include Rs. 144.28 Crores as part of the Third Control Period Capital Expenditure. Consultation Paper No. 08/2024-25 Page 84 of 349TRUE UP OF THE THIRD CONTROL PERIOD F. Projects not undertaken 4.4.21 The Authority, through its independent consultant observed that some of the projects proposed as part of the Third Control Period Order were dropped by MIAL. The Authority sought reasons and clarifications for each of those projects and MIALs submission is given in the table below: Table 65: Projects not undertaken (Rs. in crores) Project Cost approved Project Name MIAL's Submission in 3rd CP Order Engineered Material Arrestor System 35.00 The project was dropped due to cost considerations. (EMAS) The project, brought forward from an earlier control period, MET Farm 11.20 was dropped by MIAL as the MET team agreed to invest this cost. The project was dropped by MIAL as it pertains to Electronic Flight Strips 10.44 compliance requirements, which will be addressed by AAI for ATC Tower through the ATC automation project. Construction of utility The project was dropped as the K1 Taxiway work is duct bank below TWY 5.50 completed, and the utility duct bank will be relocated K1 elsewhere. Tech refresh of AODB 5.31 Dropped because of duplication. storage and backup Business Process 3.28 Dropped due to phasing out of technology Manager SITC of new 1300TR centrifugal chiller for T2 3.27 Dropped as this is not required anymore. chiller plant. Provision of new Constant current 3.25 Dropped due to phasing out of technology Regulator at CSMIA Other Projects include Replacement of Marking Machine, Other projects less than 49.31 Airport Sweeper, SITC of Cooling Tower, etc., which were Rs. 3 Crores each dropped by MIAL. Total 126.56 4.4.22 The Authority observes that certain projects approved in the Third Control Period Order were dropped by MIAL, while many others were deferred to the next control period. The Authority draws reference to its decision in the Third Control Period Order as explained in Para 5.5.3: “…From the above table, it is noted that MIAL had a trend of proposing capex in one control period and postponing the same to future Control Periods without execution. This leads to services not being available to passengers who have paid up. This trend does not further instill any confidence in the Authority that large projects which were proposed in earlier Control Periods nor the large new projects proposed by MIAL would be completed on time. In order to discourage this trend, the Authority proposed to introduce a re- adjustment of cost clause whereby if the project is committed to be completed by MIAL in each control period and if the same was not completed, then the ARR / target revenue shall be reduced by 1% as re- adjustment of the total project cost…” However, the Authority notes that a portion of the Third Control Period was impacted by the unprecedented COVID-19 pandemic, which created widespread uncertainty and disruptions across the globe. In view of Consultation Paper No. 08/2024-25 Page 85 of 349TRUE UP OF THE THIRD CONTROL PERIOD the black swan event which has affected almost all aspects of the supply chain and commercial activities, the Authority is not evaluating this 1% cost re-adjustment as a penal measure during this control period. 4.4.23 The Authority notes that MIAL has included runway recarpeting works of Rs. 256.73 Crores as part of Aero- Capitalization. The project-wise details are provided in the table below: Table 66: Cost incurred by MIAL in the Third Control Period towards Runway Recarpeting Works (Rs. in crores) Particulars Actual Cost Runway 14/32 Re-carpeting 115.03 Runway 9/27 Re-carpeting 141.70 Total 256.73 4.4.24 On review of the submission made by MIAL, the Authority, through its Aviation Expert conducted an independent comparison of the Pavement Classification Number values before and after the recarpeting exercise using information available on the AAI website. 4.4.25 Since there is no increase in PCN value was noted after the recarpeting exercise, the Authority proposes to consider the runway recarpeting expenses under Operation and Maintenance Expenses in the current control period as detailed in Authority’s Order 35 in the matter of ‘Determination of Useful Life of Airport Assets’. Accordingly, the Authority has examined the same under Operation and Maintenance Expenses (Refer 4.9.96). 4.4.26 Based on the above discussions, the CAPEX for the Third Control Period as submitted by MIAL in MYTP for the Fourth Control Period viz-a-viz the CAPEX proposed to be considered by the Authority is presented below: Table 67: Comparison of cost submitted by MIAL and proposed by Authority for the True-up of the Third Control Period (Rs. in crores) Particulars Cost submitted by MIAL Cost proposed by Authority Projects as per Table 60 429.99 429.99 Projects as per Table 61 363.57 363.57 Projects as per Table 62 227.81 227.81 Projects approved on Incurrence Basis as per 21.02 21.02 Table 63 Additional Projects undertaken as per Table 64 144.28 144.28 Runway recarpeting works as per Table 66 256.73 - Total 1,443.40 1,186.67 4.4.27 In view of the above, the Authority proposes to consider the CAPEX incurred of Rs. 1,186.67 as per Table 67 for the True up of the Third Control Period. Treatment of assets identified in the Self-Contained Note of AIA: 4.4.28 In addition to the adjusting the assets mentioned in the Self-Contained Note (SCN) of AIA in the Second Control Period, as stated in paras 3.1.6 and 4.2.7, based on the SCN, there are assets to be adjusted in the Third Control Period also. Consultation Paper No. 08/2024-25 Page 86 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 68: Value of the Assets identified to be adjusted from the Third Control Period additions in the Self-Contained Note extracted from the FAR of MIAL as on 1st April 2024 (Rs. in crores) Cost as per SCN Order Dated Cost extracted Difference (C=B- Particulars 30.08.2023 (A) from FAR (B) A) Assets identified as non-existent 174.34 174.34 - * A list of these assets is enclosed in Annexure 1 (Refer 16.1). 4.4.29 In compliance to para 12 of SCN dated 30.08.2023 referred at above para 3.1.6, the Authority, through its Independent Consultant, has computed and accordingly adjusted the impact on account of the excess amount of tariff resulting from Depreciation (Refer Table 84) and Return on RAB (Refer Table 149) and as reflected in the Target Revenue (Table 150). 4.4.30 The Authority notes that all these assets amounting to Rs. 174.34 Crores as mentioned in the above table are categorized as non-aeronautical assets, therefore the Authority proposes not to give any effect to them. 4.5 TRUE UP OF ASSET ALLOCATION RECAP OF AUTHORITY’S DECISION ON ASSET ALLOCATION IN THE THIRD CONTROL PERIOD ORDER 4.5.1 In the determination of RAB, a factor of relevance is the allocation of CAPEX into Aeronautical and Non- aeronautical assets. The exercise of allocation of assets into Aero and Non-Aero takes into consideration multiple factors like nature, location and use, revenues derived, area occupied etc. 4.5.2 The Authority had commissioned an independent study on the Allocation of Assets (“Independent Study on Asset Allocation”) at the time of tariff determination for the Third Control Period, and same was carried out by R. Subramaniam and Company LLP. The key methodology, principles, and salient features of this asset allocation study are outlined below: (i) The Independent Study on Asset Allocation segregated the total assets of the airport under the following categories: a) Aeronautical: All assets that are exclusively utilized for activities covered under Schedule 5 of the OMDA are tagged as “Aeronautical” assets. Examples - Runways, drainage and culverts, taxiways, aprons and bays, airfield ground lighting, etc. b) Non-aeronautical: All assets that are exclusively utilized for non-aeronautical activities covered under Schedule 6 of OMDA are treated as non-aeronautical assets. Examples - Development of the Retail Stores, Cargo assets, Metro Station Development. c) In-Admissible Asset: Upfront Fee paid to AAI (Rs. 154 crores) and retirement compensation payable (Rs. 317 Crores) to AAI employees in line with OMDA have been capitalized as Intangible assets. The upfront fee capitalized is not an admissible asset as it is not a pass-through item in the State Support Agreement. Retirement Compensation is allowed by the Authority on a payment basis therefore not considered as part of the asset base. d) Common Assets: Assets which are not directly allocable to either Aeronautical or Non-aeronautical are classified as Mixed assets/Common assets and allocated based on the nature of assets, location, usage and criteria defined under relevant documents. Common assets are further classified into the following categories: Consultation Paper No. 08/2024-25 Page 87 of 349TRUE UP OF THE THIRD CONTROL PERIOD • Common assets related to Terminal operations are apportioned between Aeronautical and Non-aeronautical activities based on the Weighted Average Terminal Floor Space ratio. • Common assets that are situated outside the Terminal building are apportioned between Aeronautical and Non-aeronautical activities based on the adjusted Gross Fixed Assets ratio. (ii) In 2019, MIAL appointed IRS (Indian Register of Shipping) to verify and certify the areas utilized for commercial use in Terminal 1, Terminal 2 and GA Terminal of CSMIA and to provide a Survey Report, wherever applicable. As part of this survey, a physical verification was carried out by the Independent Consultant to assess both occupied and vacant spaces in all three terminals. Based on this verification, the proportion of space designated entirely for non-aeronautical activities was determined. Further, common areas were allocated using the overall aero: non-aero ratios. 4.5.3 Based on the approach mentioned in Para 4.5.2, the following ratios have been derived by MIAL: Table 69: Cumulative Summary of Area occupied / to be occupied for Commercial (Non- Aeronautical) Use in Terminal 2, Terminal 1 and GA Terminal Sections & Areas in T2 T1 GA Total Square Meters L1 L2 L3 L4 Total Food & Beverage 805 786 2,645 2,200 6,436 2,004 - 8,440 (F&B) Vacant (F&B) - 23 162 336 521 111 15 647 Seating (F&B) 152 689 888 713 2,442 280 - 2,722 Hotel & Lounges 3,326 3,486 4,185 2,582 13,579 724 - 14,303 Retail - 427 3,323 1,898 5,648 1,845 12 7,505 Passenger Services including Forex, ATMs, 293 155 113 467 1,028 106 - 1,134 Car Rentals, Hotel Reservations, etc Promotional - - - 203 36 239 47 - 286 Advertising Airlines offices & 15,136 540 6,518 490 22,684 5,269 15 27,968 Storage Duty Free - 2,005 435 4,012 6,452 - - 6,452 Total - Commercial Area including seating 19,712 8,111 18,472 12,734 59,029 10,386 42 69,457 areas Total Area of Terminal 4,48,432 1,03,131 890 5,52,453 % of Non- 13.16% 10.07% 4.70% 12.57% Aeronautical Area % of Aeronautical 86.84% 89.93% 95.30% 87.43% Area MIAL’S SUBMISSION ON ASSET ALLOCATION FOR THE THIRD CONTROL PERIOD 4.5.4 MIAL, for the purpose of allocation of assets between Aeronautical and Non-Aeronautical for the Third Control Period, followed the methodology adopted in this Independent Study on Asset Allocation. MIAL has also submitted an independent auditor’s certificate on the statement of additions to fixed assets made for each financial year of the Third Control Period, classifying it into aeronautical and non-aeronautical assets. Consultation Paper No. 08/2024-25 Page 88 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.5.5 The following table presents the summary of the asset allocation used by MIAL for allocating the assets for the Third Control Period: Table 70: Asset Allocation used by MIAL for the assets capitalized in the Third Control Period Cost Centre Cost Driver for Segregation of common expenses Aeronautical Assets 100% Aero Non-Aeronautical Assets 100% Non-Aero Common Assets situated inside the Terminal Weighted Average terminal Floor Area Ratio of the Terminal Building 87.43% Common Assets situated outside the Gross Aeronautical Fixed Assets Ratio based on Closing Gross Terminal Building Block of FY24 – 83.40% Table 71: Ratio of Gross Fixed Assets (also used allocation of Common Assets outside the Terminal Building) for the Third Control Period as computed by MIAL 3rd CP – Asset Allocation 2019-20 2020-21 2021-22 2022-23 2023-24 Asset Allocation (%) 82.83% 82.83% 82.94% 82.94% 83.40% AUTHORITY’S EXAMINATION ON THE ASSET ALLOCATION SUBMITTED BY MIAL FOR THE TRUE UP OF THE THIRD CONTROL PERIOD 4.5.6 The Authority notes that instead of adopting the values for each year as per the above Table 71, MIAL has used the FY 2023-24 allocation percentage of 83.40% commonly for all the five years for the purpose of computing depreciation in the true up of the Third Control Period. This has been further discussed in Para 4.7.5 on aeronautical depreciation. 4.5.7 The Authority, through its Independent Consultant, obtained the Fixed Asset Register from MIAL and reviewed the assets capitalized during the Third Control Period. This evaluation included considerations of the asset description, location revenue streams and the intended use. 4.5.8 The Authority analyzed the asset allocation used on a case-to-case basis and proposes revising the allocation ratios for the following assets: Table 72: Revised allocation ratios proposed by the Authority for assets capitalized in the Third Control Period Actual Allocation Allocation Asset Asset description Cost in used by proposed by Reason for Change Category FAR MIAL Authority T1B Forecourt Common - Common - MIAL has submitted that Building 12.36 Development-Civil 83.40% 73.30% ~597 sq.m. out of total forecourt area of 2,236 sq.m. is occupied by Non-Aero Concessionaires. T1B Forecourt Plant & Common - Common - 3.59 Accordingly, this gross floor Development-MEP Machinery 83.40% 73.30% ratio of 73.30% has been considered as aero. GA Terminal Common - Refurbishment and Building 3.51 Non-Aero 95.30% As per Part I of Schedule 6 of related works OMDA, General Aviation is GA Terminal Electrical Common - non-aeronautical Refurbishment and 0.74 Non-Aero Installations 95.30% related works Consultation Paper No. 08/2024-25 Page 89 of 349TRUE UP OF THE THIRD CONTROL PERIOD Actual Allocation Allocation Asset Asset description Cost in used by proposed by Reason for Change Category FAR MIAL Authority and Equipment GA Terminal Furniture and Common - Refurbishment and 2.55 Non-Aero Fixtures 95.3% related works GA Terminal Office Common - Refurbishment and 0.74 Non-Aero Equipment 95.3% related works GA Terminal Plant & Common - Refurbishment and 0.55 Non-Aero Machinery 95.3% related works Integrated SHA-Civil- Common - T2 Since it is a part of Terminal Building 2.82 Aero T2 86.84% Building Runways, Runway intersection Considered as Taxiways & 2.18 Aero No increase in PCN value overlay works Aero Opex Aprons Server for WIFI System Servers & Common - T2 0.82 Aero Since it is a part of Terminal at MCR 2 Terminal 2 Network 86.84% Server for WIFI System Servers & Common - T1 0.71 Aero Since it is a part of Terminal at MCR 1 Terminal 1 Network 89.93% Re-branding signages at Furniture and Common Common – Since it is both within and 0.69 Various Location Fixture 87.43% Overall outside Terminal T2 Content Servers & Common - T2 Since it is a part of Terminal Management Software 0.45 Aero Network 86.84% Building E-Gate & ATRS System T1B-LED fixtures Electrical Common - T1 Since it is a part of Terminal Departure SHA and 0.44 Aero installations 89.93% Building Arrival area T1 Refurbishment of Common - T1 Since it is a part of Terminal Washroom Building 0.42 Aero 89.93% Building SHA/T1/AOG Office Common - T1 Since it is a part of Terminal T1-Air Curtains 0.31 Aero Equipment’s 89.93% Building Customized Lamination Computer - Common – Since it is a part of Terminal Roll for Biometric 0.30 Aero End Users Overall Building System Baby Stroller cum Furniture and Common - T2 Since it is a part of Terminal 0.30 Aero shopping trolley - T2 Fixture 86.84% Building Waterproofing works Common - T1 Since it is a part of Terminal Building 0.20 Aero pump room -T1A 89.93% Building Landside- Nursery Shed Common – Being a common landside Building 0.10 Aero With irrigation system Overall area TERMINAL 1C - Plant And Common - T1 Since it is a part of Terminal 0.08 Aero HVAC Machinery 89.93% Building Electrical Work at Electrical Common - T1 Since it is a part of Terminal MIAL training center- Installations & 0.10 Aero 89.93% Building T-1 Equipment Light fittings at SHA1 Electrical Common - T1 Since it is a part of Terminal and Back-office Area- 0.07 Aero installations 89.93% Building T1 MIAL Nursery - Plant & Common – Being a common landside 0.10 Aero Portable Greenwall Machinery Overall area Consultation Paper No. 08/2024-25 Page 90 of 349TRUE UP OF THE THIRD CONTROL PERIOD Actual Allocation Allocation Asset Asset description Cost in used by proposed by Reason for Change Category FAR MIAL Authority Electrical Smart Timer Switch Common - T2 Since it is a part of Terminal Installations & 0.10 Aero Street light-T2 86.84% Building Equipment Lamps & Fans MLCP Office Common 0.02 Non-Aero Since it is at the MLCP (T2) Equipment 86.84% Electrical AGL Intersection Considered as Installations & 0.01 Aero No increase in PCN value Overlay Aero Opex Equipment 4.5.9 Based on the reclassification of certain assets in Para 4.5.8 from the asset additions submitted by MIAL for the Third Control Period, the revised Aeronautical portion (%) of asset additions proposed to be considered by the Authority for the Third Control Period is as follows: Table 73: Ratio of Gross Fixed Assets (also used allocation of Common Assets outside the Terminal Building) for the Third Control Period as proposed by the Authority 3rd CP – Asset Allocation (%) 2019-20 2020-21 2021-22 2022-23 2023-24 Asset Allocation as submitted 82.83% 82.83% 82.94% 82.94% 83.40% by MIAL (From Table 71) Less: Change in % as per - - 0.02% 0.02% 0.02% Authority’s analysis Asset Allocation as proposed 82.83% 82.83% 82.92% 82.92% 83.38% by the Authority 4.5.10 Considering the ratios given in Table 73, the Aeronautical CAPEX proposed by the Authority for the Third Control Period is given in the table below: Table 74: Aeronautical CAPEX as proposed by The Authority for True up of Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aeronautical Capitalization as per Authority 194.44 2.74 146.88 171.09 660.33 1,175.48 Addition considered on Pro-rata basis 117.76 0.63 22.36 67.00 145.98 353.74 Adjustments carried forward to next year on Pro- 76.68 2.10 124.52 104.09 514.35 821.74 rata basis Table 75: RAB as proposed by the Authority for True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening RAB A 5,741.07* 5,511.74 5,112.02 4,741.03 4,542.24 Add: Addition based on proportionate capitalization B 268.65 77.31 24.47 191.52 250.08 812.02 (Refer Table 76) Less: Depreciation (Refer C 497.99 477.03 395.46 390.31 355.90 2,116.69 Table 86) Closing RAB D = A+B-C 5,511.74 5,112.02 4,741.03 4,542.24 4,436.41 *Refer Table 26 for Opening RAB of FY 20. Table 76: Statement of Proportionate Addition during the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Total Aeronautical Capitalization A 194.44 2.74 146.88 171.09 660.33 1,175.48 during the year Consultation Paper No. 08/2024-25 Page 91 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Less: Carried forward to next year B 76.68 2.10 124.52 104.09 514.35** 821.74 Proportionate capitalization C = 117.76 0.63 22.36 67.00 145.98 353.74 during the year A-B Add: Brought forward balance to be D 150.89* 76.68 2.10 124.52 104.09 458.28 added to RAB Total Capitalization during the E = 268.65 77.31 24.47 191.52 250.08 812.02 year C+D * Refer Table 26 for brought forward balance of FY 20 ** Rs 514.35 Crores is carried forward to the Fourth Control Period 4.5.11 In view of the above, the Authority proposes to consider the RAB as per Table 75 for the True up of the Third Control Period. 4.6 TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE MIAL'S SUBMISSION ON TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.6.1 The Authority while determining tariff for the Third Control Period decided not to consider the cost attributable to the old demolished T2 as part of HRAB and accordingly reduced the HRAB by Rs. 194.74 crores as on 1st April 2019, along with a reduction in carrying cost of Rs. 64.09 Crores, resulting in a net impact to the Target Revenue of Rs 258.83 Crores (Refer 4.4.14 of the Third Control Period Order). 4.6.2 TDSAT vide order dated 6th October 2023 has directed the Authority not to reduce HRAB on account of demolition of old T-2. Hence, MIAL has not considered the one-time impact of Rs. 258.83 crores computed by the Authority on account of reduction in HRAB for the purpose of calculation of true-up of the Third Control Period. 4.6.3 MIAL has submitted revised HRAB for the Third Control Period as follows: Table 77: HRAB as submitted by MIAL for True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening HRAB A 483.81 430.34 379.15 337.22 295.68 Depreciation B 53.47 51.19 41.93 41.54 37.60 225.73 Closing HRAB C = A-B 430.34 379.15 337.22 295.68 258.08 Average HRAB D = Avg (A, C) 457.07 404.74 358.19 316.45 276.88 RECAP OF DECISION TAKEN BY THE AUTHORITY REGRADING THE HYPOTHETICAL REGULATORY ASSET BASE AS PART OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.6.4 While computing the HRAB for the Third Control Period, the Authority reduced the cost of the demolished old Terminal 2 amounting to Rs. 194.74 crores. 4.6.5 This reduction affects the depreciation on HRAB and the return on HRAB for the period from FY 2013-14 to FY 2018-19. The total impact, including the carrying cost as on 1st April 2019, amounts to Rs. 258.83 crores. 4.6.6 The following table shows the value of HRAB computed by the Authority for the Third Control Period. Consultation Paper No. 08/2024-25 Page 92 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 78: HRAB Computation by the Authority for the Second Control Period after the removal of the old Terminal 2 (Rs. in crores) Particulars Ref FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 Total Opening HRAB A 780.32 561.80 517.38 481.39 440.00 398.86 Reduction due to B 194.74 194.74 removal of old T2 Depreciation C 23.79 44.42 35.99 41.39 41.15 39.59 226.32 Closing HRAB D = A-B-C 561.80 517.38 481.39 440.00 398.86 359.26 Average HRAB E = Avg (A, D) 671.06 539.59 499.38 460.70 419.43 379.06 Table 79: HRAB as decided by the Authority during the tariff determination of the Third Control Period order (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening HRAB A 359.26 320.10 283.39 252.30 222.56 Depreciation B 39.16 36.72 31.08 29.74 27.60 164.30 Closing HRAB C = A-B 320.10 283.39 252.30 222.56 194.97 Average HRAB D = Avg (A, C) 339.68 301.74 267.84 237.43 208.76 AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF HYPOTHETICAL REGULATORY ASSET BASE FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE CURRENT CONTROL PERIOD 4.6.7 As mentioned in para 4.2.5 of this Consultation Paper, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, based on which HRAB proposed by the Authority for True up of the Third Control Period is as per the below table: Table 80: HRAB Computation for the Second Control Period after the removal of the old Terminal 2 based on Revised Depreciation (Rs. in crores) Particulars Ref FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 Total Opening HRAB A 780.32 561.80 518.14 482.86 442.26 401.99 Reduction due to removal B 194.74 of old T2 Depreciation C 23.79 43.66 35.28 40.60 40.27 38.73 222.33 Closing HRAB D = A-B-C 561.80 518.14 482.86 442.26 401.99 363.26 Average HRAB E = Avg (A,D) 671.06 539.97 500.50 462.56 422.13 382.62 Table 81: HRAB proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening HRAB A 363.26 324.14 287.23 257.12 227.93 Depreciation (Refer Table 87) B 39.12 36.90 30.12 29.18 24.90 160.22 Closing HRAB C = A-B 324.14 287.23 257.12 227.93 203.04 Average HRAB D = (A+C)/2 343.70 305.68 272.17 242.52 215.48 4.6.8 In view of the above, the Authority proposes to consider HRAB as per Table 81 for the True up of the Third Control Period. Consultation Paper No. 08/2024-25 Page 93 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.7 TRUE UP OF DEPRECIATION MIAL'S SUBMISSION ON DEPRECIATION FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.7.1 Depreciation on the Regulatory Asset Base of the Third Control Period, based on the actual capitalization and depreciation on HRAB as submitted by MIAL after excluding the impact of the removal of the old Terminal 2, is as follows: Table 82: Depreciation on RAB and HRAB as submitted by MIAL for the true up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aero Allocation Ratio for Depreciation 83.40% 83.40% 83.40% 83.40% 83.40% Aeronautical Depreciation on RAB 512.94 491.21 408.93 412.93 404.08 2,230.09 Depreciation on HRAB 53.47 51.19 41.93 41.54 37.60 225.73 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE DEPRECIATION AS PART OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.7.2 The Authority in the Third Control Period Order had decided to True up the depreciation based on the actual capital expenditure incurred and actual date of capitalization of assets. 4.7.3 The depreciation as considered by the Authority for the Third Control Period is as follows: Table 83: Depreciation on RAB and HRAB decided by the Authority during Tariff determination for the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aeronautical Depreciation on RAB (Refer 512.62 512.77 451.92 441.69 418.40 2,337.40 Table 135 of 3rd CP Order) Depreciation on HRAB 39.16 36.72 31.08 29.74 27.60 164.30 AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING TRUE UP OF THE DEPRECIATION FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 4.7.4 The Authority, through its Independent Consultant reviewed the submission by MIAL for Depreciation of the Third Control Period and has also reviewed the audited financial statements of MIAL, especially on the accounting policy followed by MIAL for Depreciation. The Authority noted that for certain classes of assets, MIAL has adopted different useful lives than that prescribed in Order No.35/2017-18. The Authority proposes to adopt the rates of depreciation laid out in Annexure-I of the said Order for the purpose of calculation of depreciation on aeronautical assets in the Third Control Period. 4.7.5 The Authority, through its Independent Consultant / Aviation Expert also notes that, for the purpose of computing aeronautical depreciation, MIAL has applied the Gross Fixed Asset Ratio of FY 2023-24 (i.e., 83.40%) across all the five years of the Third Control Period. The Authority notes that Gross Fixed Asset Ratio specific to each year should be applied for allocation as per Table 71. 4.7.6 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same decisions as mentioned in para 4.2.5 of this Consultation Paper, except for complying with the directions of the Authorized Investigation Agency as explained in para 4.2.7. Consultation Paper No. 08/2024-25 Page 94 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.7.7 The Authority has computed the depreciation on the assets identified in the SCN by AIA as mentioned in para 3.1.6 as below: Table 84: Aeronautical Depreciation as computed by the Authority on the assets identified in SCN for the Third Control Period (Rs. in crores) Third Control Period – Depreciation Total Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Depreciation Aeronautical 10.63 10.42 8.61 8.06 7.54 45.26 Depreciation 4.7.8 The Authority has recomputed the depreciation for the Third Control Period after adjustment set out below: (i) removing depreciation 614-line items where MIAL had claimed depreciation rates higher than those prescribed in Order No. 35/2017-18 and has restricted the depreciation rates to those specified in the order. (ii) removing Depreciation on the re-carpeting of Runway 14/32, which was submitted by MIAL as capital expenditure but was reclassified as Operating Expenditure by the Authority. (iii) revising the asset allocation ratio based on Table 71. (iv) adjusting the depreciation impact on consequent to the SCN as per Table 84. (v) non-consideration of depreciation on Right of Use Assets in FY 2022-23 and FY 2023-24 Table 85: Asset class-wise summary of Differential Depreciation between depreciation rates claimed by MIAL and in the Order No. 35 (Rs. in crores) No. of Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Line Items Building 25 0.00 0.00 0.15 0.21 0.32 0.68 Electrical Installations 4 - - 0.01 0.06 0.06 0.13 Furniture and Fixture 10 - - 0.02 0.13 0.14 0.29 Office Equipment’s 12 - 0.00 0.00 0.01 -0.00 0.02 Plant & Machinery 563 1.73 1.87 3.60 8.19 20.87 36.26 Total additional Depreciation claimed by MIAL based on 614 1.73 1.88 3.78 8.60 21.39 37.38 technical opinion obtained by it (a) % of aeronautical assets (b) 82.83% 82.83% 82.92% 82.92% 83.38% Aeronautical portion of Additional Depreciation claimed by MIAL 1.43 1.56 3.13 7.13 17.84 31.09 Based on Technical opinion obtained by it (c = a x b) Table 86: Depreciation on RAB as proposed by the Authority for the True up of the Third Control Period as a part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Depreciation as per Books (does not include depreciation on upfront fees paid 690.33 670.89 552.41 547.50 537.01 2,998.14 to AAI) Less: Depreciation on ROU Assets* - - - 4.21 4.21 8.42 Depreciation after deduction of 690.33 670.89 552.41 543.29 532.79 2,989.71 depreciation on ROU Assets Consultation Paper No. 08/2024-25 Page 95 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aero Allocation Ratio for Depreciation 82.83% 82.83% 82.92% 82.92% 83.38% Aeronautical Depreciation as per FAR 571.79 555.71 458.07 450.51 444.25 2,480.34 Less: Higher depreciation in books as 1.43 1.56 3.13 7.13 17.84 31.09 compared to the Authority (614-line items) Less: Runway recarpeting amortize 56.89 62.13 47.13 41.39 59.89 267.43 separately as O&M Less: Depreciation on disallowed 4.85 4.58 3.74 3.62 3.09 19.87 projects** Less: Depreciation Impact on non-existent 10.63 10.42 8.61 8.06 7.54 45.26 assets as per SCN Aeronautical Depreciation 497.99 477.03 395.46 390.31 355.90 2,116.69 * On 29th April 2022 MIAL acquired 100% of equity shares of Regency Convention Centre and Hotels Private Limited for total consideration of Rs. 64 Crores. MIAL in its submissions claimed depreciation on this ROU asset as a part of Aeronautical Depreciation. However, the Authority notes that this is only an investment in equity shares and does not form part of RAB. Accordingly, the Authority proposes not to consider the depreciation on this asset as a part of Aeronautical Depreciation. **Depreciation of Rs. 19.87 Crores on 7-line items with Gross Book value of Rs. 122.18 Crores not considered in RAB during the First and the Second Control Periods excluded. See Table 57 in the Third Control Period Order. 4.7.9 The Authority also noted that the average depreciation rate in the Third Control Period will vary from the average rate considered by MIAL based on allocation ratio, the adjustments in depreciation calculations made by the Authority and adjustment made due to the depreciation on runway recarpeting reclassified as an operating expenditure. 4.7.10 Accordingly, the Depreciation on HRAB was revised. In view of this, the Authority has estimated the Depreciation on HRAB as follows: Table 87: Depreciation on HRAB as proposed by the Authority for True up of the Third Control Period as part of the Tariff Determination exercise for the Fourth Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Aeronautical assets A 9,131.76 9,272.39 9,419.85 9,594.77 10,255.10 Depreciation on aeronautical assets (Refer B 497.99 477.03 395.46 390.31 355.90 2,116.69 Table 86) Average rate of Depreciation C=B/A 5.45% 5.14% 4.20% 4.07% 3.47% on aeronautical assets % HRAB D 717.36 717.36 717.36 717.36 717.36 Depreciation on HRAB E=D*C 39.12 36.90 30.12 29.18 24.90 160.22 4.7.11 In view of the above, the Authority proposes to consider the Depreciation on RAB and HRAB as per Table 86 and Table 87 respectively for the True up of the Third Control Period. 4.8 TRUE UP OF FAIR RATE OF RETURN MIAL'S SUBMISSION ON FAIR RATE OF RETURN FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD Cost of Equity: 4.8.1 MIAL considered the Cost of Equity as approved by the Authority in the tariff order for the Third Control Period i.e. 15.13%. Consultation Paper No. 08/2024-25 Page 96 of 349TRUE UP OF THE THIRD CONTROL PERIOD Cost of Debt: 4.8.2 MIAL’s submission on the Cost of Debt for the True-Up of FRoR for the Third Control Period is as given below: “As a part of Consultation Paper proposals for the Third Control Period, AERA initially proposed adjusting Cost of Debt by allowing an increase of 0.50% (50 bps) – raising it from 10.30% to a maximum of 10.80%. However, when finalizing the Tariff Order, based on Stakeholder Comments, AERA decided to strictly cap the Cost of Debt fixed at 10.30%, without allowing any increase for the Control Period.” 4.8.3 During the tariff determination process of the Third Control Period, MIAL had submitted the letter from State Bank of India dated 20th December 2019 to the Authority which stated that on account of downgrade in the external rating of MIAL by India Ratings from A+ to A-, the existing pricing on all the credit facilities has been increased by 0.50% w.e.f. 9th August 2019, effective rate of interest being 10.30% p.a. 4.8.4 Subsequently, MIAL’s financial profile was severely impaired by the outbreak of COVID-19, the resultant lockdowns, and the continued restrictions on airlines’ operations starting from March 2020. 4.8.5 MIAL’s liquidity crisis was aggravated in FY 2020-21 as total passengers handled plummeted from 45.9 MN in FY 2019-20 to 10.5 MN in FY 2020-21 resulting in constrained operating cash flow. 4.8.6 In July 2021, MIAL, with the support from AAHL and AEL, refinanced its existing debt with short term bridge to bond facility which was mix of 11% Non-Convertible Debentures redeemable at the end of one year and Term Loans with interest rate of MCLR plus spread of 4.65% (effective interest rate of 11%) repaid at the end of one year in March 2022 of Rs. 7,250 Crs. 4.8.7 In April 2022, MIAL raised USD 750 million (~Rs 5,500 crores) through 7.25-year USD Notes/Bonds through US Private Placement (USPP). Funds raised through Private placement along with additional borrowings from Adani Airport Holdings Limited (AAHL) were used for refinancing of existing short term bridge loan of Rs. 7,250 crores as on 31 March 2022. It is to be noted that only ~75% of existing debt was refinanced from USD notes and balance was refinanced by inter-company loan from AAHL. 4.8.8 USD Notes are repayable in 7.25 years on the last day of Tenor (Bullet Repayment on last date of Tenor). As per the existing loan agreements, the effective interest rate is ~11.5% (7.25% effective coupon rate + 3.8% hedging cost+6% TDS Gross up on coupon payments). 4.8.9 The intercompany loan from AAHL is unsecured and subordinated to the senior debt. It carries interest 12.5% per annum. 4.8.10 The year wise cost of debt and weighted average cost of debt for the Third Control Period is as follows: Table 88: Computation of weighted average cost of debt for the Third Control Period – as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Opening Outstanding Debt 6,273.60 6,138.40 6,075.64 7,183.00 8,114.04 Closing Outstanding Debt 6,138.40 6,075.64 7,183.00 8,114.04 8,743.10 Average Debt 6,206.00 6,107.02 6,629.32 7,648.52 8,428.57 Interest Cost 615.75 635.17 732.62 907.30 954.57 Cost of Debt 9.92% 10.40% 11.05% 11.86% 11.33% Weighted Avg Cost of Debt 10.98% Consultation Paper No. 08/2024-25 Page 97 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.8.11 The Authority had finalized the process of tariff determination of MIAL for the Third Control Period in February 2021 with consultation process getting completed in November 2020. There were significant changes in the global economy post this period. Interest rates surged sharply globally post December 2020. 4.8.12 Since May 2022, the Reserve Bank of India has increased Repo Rate by 2.50% leading to cost of domestic borrowing becoming dearer in India. 4.8.13 Even if MIAL had continued with the existing debt facility, the increase in interest rate for FY 2022-23 would have been 1.25% (since average interest rates increased gradually) and 2.5% for FY 2023-24 considering only the overall increase in interest rates in the economy. Based on the above, the weighted average rate of interest for the Third Control Period would have been 11.17% as given hereunder: Table 89: Computation of weighted average cost of debt if MIAL had continued with existing debt facility throughout the Third Control Period – as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Opening Outstanding Debt 6,273.60 6,138.40 6,075.64 7,183.00 8,114.04 Closing Outstanding Debt 6,138.40 6,075.64 7,183.00 8,114.04 8,743.10 Average Debt 6,206.00 6,107.02 6,629.32 7,648.52 8,428.57 Cost of Debt 10.30% 10.30% 10.30% 11.55% 12.80% Weighted Avg Cost of Debt 11.17% 4.8.14 TDSAT vide judgement dated 6th October 2023 has ruled that Authority ought to allow actual cost of debt incurred by MIAL especially looking into fact that debt availed is from reputed lenders. 4.8.15 FRoR: As per the weighted average cost of debt of 10.98% for the Third Control Period and cost of equity of 15.13% and normative gearing ratio of 48:52 as decided by the Authority in the Third Control Period tariff order, calculation of revised FRoR for the Third Control Period is as follows: Table 90: Computation of FRoR for the Third Control Period as submitted by MIAL Calculation of FRoR for the Third Control Period Cost of Debt 10.98% Cost of Equity 15.13% Gearing 48.00% FRoR for the Third Control Period 13.14% RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE FAIR RATE OF RETURN AS PART OF TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.8.16 The Authority in the Third Control Period Order decided to consider Cost of Equity at 15.13% and Debt Equity Ratio of 48%:52% as per the recommendations / outcome of the Independent Study Report (Refer Para 5.2.5 of the Third Control Period Order). 4.8.17 The Cost of Debt was considered at 10.30% and decided to be trued up subject the cap of 10.30%. The Cost of Debt was applied across total debt, irrespective of the source, i.e., both on Debt and Refundable Security Deposit (RSD). 4.8.18 Accordingly, the Authority had considered FRoR at 12.81% considering Cost of Debt at 10.30% to be trued up subject to cap, Cost of Equity of 15.13% and the gearing ratio of 48:52. Consultation Paper No. 08/2024-25 Page 98 of 349TRUE UP OF THE THIRD CONTROL PERIOD AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF FAIR RATE OF RETURN FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD 4.8.19 The Authority notes that MIAL has submitted the True up of FRoR for the Third Control Period based on the TDSAT judgement as explained in para 1.8.1. 4.8.20 The Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same as mentioned in para 4.2.5 of this Consultation Paper. 4.8.21 Additionally, the Authority observed MIAL’s and analyzed it further. The following table lists the loan position of MIAL throughout the five years in the Third Control Period: Table 91: Computation of FRoR for the true up of the Third Control Period as submitted by MIAL Particulars FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 Interest Project Term 5,665 5,560 5,714 - - - MCLR+1.80=10.30% Loan – SBI Term Loans From banks – SCB & - - - 4,100 - - 11% DB Term loan from financial institution – - - - 250 - - 11% Aseem Infra Finance Non-convertible - - - 2,900 - - 11% debentures (NCD) ECB – Apollo - - - - 6,201 6,339 Coupon EIR-7,25 Group Inter corporate - - - 113 2,093 2,584 12.50% loans – AAHL Real Estate loan 609 287 288 - - - 9.30 % to 11.95% Working Capital 322 291 74 - - - 9.25% Loan Total Borrowing Considered in 6,596 6,138 6,076 7,363 8,294 8,923 MYTP 4.8.22 From the above table, it is evident that MIAL initially relied on a Loan from SBI at a relatively lower interest rate MCLR + 1.80% (10.30%). However, over time, this borrowing was replaced with other higher-cost sources, reflecting a more expensive shift in funding. 4.8.23 The SBI loan was phased out through borrowings from Azeem Infra Finance, NCD and Term Loans from other Banks at a higher interest rate of 11%, which was further replaced in the next year (FY 2021-22) by Consultation Paper No. 08/2024-25 Page 99 of 349TRUE UP OF THE THIRD CONTROL PERIOD a combination of loans, i.e., an External Commercial Borrowing Facility at 11.50% and an intercorporate loan from AAHL at 12.50% p.a, both of which were at higher rates of interest. 4.8.24 The Authority’s examination is summarized below: (i) MIAL states that it had to restructure the borrowing arrangement with SBI due to defaulting loans under the previous management. MIAL stated that even if it had continued with the borrowings from SBI, the rate of interest would have been substantially higher and would have resulted in a weighted average cost of borrowing of 11.17% as stated in Para 4.8.13. The Authority analyzed the movement in SBI MCLR in the table below: Figure 2 - SBI – 1 Year MCLR ranging from March 2019 to September 2024 SBI - 1-Year MCLR 9.50% 9.00% 8.65% 8.50% 8.95% 8.50% 8.55% 8.55% 8.15% 8.00% 7.50% 7.75% 7.70% 7.00% 7.00% 7.00% 7.00% 7.00% 6.50% Mar’ Sep’ Mar’ Sep’ Mar’ Sep’ Mar’ Sep’ Mar’ Sep’ Mar’ Sep’ 19 19 20 20 21 21 22 22 23 23 24 24 From the above figure, it is clearly seen that the SBI MCLR rate experienced a significant decline from the beginning of FY 20 and remained at those levels for about two years before returning to its pre- covid range by FY 24. This indicates that if MIAL had continued with the same debt facility during this period, it could have benefitted from the reduced interest rates, resulting in lower borrowing costs for most part of the Third Control Period. Based on the movement of SBI MCLR, even considering the highest interest rate, the Authority finds that cost of debt would have only increased to 10.15% (MCLR – 8.65% + 1.50% Spread) as per Figure 2. (ii) The Authority also notes the inter-corporate loan being availed at the highest rate of 12.50%, is quite high in the context of funding available in the Indian market at that relevant time for the infrastructure sector. The trend of SBI MCLR in Figure 2 clearly indicates that finance was available to MIAL at a substantially lower rate than its current borrowing rate. Therefore, availing the inter-corporate loan from AAHL at 12.50% has increased the cost of debt substantially when compared to the borrowing from SBI. (iii) In view of the foregoing analysis and reasoning, the Authority proposes not to consider the weighted average costs of debt and is continuing with its decision to apply the cap on the interest rate at 10.30% as decided in the Third Control Period. Consultation Paper No. 08/2024-25 Page 100 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.8.25 Consequently, the Authority proposes not to make any change to the decisions made in the Third Control Period Order for the Fair Rate of Return. Therefore, the FRoR as decided in the Third Control Period Order (Ref para 5.6.5) is proposed to be continued for the True up of the Third Control Period. 4.9 TRUE UP OF OPERATING EXPENSES MIAL'S SUBMISSION ON OPERATING EXPENSES FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.9.1 MIAL has submitted the O&M expenses for the true-up of the Third Control Period based on actuals incurred during the period. 4.9.2 The component wise breakup of Operating and Maintenance expenditure submitted by MIAL for the Third Control Period is as follows: Table 92: O&M expenses submitted by MIAL for the true up of the Third Control Period (Rs. in crores) (+) / (-) % as per MIAL’s submission from Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total the 3rd Control Period Tariff Order Employee Cost 217.68 220.79 168.02 146.12 159.37 911.98 18.39% Utilities Expenses 120.95 63.53 73.40 108.40 132.75 499.03 15.44% Repair & Maintenance 179.53 127.17 164.41 205.41 180.29 856.81 -24.06% Expenses Rent, Rates and 45.97 43.84 48.05 53.88 57.25 248.99 27.88% Taxes Advertisement 5.17 2.28 3.06 8.17 3.58 22.26 10.96% Expenses Administrative 78.80 59.33 23.87 41.79 59.82 263.60 32.33% Expenses AOA Fees 10.53 8.81 - - - 19.34 62.32% Insurance Expenses 9.15 15.54 15.13 16.05 17.83 73.70 -85.83% Consumption of 8.63 5.12 9.05 20.41 17.47 60.68 -44.34% Stores Operating 159.30 150.12 127.61 161.58 174.71 773.32 5.83% Expenditure Interest on Working 24.98 28.00 27.23 17.50 17.50 115.21 Capital Financing Charges 24.74 14.98 162.64 38.93 27.77 269.06 -169.06% Runway Recarpeting along with Carrying 52.32 56.21 51.13 45.92 29.51 235.10 1.86% Cost on Unamortised Portion Corporate Cost - - 91.47 100.10 76.00 267.57 Allocation Provision for Bad 6.08 36.39 3.24 15.09 0.43 61.23 Debts Bad Debts Written 1.41 - 10.66 19.46 0.71 32.24 Off Consultation Paper No. 08/2024-25 Page 101 of 349TRUE UP OF THE THIRD CONTROL PERIOD (+) / (-) % as per MIAL’s submission from Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total the 3rd Control Period Tariff Order Loss on Scrapping of 2.35 -0.03 - - - 2.32 Asset Collection Charges 2.96 2.75 0.41 5.52 5.77 17.41 over DF CSR Cost 0.48 0.04 - - - 0.52 Exchange Gain and 0.03 0.12 - 0.37 -0.14 0.38 Loss CWIP - Written Off - - 8.65 - - 8.65 Investment Written - - 0.06 - - 0.06 Off Total 951.06 834.99 988.09 1,004.70 960.63 4,739.46 -6.23% 4.9.3 MIAL has stated that it was able to achieve savings in various heads of O&M like Employee Expenses, Utilities, Rates and Taxes, Advertisement, Administrative Expenses and Operating expenses over the cost approved by the Authority in the Third Control Period. However there has been an increase in expenses for some heads of expenditure as well, like Repairs and Maintenance, Insurance, Working Capital, and Financing Charges, for which MIAL has provided reasons as detailed below: Reasons for increase in various heads of expenditure as per MIAL: Corporate allocation costs from AEL and AAHL resulting in higher Administration Costs 4.9.4 Adani Enterprises Ltd (AEL), through its subsidiary Adani Airport Holdings Ltd (AAHL), acquired Mumbai International Airport Ltd (MIAL) in July 2021, adding MIAL to its portfolio of eight airports, including Navi Mumbai International Airport and six others. AEL is the flagship company of the Adani Group, promoting various sectors such as airports, power, renewable energy, and logistics. AEL and AAHL have centralized strategic functions, including finance, legal, procurement, and human resource management, providing corporate support services across Adani Group companies, including airports. These services are essential for efficient airport operations and are provided on a cost-to-cost basis, without a markup, to avoid duplication of expenses at each airport. 4.9.5 MIAL, after its acquisition by Adani, discontinued payments for services previously made to GVK Power and Infra Ltd and ACSA, resulting in cost savings. The cost allocation to MIAL by AEL and AAHL is consistent with other Adani airports and has been accepted by the Authority for airports like Ahmedabad, Mangalore, and Lucknow. 4.9.6 TDSAT directed the Authority to include corporate costs in MIAL's operating expenses, following an appeal by MIAL after these costs were excluded during the Third Control Period tariff determination process. The judgment requires the Authority to allow the true-up of these costs in the final tariff determination (Fourth Control Period). Repair and Maintenance Costs 4.9.7 The Authority, in its Third Control Period projection, approved repair and maintenance (R&M) costs based on 1.1% of the opening gross block for a given year. However, an error was made in calculating R&M Consultation Paper No. 08/2024-25 Page 102 of 349TRUE UP OF THE THIRD CONTROL PERIOD expenses, as the Authority used only the aeronautical gross block rather than the total gross block. This led to an underestimation of the actual R&M costs for MIAL. 4.9.8 The closing gross block for FY 2018-19 was Rs. 15,046.88 Crores, as confirmed in the Authority’s independent study. MIAL has further stated that, the R&M expenses should have been computed on the total gross block of assets, and then the portion pertaining to aeronautical expense should have been worked out on that base. 4.9.9 MIAL used to incur AMC costs for security equipment, which were reimbursed by NASFT. However, NASFT revised its list of allowable expenditures in January 2021, excluding AMC/CAMC for security equipment. As a result, MIAL has not been reimbursed for these expenses since July 2019. Hence, this cost has been considered as R&M by MIAL. 4.9.10 Despite these issues, MIAL's total actual R&M expenses for the Third Control Period were Rs. 856.81 Cr, which is lower than the projected amount and also well below the 6% of opening RAB, a benchmark often used in the recent Authority’s tariff orders. Increase in costs related to Financing Charges 4.9.11 During the tariff determination process for the Third Control Period, the Authority approved financing costs based on the average yearly costs incurred in the Second Control Period. These financing charges encompass recurring costs such as upfront fees, arranger fees for banks, bank guarantee commissions, and other bank charges. 4.9.12 In November 2020, MIAL requested the Authority to approve a one-time restructuring/refinancing cost of Rs. 55 Cr, based on preliminary estimates. Due to a significant reduction in revenue and a liquidity crisis, MIAL faced challenges in fulfilling its debt obligations, leading to a request for loan restructuring as per RBI guidelines. In December 2020, MIAL's credit rating was downgraded from C to D (default). 4.9.13 In this challenging economic environment, MIAL decided to refinance its existing loans with long-term bonds, but due to financial instability and uncertainty caused by the COVID pandemic, it could not raise funds. In July 2021, MIAL, with support from AAHL and AEL, refinanced its debt through a short-term bridge-to-bond facility, incurring one-time financing charges of Rs. 158 Crs. 4.9.14 Although MIAL initially requested a one-time restructuring cost of Rs. 55 Cr, this amount was lower than the actual costs incurred. Given the circumstances that necessitated the refinancing for the airport's survival, MIAL seeks to have these one-time costs recognized as allowable financing charges. Furthermore, TDSAT's judgment on October 6, 2023, directed the Authority to include these financing charges in MIAL's operating expenses and to allow true-up in the final tariff determination for the Fourth Control Period. Interest on Working Capital 4.9.15 During the tariff determination of the Third Control Period, the Authority noted that if working capital was needed, it would be reviewed in the Fourth Control Period based on actual costs and justification. MIAL had historically incurred working capital interest of Rs. 71.42 crores during the Second Control Period, which was approved by the Authority. The need for working capital became more crucial during the pandemic-induced liquidity crunch. 4.9.16 At the start of the Third Control Period, MIAL had a cash credit/working capital limit of up to Rs. 330 crores, with average utilization ranging from Rs. 180 to Rs. 200 crores. Interest payments of Rs. 17.56 crores and Rs. 17.76 crores were made in FY 2019-20 and FY 2020-21, respectively. TDSAT, in its October 6th, Consultation Paper No. 08/2024-25 Page 103 of 349TRUE UP OF THE THIRD CONTROL PERIOD 2023 Judgment, directed the Authority to include MIAL’s working capital interest during the Third Control Period in operating expenses and true it up in the First Control Period. 4.9.17 In July 2021, MIAL refinanced its existing debt, including Rs. 180 crores in outstanding working capital debt, with a short-term bridge-to-bond facility. The new facility included 11% Non-Convertible Debentures and term loans with an effective interest rate of 11%, replacing the previous working capital facility. 4.9.18 MIAL paid Rs. 3.77 crores in interest on working capital debt until July 2021. For FY 2021-22, FY 2022- 23, and FY 2023-24, the interest on working capital is estimated at Rs. 17.5 crores annually, based on historical usage and average utilization of Rs. 180 crores. This amount is accounted for when calculating the FRoR by adjusting the total interest cost and outstanding debt. Insurance Expenses 4.9.19 As per OMDA provisions, MIAL is required to maintain various insurance policies covering aspects like physical loss, business interruption, and employee insurance. The Authority had approved insurance costs for the Third Control Period. 4.9.20 There was a significant rise in insurance expenses in FY 2019-20 and FY 2020-21 due to factors like increased insurance rates by reinsurers, reinstatement of asset values, and higher premiums for the Industrial All Risk Policy, particularly due to COVID-19. 4.9.21 Since these insurance expenses are mandatory and determined by insurance companies regulated by IRDAI, they are beyond MIAL's control. MIAL has requested the Authority to consider the actual insurance costs incurred during the Third Control Period. 4.9.22 TDSAT, in its October 6, 2023, judgment, directed the Authority to include the actual insurance expenses incurred by MIAL during the Third Control Period as part of operating expenses, with a true-up to be given in the tariff determination for the Fourth Control Period. AERONAUTICAL ALLOCATION OF OPERATING EXPENSES AS SUBMITTED BY MIAL: 4.9.23 Expenses have been allocated by MIAL based on an independent study of Operation and Maintenance expenses of the Second Control Period during tariff determination of the Third Control Period. The principles determining the segregation of Operation and Maintenance costs in Aeronautical and Non- Aeronautical expenses for the purpose of tariff determination is discussed below. The process of segregation broadly involved the following steps: 4.9.24 As per the independent study, segregation of various costs into Aeronautical, Non-Aeronautical and Common were done based on review of the cost centers. 4.9.25 Methodology for allocation of common cost is as below: (i) Common costs related to Terminal operations are apportioned between Aeronautical and Non- Aeronautical activities based on the weighted average terminal floor space ratio. (ii) Corporate Overheads (Costs incurred outside the Terminal Building) are apportioned between Aeronautical & Non-Aeronautical activities based on the adjusted gross fixed assets ratio. 4.9.26 Based on the above-mentioned segregation logic as per the independent study, aeronautical allocation percentages of various expenses of the Third Control Period using above allocation principles is given below: Consultation Paper No. 08/2024-25 Page 104 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 93: Comparison of Costs Centers being used by MIAL for segregation purposes Classification for Cost Driver for Segregation of Cost Centre Description regulatory common expenses purposes Aeronautical For cost common to Aeronautical 100% Aero Common Aeronautical activities For costs common to Weighted average terminal Airport Common Aeronautical and Non- Common floor area ratio of the terminal Aeronautical Activities 87.43% Non-Aeronautical For costs common to Non- Non- 0% Aero Common aeronautical Activities aeronautical For allocation of corporate 83.40% (Gross Aeronautical Corporate Overheads overheads applicable at the Common fixed assets ratio of closing entity level gross block of FY24) 4.9.27 Basis on the above-mentioned allocation method, the aeronautical operation and maintenance percentages allocated by MIAL for each cost head is as follows: Table 94: Aeronautical allocation ratios of O&M expenses submitted by MIAL in the Third Control Period As Applied by the Authority in Particulars FY 20 FY 21 FY 22 FY 23 FY 24 the 3rd Control Period Employee Cost 89.69% 89.43% 88.07% 88.41% 88.41% 86.50% Utilities Expenses 99.04% 98.60% 98.18% 98.85% 98.85% 98.60% Repair & Maintenance 93.56% 98.94% 93.27% 96.83% 95.82% 86.90% Expense Rents, Rates & Taxes 91.22% 91.18% 90.95% 84.80% 94.26% 81.90% Advertisement Expense 92.53% 95.15% 89.21% 83.90% 86.48% 91.40% Administrative Expenses 76.07% 83.08% 78.78% 82.57% 82.57% 77.50% AOA Fees 83.40% 83.40% 0.00% 0.00% 0.00% 82.60% Insurance Expense 83.40% 83.40% 83.40% 83.40% 83.40% 82.60% Consumable Stores 87.90% 87.95% 87.72% 87.43% 87.30% 93.70% Operating Cost 87.40% 87.11% 91.00% 90.91% 98.90% 91.20% Bad Debts Written Off 100.00% 0.00% 61.18% 0.00% 0.00% Working Capital Interest 83.40% 83.40% 83.40% 83.40% 83.40% 82.60% Financing Charges 83.40% 83.40% 83.40% 83.40% 83.40% 78.30% Runway Recarpeting 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Carrying Cost on Runway 100.00% 100.00% 100.00% 100.00% 100.00% Recarpeting Corporate Cost Allocation 89.69% 89.43% 88.07% 88.41% 88.41% 4.9.28 Aeronautical Portion of various expenses of the Third Control Period using above allocation principles is given below: Table 95: Aeronautical O&M expenses submitted by MIAL for the true-up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Employee Cost 195.23 197.46 147.98 129.19 140.90 810.75 Consultation Paper No. 08/2024-25 Page 105 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Utilities (net of recoveries) 119.78 62.64 72.07 107.15 131.23 492.87 Repair & Maintenance Expenses 167.97 125.82 153.34 198.89 172.76 818.78 Rent, Rate and Taxes 41.93 39.97 43.70 45.69 53.97 225.27 Advertisement Expenses 4.78 2.17 2.73 6.85 3.10 19.63 Administrative Expenses 59.94 49.29 18.81 34.51 49.39 211.93 AOA Fees 8.78 7.35 - - - 16.13 Insurance Expenses 7.63 12.96 12.62 13.39 14.87 61.47 Consumption of store 7.59 4.50 7.94 17.85 15.25 53.12 Operating Expenditure 139.23 130.78 116.13 146.89 172.79 705.82 Interest on Working Capital 20.83 23.35 22.71 14.60 14.60 96.09 Financing Charges 20.63 12.49 135.64 32.47 23.16 224.40 Runway Recarpeting along with carrying 52.32 56.21 51.13 45.92 29.51 235.10 cost on unamortised portion Corporate Cost Allocation - - 80.56 88.50 67.19 236.25 Provision for Bad Debts - - - - - - Bad debts written off 1.41 - 6.52 - - 7.93 Loss on scrapping of Asset - - - - - - Collection charges over DF - - - - - - CSR cost - - - - - - Exchange gain and loss 0.03 - - - - 0.03 CWIP - Written off - - - - - - Investment written off - - - - - - Total 848.08 724.99 871.87 881.89 888.72 4,215.56 RECAP OF DECISION TAKEN BY THE AUTHORITY REGRADING THE OPERATION AND MAINTENANCE EXPENDITURE AS PART OF THE TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.9.29 In the tariff determination of the Third Control Period order, “The Authority decides to true up operating and maintenance expenditure for the current control period, at the time of tariff determination for the next control period, after evaluation of the reasonableness and efficiency of the costs incurred.” 4.9.30 The Authority has considered the following Aeronautical Operating Expenses at the time of tariff determination for the Third Control Period. Table 96: Aeronautical Operating and Maintenance Expenditure decided by the Authority during the tariff determination of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Employee Cost 201.73 201.73 218.89 237.50 257.70 1,117.55 Utilities Expenses 147.30 92.14 79.38 128.83 142.48 590.12 Repair & Maintenance Expense 128.19 133.06 139.52 143.82 146.04 690.62 Rents, Rates & Taxes 46.26 46.92 76.41 87.40 88.28 345.27 Advertisement Expense 5.00 5.00 5.00 5.00 5.00 25.00 Administrative Expenses 83.10 68.22 73.80 79.40 85.02 389.54 AOA Fees 9.88 10.07 10.26 10.46 10.66 51.34 Insurance Expense 4.58 8.19 8.56 8.96 9.37 39.64 Consumption and Store Expenses 6.34 7.11 8.13 10.00 10.46 42.03 Operating Expenditure 149.72 156.65 163.90 171.49 179.43 821.20 Financing Charges 20.00 20.00 20.00 20.00 20.00 100.00 VRS Expenses 1.47 - - - - 1.47 Collection Charges over DF 2.72 2.72 2.72 - - 8.16 Consultation Paper No. 08/2024-25 Page 106 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Works claimed by MIAL as part of 13.74 59.45 59.45 59.45 47.46 239.55 Operational Capex allowed as Opex Total Aeronautical Opex 820.03 811.25 866.01 962.31 1,001.89 4,461.49 4.9.31 The Authority had decided to True up the Aeronautical Operating and Maintenance Expenditure for the Third Control Period, at the time of determination of tariff for the Fourth Control Period, after evaluation of the reasonableness and efficiency of the costs incurred. AUTHORITY’S EXAMINATION AND PROPOSAL REGARDING THE TRUE UP OF OPERATING AND MAINTENANCE EXPENDITURE FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 4.9.32 As part of the true-up exercise, the Authority has reviewed the O&M expenditure by undertaking the following steps: (i) Obtaining a party-wise / ledger-wise breakup and other internal records of expenses to assess the composition of costs. (ii) Reconciling the expenses with the financial statements audited, wherever possible. (iii) Examining the reasons for variances between the costs submitted by MIAL for true-up and those approved by the Authority in the Third Control Period. The Authority has examined the expenditure component wise, which is discussed below: Employee Costs: 4.9.33 The Authority notes that the employee cost includes salaries, wages, social security benefits, bonus, perquisites (such as medical reimbursement), gratuity paid to employees and fees paid to retainers. 4.9.34 The employee count of MIAL and the comparison of costs submitted by MIAL for true-up and as approved by the Authority in the Third Control Period is given in Table 97: Table 97: Employee Count as submitted by MIAL for True up of the Third Control Period Name of the Department Classification FY20 FY21 FY22 FY23 FY24 (Employee Count) Land Management and Slum Common 10 9 11 6 4 Rehabilitation CSD Non-Aero - - - 10 16 Project Operations Aero 93 80 23 39 35 CEO/MD Office Common 10 9 6 8 6 Operations Procurement Aero 24 30 14 19 15 Finance and Accounts Common 45 47 31 38 34 Information Technology Common 21 21 14 12 12 Terminal Operations Aero 71 70 71 71 65 Administration Common 13 13 6 7 6 Guest Relations Common 28 26 21 18 16 Jaya He Aero 6 4 4 2 2 Security Aero 361 364 339 376 356 Landside Operations Aero 15 13 11 10 9 Commercial Non-Aero 12 13 19 28 27 Legal Common 8 6 6 7 7 Human Resources Common 16 17 8 10 13 Aero Commercial Aero 9 5 3 3 3 Consultation Paper No. 08/2024-25 Page 107 of 349TRUE UP OF THE THIRD CONTROL PERIOD Name of the Department Classification FY20 FY21 FY22 FY23 FY24 (Employee Count) Horticulture Aero 11 11 8 6 6 Aerodrome Rescue & Fire Fighting Aero 162 159 152 156 176 Airport Operations Services Aero 34 35 30 38 35 Airside & Ground Maintenance Aero 12 11 11 11 10 Airside Operations Aero 9 8 6 4 3 Airside Safety Aero 44 45 37 43 45 Baggage Operations Aero 26 26 25 25 26 Engg & Maint Aero 65 76 65 75 77 Environment Aero 4 3 1 2 3 Facilities Common 28 28 24 23 19 Health &Safety Aero 5 4 3 5 5 Joint Control Centre Aero 5 5 5 5 5 Quality and Customer Care Aero 92 89 65 52 44 Medical Services Aero 3 3 3 3 3 Corporate Communication Common 8 7 2 3 4 Corporate Relations Common 4 5 3 1 1 Corporate Aviation Terminal Aero 16 16 14 12 10 Cargo Non-Aero 8 9 7 7 7 Air Transport Services Aero - - - - - Regulatory Aero 6 2 - - - Chairman's Office Common 5 5 - - - Airport Services Non-Aero 38 33 25 18 - Urban Planning Common 25 18 - - - Total 1,352 1,325 1,073 1,153 1,105 Table 98 : Comparison of Employee Cost as submitted by MIAL for true-up and as approved by the Authority in the Third Control Period (Rs. in crores) Employee Costs FY 20 FY 21 FY 22 FY 23 FY 24 Total As submitted by MIAL 217.68 220.79 168.02 146.12 159.37 911.98 (a) As approved in the Third 201.73 201.73 218.89 237.50 257.70 1,117.55 Control Period Order (b) Difference (b-a) (15.95) (19.06) 50.87 91.38 98.33 205.57 4.9.35 The Authority notes that the cost incurred by MIAL is lower than the cost approved in the Third Control Period, since MIAL has stated that many of the administrative functions are being outsourced from AEL and AAHL and included as part of the Corporate Costs. Table 99: Average Employee Cost as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Average Employee Cost 0.16 0.17 0.16 0.13 0.14 4.9.36 The Authority observes that the average employee headcount has decreased, and the average employee cost has reduced initially and thereafter sustained during the Third Control Period. Accordingly, the Authority considers the employee cost of Rs. 911.98 crores as mentioned in Table 98 for the purpose of the true up of the Third Control Period. Consultation Paper No. 08/2024-25 Page 108 of 349TRUE UP OF THE THIRD CONTROL PERIOD Utilities Expenses: 4.9.37 The Authority reviewed MIAL’s submission regarding utility expenses for the Third Control Period. It was observed that utility expenses comprise electricity, water, and fuel charges, primarily related to lighting, HVAC systems, and other airport equipment. These expenses also include utility costs incurred by non- aeronautical concessionaires, such as retail outlets, food shops, beverage stores, and cargo operations. For cost computation purposes, MIAL has adjusted the utility consumption attributed to these non-aeronautical concessionaires. 4.9.38 The Authority reviewed the utility costs submitted by MIAL for the true-up of the Third Control Period, along with the costs approved in the Third Control Period Order. The Authority has analyzed the average consumption, average rates, and net recovery from concessionaires as provided by MIAL in the table below: Table 100: Electricity Cost as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Gross Consumption (KwH) A 16.19 9.93 12.06 15.15 16.43 69.76 Recoveries (KwH) B 5.09 2.67 3.77 4.86 5.42 21.81 Net Consumption (KwH) C=A-B 11.1 7.26 8.29 10.29 11.01 47.95 Rate per KwH D 11.33 8.98 8.68 10.17 11.58 Gross Amount E=C*D 125.82 65.15 71.94 104.68 127.48 495.07 Other Credit and Recoveries F 12.41 6.44 5.7 4.68 4.91 34.14 Net Amount G=E-F 113.41 58.71 66.24 100 122.57 460.93 Table 101: Water Cost as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Consumption (KL) A 0.16 0.1 0.13 0.16 0.15 0.70 Recoveries (KL) B 0.04 0.02 0.03 0.04 0.01 0.14 Net Consumption (KL) C=A-B 0.12 0.08 0.1 0.13 0.14 0.56 Rate per KL D 88.38 94.45 99.95 107.00 108.20 Gross Amount E= C*D 10.49 7.32 10.02 13.58 14.72 56.12 Savings due to recycled water F 3.02 2.5 3.28 5.06 4.67 18.52 Net Amount G= E-F 7.47 4.82 6.74 8.52 10.05 37.60 4.9.39 The comparison of cost submitted by MIAL for true-up and as approved by the Authority in the Third Control Period is given in the table below: Table 102: Comparison of Utilities Expenses as submitted by MIAL for True up and as approved by the Authority for the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Electricity Cost A 113.41 58.71 66.24 100.00 122.57 460.93 Water Cost B 7.47 4.82 6.74 8.52 10.05 37.60 Fuel Cost C 0.07 0.00 0.42 (0.12) 0.13 0.50 Utilities Cost as D = submitted by 120.95 63.53 73.40 108.40 132.75 499.03 A+B+C MIAL Utilities Cost as approved in the E 147.30 92.14 79.38 128.83 142.48 590.12 Third Control Period Order Difference F = E-D 26.35 28.61 5.98 20.43 9.73 91.09 Consultation Paper No. 08/2024-25 Page 109 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.9.40 The Authority notes that the Utility charges (net of recoveries) incurred by MIAL in the Third Control Period are substantially lower than the charges approved by the Authority in the Third Control Period. Therefore, the Authority proposes to allow utility expenses of Rs. 499.03 Crores submitted by MIAL as per Table 102. Repair and Maintenance Expenses 4.9.41 The Authority notes that repair and maintenance expenses include cost incurred towards repair and maintenance (including annual maintenance contracts) in nature of: (i) Civil Works at the passenger, terminal, cargo areas, etc, (ii) Electrical Works such as aerobridges, airside ground lighting, air conditioning equipment, power supply and degeneration sets, etc, (iii) Plant and Machinery, (iv) IT & Electronics, (v) Vehicles, (vi) Furniture’s and Fixtures. 4.9.42 The Authority has reviewed the costs submitted by MIAL for the true-up of the Third Control Period and compared them with the costs approved in the Third Control Period Order. Table 103: Comparison of Repairs and Maintenance Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Civil Works 62.50 22.18 27.28 25.82 13.45 151.22 Electrical Works 85.52 77.74 78.65 91.07 50.49 383.48 Plant & Machinery 8.32 4.93 13.50 59.76 67.49 154.00 IT & Electronics 21.53 21.18 43.73 22.12 35.06 143.63 Security Automation - - - 2.54 5.03 7.57 Expenses Vehicles 1.16 1.00 1.12 3.35 0.32 6.95 Furniture’s and 0.49 0.13 0.13 0.75 0.37 1.88 Fixtures Others - - - - 8.07 8.07 R&M Expenses as submitted by MIAL 179.53 127.17 164.41 205.41 180.29 856.81 (a) R&M Expenses as approved in the Third 128.19 133.06 139.52 143.82 146.04 690.62 Control Period Order (b) Difference (b-a) (51.34) 5.89 (24.89) (61.59) (34.25) (166.19) 4.9.43 The Authority notes that the cost incurred by MIAL is higher than the amount approved by the Authority in the Third Control Period by Rs. 166.19 Crores. This excess is attributed to a variance in the tariff order of the Third Control Period as stated by MIAL in para’s from 4.9.7 and 4.9.8, which is explained with an example below: Consultation Paper No. 08/2024-25 Page 110 of 349TRUE UP OF THE THIRD CONTROL PERIOD Figure 3 – Repair and Maintenance Expenses – Comparison what was done in the Third Control Period Order to how it should have been done 4.9.44 Apart from the above, R&M expenses has increased due to discontinuation of AMC costs for security equipment by NASFT. 4.9.45 It is further noted that R&M expenses incurred by MIAL is less than benchmark 6% of opening RAB. 4.9.46 Accordingly, the Authority proposes to consider the cost of Rs 856.81 Crores submitted by MIAL as per Table 103 for the True up of Repair and Maintenance Expenses. Rents, Rates and Taxes: 4.9.47 The Authority notes that the Rents, Rates and Taxes include rental paid for accommodating custom offices, guest house rentals, property taxes, non-agricultural tax, and other levies of similar nature. 4.9.48 The Authority has analyzed the cost submitted by MIAL for the True up of the Third Control Period and also compared it with the cost approved in the Third Control Period Order in the below table: Table 104:Comparison of Rents, Rates and Taxes Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Rents 9.87 8.60 11.77 13.79 11.30 55.33 Other Rates and Taxes 0.12 0.09 0.02 - - 0.23 Property Tax 15.18 16.74 17.28 0.35 25.78 75.33 Non-Agricultural Tax 20.80 18.41 18.98 39.74 20.17 118.11 Rent, Rates and Taxes as 45.97 43.84 48.05 53.88 57.25 248.99 submitted by MIAL (a) Rent, Rates and Taxes as approved in the Third Control 46.26 46.92 76.41 87.41 88.28 345.26 Period Order (b) Difference (b-a) 0.29 3.08 28.36 33.53 31.03 96.27 Consultation Paper No. 08/2024-25 Page 111 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.9.49 The Authority observes that the expense incurred by MIAL is lower than cost approved in the Third Control Period on account of the following: (i) Increase in Agricultural Tax, which was originally estimated to increase 3 times once in every 5 years, was much lower due to the Covid-19 pandemic. (ii) The increase in Property Tax, which was originally expected to be around 40%, was much lower due to the Covid-19 pandemic. 4.9.50 The Authority also reviewed the few tax challan documents and found MIAL’s submission satisfactory, therefore the Authority has decided to consider the cost of Rs 248.99 Crs as submitted for True up by MIAL for the Third Control Period as per Table 104. Advertisement Expenses: 4.9.51 The Authority notes that advertisement expenses include expenses towards general advertisement, retention of a PR agency and surveys relating to customer satisfaction. Table 105: Comparison between advertisement cost as submitted by MIAL for True up and as Approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total As submitted by MIAL (a) 5.17 2.28 3.06 8.17 3.58 22.26 As approved in the Third Control Period 5.00 5.00 5.00 5.00 5.00 25.00 Order (b) Difference (b-a) (0.17) 2.72 1.94 (3.17) 1.42 2.74 4.9.52 The Authority had capped the Advertisement Expenses at Rs. 5 Crores/year in the Third Control Period Order and notes that the total expenses incurred by MIAL is lower than the amount approved in the Third Control Period Order. The Authority on its examination noted that: (i) MIAL has exceeded the cap in FY 2019-20 by Rs. 0.17 Crores and by Rs. 3.17 Crores in FY 2022- 23. The total expenditure is however within the overall cap for the Third Control Period. 4.9.53 Consequently, the Authority proposes considering the advertisement expenditure of Rs 22.26 Crores submitted for true-up by MIAL as per Table 105. Administrative Expenses: 4.9.54 The Authority notes that the administrative expenses include legal fees, professional fees, travelling and lodging expenses, telephone expenses, business development, conveyance, printing & stationery, subscription / membership fees and hospitality expenses. 4.9.55 The Authority examined the Administrative Expenses submitted by MIAL for True up with the cost approved in the Third Control Period Order as per Table below: Table 106: Comparison between Administrative Expenses submitted by MIAL for True up and as approved by the Authority in the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Miscellaneous Expenses 8.72 4.75 2.60 11.27 7.14 34.48 Travelling and Conveyance 4.84 3.76 1.87 2.02 1.70 14.19 Communication Expenses 1.15 1.30 0.96 1.51 0.79 5.71 Director’s Sitting Fees 0.34 0.29 0.45 0.31 0.36 1.75 Consultation Paper No. 08/2024-25 Page 112 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Donation 1.71 - - - - 1.71 Professional Charges 47.23 29.33 5.26 4.96 23.70 110.48 Remuneration to Auditors 0.96 0.53 1.50 0.63 1.19 4.81 Legal Expenses 13.85 19.37 11.23 21.09 24.94 90.48 Administrative Expenses as 78.80 59.33 23.87 41.79 59.82 263.60 submitted by MIAL (a) Administrative Expenses as approved in the Third Control 83.10 68.22 73.80 79.40 85.02 389.54 Period Order (b) Difference (b-a) 4.30 8.89 49.93 37.61 25.20 125.94 4.9.56 The Authority observes that MIAL has included donation expenses of Rs. 1.71 Crores as part of Administrative Expenses. However, since donations are not related to airport operations, the Authority proposes not to consider the same. 4.9.57 The Authority further notes that the Administrative Expenses submitted by MIAL for true-up is lower than the cost approved by the Authority for the Third Control Period by Rs. 125.94 Crores (32.33%), primarily due to variances in Travelling & Conveyance expenses (lower by Rs. 56 Crores) and Professional Fees (lower by Rs. 59 Crores) on account of Covid-19. 4.9.58 Accordingly, the Authority proposes to consider the costs of Rs 261.89 Crores for the true up of Administrative Expenses as per Table 107 for the Third Control Period, after excluding donation expenses of Rs 1.71 Crores. Table 107: Administrative Expenses proposed by the Authority for True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Miscellaneous Expenses 8.72 4.75 2.60 11.27 7.14 34.48 Travelling and Conveyance 4.84 3.76 1.87 2.02 1.70 14.19 Communication Expenses 1.15 1.30 0.96 1.51 0.79 5.71 Director’s Sitting Fees 0.34 0.29 0.45 0.31 0.36 1.75 Professional Charges 47.23 29.33 5.26 4.96 23.70 110.48 Remuneration to Auditors 0.96 0.53 1.50 0.63 1.19 4.81 Legal Expenses 13.85 19.37 11.23 21.09 24.94 90.48 Administrative Expenses 77.09 59.33 23.87 41.79 59.82 261.89 Airport Operator Fees: 4.9.59 In line with the requirements of OMDA, MIAL entered into an airport operator agreement with ACSA Global Limited on 28.04.2006 to leverage their expertise in airport operations as mentioned in the extract below: Extract from Schedule 8 of OMDA: “Form of Airport Operator Agreement (AOA) The Joint Venture Company is required to enter into an AOA with the Airport Operator (AO), who is a member of the consortium (nominated if more than one AO are in the consortium) which contractually sets out the role, responsibilities, accountabilities and financial arrangements between the AO and the JVC.” Consultation Paper No. 08/2024-25 Page 113 of 349TRUE UP OF THE THIRD CONTROL PERIOD “The term of the AOA must be for a minimum term of seven (7) years from the Effective Date of OMDA with any change of AO subject to the approval of the AAI.” 4.9.60 MIAL has submitted the AOA Cost as part of true-up of the Third Control Period, and the same has been compared with the cost approved in the Third Control Period Order as per table below: Table 108: Comparison of Airport Operator Fees as submitted by MIAL for true up and as approved in the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total AOA Fees as submitted by 10.53 8.81 - - - 19.34 MIAL (a) AOA Fees as approved in the Third Control Period 9.88 10.07 10.26 10.46 10.66 51.34 Order (b) Difference (b-a) (0.65) 1.26 10.26 10.46 10.66 32.00 4.9.61 MIAL has stated that, “Airport Operator Fee has been discontinued post the acquisition of MIAL by Adani Group.” The Authority has noted that OMDA has permitted engaging a Airport operator for the first seven years from the commencement of the Airport (Refer the relevant extract from OMDA in para 4.9.59) and this has been consistently included in the operating costs in the previous controls periods. The Authority further notes that the Airport Operator Arrangement fees has been discontinued since FY 22 onwards. 4.9.62 Since the cost submitted by MIAL for true-up is as per the provisions of OMDA, the Authority proposes to consider it as a part of operating expenditure for true up. Insurance Expenses: 4.9.63 The Authority notes that insurance expenses include premium paid for Mega Risk Policy, Airport Operator’s Liability Policy and for Cyber Policy. 4.9.64 The Authority examined the Insurance Cost submitted by MIAL for the true up of the Third Control Period with the cost approved by the Authority in the Third Control Period Order in the table below: Table 109: Comparison of Insurance Expenses as submitted by MIAL for True up and as approved in the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Mega Risk Policy 7.73 12.97 10.49 10.92 11.78 53.89 Airport Operators Liability 0.36 1.37 1.57 2.31 2.42 8.03 Insurance Policy Cyber Crime Policy 0.25 0.61 0.99 2.33 2.37 6.55 Terrorism Premium Policy 0.23 0.38 0.33 0.46 0.57 1.97 Industry All Risk Policy 0.54 - - - 0.00 0.76 Vehicle Insurance Policy 0.11 0.02 0.02 0.11 0.24 0.44 Others - 0.20 1.74 0.13 0.42 2.27 Insurance Expenses as 9.15 15.54 15.13 16.05 17.83 73.70 submitted by MIAL (a) Insurance Expenses as approved in the Third Control 4.58 8.19 8.56 8.96 9.37 39.64 Period Order (b) Difference (b-a) (4.57) (7.35) (6.57) (7.09) (8.46) (34.06) Consultation Paper No. 08/2024-25 Page 114 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.9.65 The Authority has reviewed the insurance expenses incurred by MIAL during the Third Control Period and notes that the actual expenses totaled is higher than the cost approved in the Third Control Period Order by 34.06 Crores (85.92%). 4.9.66 MIAL was asked to submit details justifications for the variance, the summary of which is given below: (i) Variance of approximately Rs. 27 Crores is primarily on account of a significant increase in insurance rates post-COVID, attributable to the heightened risk awareness and an increase in the frequency of claims globally. (ii) Additionally, MIAL has introduced a new Cyber Crime Policy during FY 2022-23, incurring an insurance premium cost of Rs. 6.55 crores. This policy was implemented to address the growing threat of cyberattacks, which have increasingly targeted airports worldwide. 4.9.67 After examination, the Authority finds the explanations provided by MIAL to be satisfactory and proposes to consider the insurance costs of Rs 73.70 Crores submitted by MIAL as per Table 109 for the true-up for the Third Control Period. Consumable Stores Expenses: 4.9.68 Consumable Store Expenses include expenses towards purchase and consumption of facility stores including engineering stores, cleaning chemicals and other consumables. 4.9.69 The Authority has analyzed the Consumable Store Expenses submitted by MIAL for True up of the Third Control Period with the cost approved in the Third Control Period Order as per the table below: Table 110: Comparison of Consumable Stores Expenses as submitted by MIAL for True up and as approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Consumable Stores as submitted by 8.63 5.12 9.05 20.41 17.47 60.68 MIAL (a) Consumable Stores as approved in 6.34 7.11 8.13 10.00 10.46 42.03 the Third Control Period Order (b) Difference (b-a) (2.29) 1.99 (0.92) (10.41) (7.01) (18.65) 4.9.70 The Authority notes that the consumable expenses submitted by MIAL for true-up is approximately 44% higher than the expenses approved by the Authority in the Third Control Period, with majority of the variance observed in FY 2022-23 and FY 2023-24. 4.9.71 The Authority sought detailed justifications from MIAL for this variance. MIAL submitted that there is an increase due to a reclassification of certain expenses post takeover by the new management (Adani Group). Items such as gels, lubricants, and similar materials used for runway sweeping machines, fire alarm systems, and other equipment, which were previously classified as Repair and Maintenance Expenses, were reclassified to Consumable Store Expenses. 4.9.72 Considering the increase is on account of an accounting reclassification, and also reviewing the breakup provided by MIAL, the Authority finds the explanation satisfactory, and proposes to consider MIAL's submission of Rs 60.68 Crores as per Table 110 for the true-up of consumable expenses for the Third Control Period. Consultation Paper No. 08/2024-25 Page 115 of 349TRUE UP OF THE THIRD CONTROL PERIOD Operating Contracts 4.9.73 The Authority analyzed MIAL’s submission regarding Operating Contracts (which includes cleaning, security, horticulture, trolley, medical emergencies, etc.) for the True up of the Third Control Period with the cost approved in the Third Control Period Order as per table below: Table 111: Comparison of Operating Contract Expenses as submitted by MIAL for true up and as approved in the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Security Contracts 21.43 18.47 14.45 0.04 - 54.39 Gardening Contracts 8.11 5.45 6.44 5.84 6.60 32.44 Cleaning Contracts 67.35 45.99 49.09 65.29 70.21 297.94 Trolley Contracts 15.25 8.46 8.77 12.12 13.80 58.40 Other Operating Contracts 47.16 71.75 48.86 78.29 84.10 330.16 Operating Contracts Cost as submitted by 159.30 150.12 127.61 161.58 174.71 773.32 MIAL (a) Operating Contracts Cost as approved in the 149.72 156.65 163.90 171.49 179.43 821.20 Third Control Period Order (b) Difference (b-a) (9.58) 6.53 36.29 9.91 4.72 47.88 4.9.74 The Authority observes that MIAL has reclassified certain expenses, such as certain security, gardening and cleaning contracts, to the "Other Operating Contracts" category, particularly in FY 2023-24. It is observed that this is only an internal sub-category reclassification within the head “operating contracts”. 4.9.75 The Authority notes that the Operating Contract Expense submitted by MIAL is lower than the cost approved in the Third Control Period Order by 47.88 Crores (5.83%), which MIAL submits is because of lower expenditure incurred during the periods affected by the Covid-19 pandemic. 4.9.76 The Authority proposes to consider the cost of Rs 773.32 Crores as per Table 111 as submitted by MIAL for the True up of the Third Control Period. Working Capital Interest: 4.9.77 The Authority has reviewed MIAL's submission regarding the True-up of Working Capital Interest for the Third Control Period. 4.9.78 It is noted that in the Third Control Period Order, the Authority did not allow any costs for Working Capital Interest, as MIAL had not included the same in its submissions at that time. However, MIAL had indicated that such costs might be required if the tariff was set at a lower rate. The Authority had concluded that this matter would be reviewed during the Fourth Control Period, based on the actual incurrence of costs and submission of proper justification. 4.9.79 The Authority observes that MIAL had a separate working capital loan during FY 2019-20, FY 2020-21, and part of FY 2021-22, for which interest was paid at a rate of 9.25%. Following the refinancing of its project loan through an External Commercial Borrowing (ECB) facility, MIAL surrendered this working capital facility in FY 2021-22. 4.9.80 The Authority notes MIAL’s submission in its current MYTP, Consultation Paper No. 08/2024-25 Page 116 of 349TRUE UP OF THE THIRD CONTROL PERIOD “At the start of the Third Control Period, MIAL has cash/credit working capital limits of upto Rs. 330 Crores which it used for working capital purposes. The average utilization of these facilities varied with time depending on business requirements and average utilization was in the range of Rs. 180 to Rs. 200 Crores.” 4.9.81 Thus, based on the above, MIAL has now submitted a working capital loan interest at a cost of Rs. 17.50 crores per year, for the remaining part of FY 2021-22, and the whole years of FY 2022-23, and FY 2023- 24. This is worked out on a working capital loan of Rs. 180 crores at an implied interest rate of approximately 9.72% per annum. 4.9.82 Upon reviewing MIAL’s financial statements, the Authority notes the need for a working capital facility for the last three financial years in the Third Control Period, as summarized in the table below: Table 112: Working Capital Interest Requirement Computation by Authority for Analysis (Rs. in crores) Particulars Ref FY 22 FY 23 FY 24 Total Current Assets a1 1,646.23 2,117.97 1,718.64 Cash & Equivalents a2 581.64 467.19 508.90 Current Investments a3 - 70.11 283.48 Net Current Assets A = a1-a2-a3 1,064.59 1,580.67 926.26 Total Current Liabilities b1 9,715.12 2,603.20 1,272.12 WC Loan / Short Term Borrowings b2 8,493.00 800.05 - Capital Creditors b3 286.84 254.46 276.40 Interest Accrued but Not Due b4 0.64 171.73 174.32 Net Current Liabilities B = b1-b2-b3-b4 934.64 1,376.96 821.40 Net Working Capital Required C = A-B 129.95 203.71 104.85 4.9.83 The Authority observes that the average working capital requirement for the three financial years (FY 22, FY 23 and FY 24) is approximately Rs. 150 Crores based on the figures reported as of the respective balance sheet dates as presented in the table above. However, it is recognized that the closing balance sheet figures may not accurately reflect the actual utilization of the working capital during the year, as they are derived from year end balances. Actual utilization may differ due to efforts typically undertaken at the year-end to minimize receivables, while interim requirements and delays in realization may result in higher working capital usage. 4.9.84 MIAL has currently claimed a notional working capital of around Rs. 180 Crores Y-o-Y. As highlighted in MIAL’s submission (Refer para 4.9.80), the historically availed working capital facility has generally been within the same range as the amount currently requested by MIAL. 4.9.85 Consequently, the need for a Working Capital Loan has been established as per the above table and is proposed to be approved by the Authority. The Authority has reviewed the basis of the working capital claimed by MIAL as summarized in the table below: Table 113: Working Capital Loan and Interest as submitted by MIAL for the Third Control Period True up (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Working Capital Loan as A 290.73 74.45 180.00 180.00 180.00 submitted by MIAL Working Capital Loan Interest as submitted by B 24.98 28.00 27.23 17.50 17.50 115.21 MIAL Consultation Paper No. 08/2024-25 Page 117 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.9.86 The Authority notes that the notional working capital interest claimed by MIAL is lower than the Cost of Debt with a cap of 10.30% approved in the Third Control Period Order. Accordingly, the Authority proposes to consider MIAL’s submission of Rs 115.21 Crores as working capital interest for the True up of the Third Control Period. Financing Charges: 4.9.87 The Authority has reviewed the submission by MIAL for the True up of Financing Charges for the Third Control Period and compared it with the cost approved in the Third Control Period order in the table below: Table 114: Comparison between Financing Charges as submitted by MIAL for True up and as approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Financing Charges as 24.74 14.98 162.64 38.93 27.77 269.06 submitted by MIAL (a) Financing Charges as approved in the Third Control 20.00 20.00 20.00 20.00 20.00 100.00 Period Order (b) Difference (b-a) (4.74) 5.02 (142.64) (18.93) (7.77) (169.06) 4.9.88 The Authority observes that MIAL’s submission for financing charges substantially exceed the costs approved in the Third Control Period order, primarily due to two refinancing charges incurred during the Third Control Period: (i) an interim arrangement (Bridge-to-Bond Loan) in FY 2021-22 of Rs. 7,250 Crs. (ii) a long-term (i.e., 7.25 years) ECB Loan in FY 2022-23 of Rs. 8,294 Crs. The financing charges for this ECB loan is being amortized over the loan period. Table 115: Breakup of Financing Charges as submitted by MIAL for True up of the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Upfront Fees on Amortization of SBI A 16.01 6.78 54.34 - - 77.13 Loan One-time refinancing fee B - - 100.94 - - 100.94 on short term loan Amortization of One- time refinancing fee on C - - - 18.81 12.17 30.98 ECB loan DF Loan Charges - - 2.41 - - 2.41 ADF Loan Advisory D - - - 11.35 12.30 23.65 Fees – Barclays Exchange Rate Differential on Financial E - - - 3.72 - 3.72 Instruments Bank Guarantee / Commission / Other F 8.73 8.20 4.94 5.05 3.30 30.22 Charges Financing Charges as G = Sum 24.74 14.98 162.64 38.93 27.77 269.06 submitted by MIAL (A:F) 4.9.89 MIAL submitted the following details for refinancing charges incurred: Consultation Paper No. 08/2024-25 Page 118 of 349TRUE UP OF THE THIRD CONTROL PERIOD (i) MIAL paid re-financing charges of Rs 100.94 Crores for an interim bridge-to-bond loan. This was acquired partly as a Non-Convertible Debenture and partly as a Short-Term Loan at an interest rate of 11%. The arrangement was funded by lenders including Standard Chartered Bank, Aseem Infrastructure Finance Limited, Deutsche Bank AG, DB International (Asia) Limited, J.P. Morgan Securities India Pvt. Ltd., J.P. Morgan Securities Asia Pvt. Ltd., and Arka Fincap Limited. MIAL paid an upfront fee of 1.39%, increasing the effective cost of this borrowing to 11.16%. (ii) Additionally, MIAL paid refinancing charges of Rs. 107.52 crores (being 1.70% of the ECB Loan of USD 75 million), which is being amortized over the tenure of the loan of 7.25 years starting July 2022. 4.9.90 The Authority notes that the bridge-to-bond refinancing arrangement was executed at a notably high cost, which is considered inefficient. While the Authority has allowed refinancing charges in cases where they lead to more efficient borrowing, this arrangement presents a high-cost structure. The total upfront charges (100.94 + 107.52 = Rs. 208.46 Crores) for the total borrowing, which comes to almost 3.28%, exceeds industry benchmarks. The upfront fee of Rs. 100.94 crore incurred in FY 2021-22 represents 11.74% of MIAL’s total operating expenditure for the year, which is considered very high. 4.9.91 The Authority observes that financing costs in India typically range from 9.5% to 10.15%. By comparison, MIAL's refinancing charges during the Second Control Period (FY 2016-17) amounted to Rs. 50 Crores, which reflected a more cost-effective arrangement. Given the critical importance of financing efficiency for large projects, the Authority proposes to exclude the one-time refinancing fee of Rs. 100.94 crores, considering it inefficient. 4.9.92 The Authority further observes: (i) The ADF Loan Advisory Fees of Rs. 23.65 crores (Ref 'd' in Table 115) pertain to assets funded through DF and cannot be included in the tariff computation. (ii) The Exchange Rate Differential of Rs. 3.72 crores (Ref 'e' in Table 115) is a notional cost related to financial instruments, which is ultimately included in interest and finance costs upon settlement. Therefore, it cannot be considered under operating expenditure. 4.9.93 Based on the analysis, the Authority proposes considering Rs. 138.33 Crores out of the Rs. 269.06 Crores claimed by MIAL, as detailed in the table below: Table 116: Financing Charges as proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Financing Charges 24.74 14.98 59.28 23.86 15.47 138.33 Runway Recarpeting and Carrying Cost of Runway Recarpeting 4.9.94 The Authority reviewed MIAL's submission regarding Runway Recarpeting Expenses, including the carrying cost, and compared it with the expenses approved in the Third Control Period Order. 4.9.95 It is further noted that in the Third Control Period Order, the Authority did not allow the inclusion of carrying costs for runway recarpeting, as the amortization of these expenses over five years was intended to ensure tariff stability, rather than to provide returns on such expenditures. Consultation Paper No. 08/2024-25 Page 119 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 117: Comparison of Runway Recarpeting Cost as submitted by MIAL for True up and as approved in the Third Control Period Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Runway Recarpeting as 39.56 39.56 39.66 39.66 27.67 186.11 submitted by MIAL (a) Runway Recarpeting as 13.74 59.45 59.45 59.45 47.46 239.55 approved in 3rd CP Order (b) Difference (b-a) (25.82) 19.89 19.79 19.79 19.79 53.44 Table 118: Carrying Cost on Runway Recarpeting as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Carrying cost on runway recarpeting as submitted by 12.76 16.65 11.48 6.27 1.84 48.99 MIAL (a) Carrying cost on runway recarpeting as approved in - - - - - - the Third Control Period Order (b) Difference (b-a) (12.76) (16.65) (11.48) (6.27) (1.84) (48.99) 4.9.96 The Authority observes that the actual runway recarpeting costs submitted by MIAL for the true-up of the Third Control Period are lower than those approved in the Third Control Period Order due to shifting of the completion dates. However, the Authority finds that the overall cost incurred is in line with the industry benchmark and proposes to allow the cost of runway recarpeting as submitted by MIAL in Table 117. 4.9.97 Regarding the carrying cost for runway recarpeting, the Authority notes that MIAL has submitted this cost in line with the TDSAT Order (Refer para 1.8.1). The Authority, taking note of its decisions in other recent tariff orders, proposes to consider the carrying cost for the true-up of the Third Control Period, 4.9.98 The Authority further observes that the costs incurred for the recarpeting of Runway 14/32 and Runway 09/27 have been reclassified from Capital Expenditure (Refer Table 66) to Operating Expenditure, of which the amortization for recarpeting Runway 09/27 is already included in MIAL’s submission for Operating Expenditure. The Authority proposes to consider the amortization of Runway 14/32 of Rs. 114.68 Crores over a period of 5 years starting from FY 2023-24 with carrying cost based on the FRoR of 12.81% (Refer 4.8.25). Table 119: Runway Recarpeting and Carrying Cost on Runway Recarpeting as proposed by the Authority for True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Runway Recarpeting 39.56 39.68 40.44 40.44 51.46 211.59 Carrying cost on runway 12.44 16.23 11.38 6.45 7.93 54.44 recarpeting Table 120: Carrying Cost on Runway Recarpeting computation by the Authority (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Opening unamortized amount 47.94 146.27 107.17 70.55 30.11 Add: Addition 137.89 0.58 3.83 - 115.02 Less: Amortized During the year 39.56 39.68 40.44 40.44 51.46 Closing unamortized amount 146.27 107.17 70.55 30.11 93.66 Consultation Paper No. 08/2024-25 Page 120 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Average unamortized amount (a) 97.10 126.72 88.86 50.33 61.89 FRoR (b) 12.81% 12.81% 12.81% 12.81% 12.81% Carrying cost on runway recarpeting (c = 12.44 16.23 11.38 6.45 7.93 54.44 a*b) 4.9.99 Based on the above, the Authority proposes to allow Runway Recarpeting cost and carrying cost on runway recarpeting as per Table 119 above. Corporate Cost: 4.9.100 The Authority notes that MIAL submitted Corporate Cost of Rs. 338.39 Crores in its MYTP for the Third Control Period, but the same was not allowed by the Authority then as it did not find merit in MIAL’s request for separate allowance of corporate costs (Refer Para 6.4.10 of the Third Control Period Order). 4.9.101 As part of the true-up of the Third Control Period submitted as part of the MYTP of the Fourth Control Period, MIAL has once again submitted corporate costs of Rs. 267.57 Crores as part of their operating expenses. MIAL submits that these are towards support services received from the Holding Companies, namely AEL and AAHL. 4.9.102 AEL provides various strategic functions/activities like corporate finance, legal, central procurement, green initiative, ESG, Information technology, human resource management, etc., and also includes various leadership functions. AAHL through its corporate structure, provides expertise and specialist domain knowledge in Airports Operation, Airside Management, Master Planning, Designing, Airport Development, Airport Regulatory, Hospitality, Customer management, Cargo Development and management, Airline Marketing, Non-Aeronautical etc. 4.9.103 AEL and AAHL incur costs at the corporate level to provide these services and support to various Group Companies (including Airports) and Airport companies. The major composition of these costs includes salaries and administrative costs. These costs (except shareholders services and non-Aeronautical services) are recovered by AEL and AAHL through a pre- determined, appropriate allocation method. 4.9.104 Similar corporate cost allocation process is used by other private airport operators’ holding entities, such as GMR Infrastructure Limited (GIL) and GMR Airports Limited (GAL), which provide corporate administration services to DIAL and GHIAL, and their costs are allocated based on suitable drivers. Similarly, AAI also allocates its Central Head Quarters (CHQ) / Regional Head Quarters (RHQ) costs to various airports based on appropriate cost drivers. The detailed break-up of the actual cost along with the basis of allocation submitted by MIAL is given below: Table 121: Cost Allocation from AAHL as submitted by MIAL (Rs. in crores) Cost Allocation from Allocation Basis approved in Board meeting dated FY 22 FY 23 FY 24 AAHL 15th Mar 22 Ratio of No of MIAL Employees: Total No of Human Resource 9.05 8.37 3.6 employee in airport grp Ratio of Per Pax Revenue of MIAL to Per Pax Revenue CEO's Office 4.75 5.33 5.89 of all airports Finance Tax & Internal Ratio of Debt raised for MIAL to total Debt raised for 2.06 5.78 2.61 Audit Airport Group & Ratio of Turnover Ratio of Number of IT users in MIAL to total IT users IT 2.06 4.48 2.25 in all airports Inhouse Legal Team 0.83 1.05 1.70 Ratio of Legal of MIAL to Total Legal of all airports Consultation Paper No. 08/2024-25 Page 121 of 349TRUE UP OF THE THIRD CONTROL PERIOD Cost Allocation from Allocation Basis approved in Board meeting dated FY 22 FY 23 FY 24 AAHL 15th Mar 22 Total 18.76 25.01 16.05 Table 122: Cost Allocation from AEL as submitted by MIAL (Rs. in crores) Allocation Basis approved in Board Cost Allocation from AEL FY22 FY23 FY24 meeting dated 15th Mar 22 Ratio of No. of MIAL Employees: Total No. of Human Resource 23.3 14.72 28.46 Adani Group Employees Finance Tax, & Internal Ratio of Debt raised for MIAL to total Debt 17.81 20.82 14.96 Audit raised for Adani group & Ratio of Turnover Ratio of Number of IT users in a MIAL to total IT 15.42 10.51 8.81 Group users Ratio of Legal of MIAL to Total Legal of all Legal Services 0.67 1.02 0.30 airports CMD Office 9.11 19.81 8.26 Ratio of a MIAL PBT to Group PBT Land and Estate 0.31 - - Ratio of a MIAL PBT to Group PBT Ratio of Turnover of a MIAL to Total Group Central Procurement Cell 0.08 - - Turnover Total 66.72 66.88 60.78 Note: MIAL has wrongly grouped some portion of the corporate cost under Professional Expenses in the Head Administrative expenses- Rs 5.99 Crores in FY22 and Rs 8.12 Crores in FY23. Table 123: Corporate Cost as submitted by MIAL for True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Corporate Cost Allocation - - 91.47 100.10 76.00 267.57 4.9.105 MIAL has submitted that the activities of certain Functions such as Finance, HR & Admin and IT are performed both centrally at Corporate (AEL, AAHL) and at individual Airports. The same has been detailed as follows: (i) Activities performed at the Corporate level: These are strategic, decision-making activities that are carried out across the Group such as: a) Designing policies and procedures, benchmarking and standardization of processes across the Group b) Monitoring annual budgeting process c) Implementation of ERP for the Group (particularly Finance and HR functions) d) Reviewing performance of the Group and providing guidance to Group Companies e) Maintaining Adani Airports Information Repository, standards in software development and networking. f) Identifying new revenue generating IT services, technologies and solutions. (ii) Activities performed at the Airport: These are operational in nature which includes: a) Recording of Financial data in ERP b) Preparation of monthly MIS for presenting it to corporate team c) Financial due diligence of various proposals. d) Conducting interviews at site level for hiring of manpower and managing manpower at the site. Consultation Paper No. 08/2024-25 Page 122 of 349TRUE UP OF THE THIRD CONTROL PERIOD e) Executing Performance appraisal process and providing feedback to corporate team. f) Executing day-to-day IT requirements at the Airport. g) Maintaining airport related IT assets such as AODB, FIDS, software used in AOCC, etc. h) Support HO/Corporate IT team in the areas of IT Strategy, delivery, and Governance. 4.9.106 The Authority notes that AEL on an overall basis, extends support and guidance to various Group Companies and AAHL provides expertise and specialist domain knowledge to the Airport Companies, which are essential for the sustainable operations of the business. The major composition of the costs of these services includes salaries and administrative costs that are recovered by AEL and AAHL through an appropriate allocation method. Further, this process is consistent with the approach followed by other PPP airports such as DIAL, GHIAL etc. for allocation of corporate costs to the Airports. Based on the above factors, the Authority considers the apportionment of costs of AEL and AAHL to MIAL as reasonable. 4.9.107 In view of the above, the Authority proposes to consider the Corporate Cost Allocation sought by MIAL. However, the Authority observes that the aforementioned cost includes the allocated costs of legal team of AEL (Rs. 1.99 Crores) and AAHL (Rs. 3.58 Crores), which is in addition to the cost of employees of Legal department available at MIAL, already considered under the employee expenses (Refer Table 97 above) and is not justified. Hence, the Authority proposes to exclude these legal costs of Rs. 5.67 Crores and consider only the remaining amount submitted by MIAL. Table 124: Corporate Cost as proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Corporate Cost as submitted - - 91.47 100.10 76.00 267.57 by MIAL Less: Legal Expenses - - 1.50 2.17 2.00 5.67 Corporate Cost as - - 89.97 97.93 74.00 261.90 proposed by the Authority Other Expenses: 4.9.108 The Authority notes that MIAL in its MYTP has submitted the following miscellaneous expenses: Table 125: Other Expenses as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Provision for Bad Debts 6.08 36.39 3.24 15.09 0.43 61.23 Bad Debts Written off 1.41 - 10.66 19.46 0.71 32.24 Loss on Scrapping of Assets 2.35 - - - - 2.35 Collection Charges over DF 2.96 2.75 0.41 5.52 5.77 17.41 CSR Cost 0.48 0.04 - - - 0.52 Exchange Gain and Loss 0.03 0.12 - 0.37 (0.14) 0.38 CWIP Written off - - 8.65 - - 8.65 Investment Written off - - 0.06 - - 0.06 Total Other Expenses 13.31 39.30 23.02 40.44 6.77 122.84 4.9.109 The Authority notes that, while all of these expense are non-aeronautical in nature, MIAL has considered a portion of Bad Debts Written Off as Aeronautical Expenditure. MIAL has explained that the reason for this to be as majority of the bad debts arise from unreconciled amounts for services rendered to Air India Ltd. 4.9.110 The Authority observes that MIAL has failed to reconcile these receivables and collect its dues, resulting in the recovery of inefficient costs through the tariff. Based on this assessment and upon review, the Authority Consultation Paper No. 08/2024-25 Page 123 of 349TRUE UP OF THE THIRD CONTROL PERIOD has determined that all these expenses listed in Table 125 related to non-core services and all of these services are non-aeronautical in nature. Therefore, the Authority proposes to reject MIAL's claim and has not considered these expenses for tariff computation. 4.9.111 Based on the above analysis, the Authority proposes operating and maintenance expenses for the true up of the Third Control Period as provided below: Table 126: Operating Expenses as proposed by the Authority for True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Employee Cost 217.68 220.79 168.02 146.12 159.37 911.98 Utilities (net of recoveries) 120.95 63.53 73.40 108.40 132.75 499.03 Repair & Maintenance Expenses 179.53 127.17 164.41 205.41 180.29 856.81 Rent, Rate and Taxes 45.97 43.84 48.05 53.88 57.25 248.99 Advertisement Expenses 5.17 2.28 3.06 8.17 3.58 22.26 Administrative Expenses 77.09 59.33 23.87 41.79 59.82 261.89 AOA Fees 10.53 8.81 - - - 19.34 Insurance Expenses 9.15 15.54 15.13 16.05 17.83 73.70 Consumption of store 8.63 5.12 9.05 20.41 17.47 60.68 Operating Expenditure 159.30 150.12 127.61 161.58 174.71 773.32 Interest on Working Capital 24.98 28.00 27.23 17.50 17.50 115.21 Financing Charges 24.74 14.98 59.28 23.86 15.47 138.33 Runway Recarpeting along with carrying 52.00 55.91 51.83 46.89 59.39 266.03 cost on unamortized portion Corporate Cost Allocation - - 89.97 97.93 74.00 261.90 Total 935.72 795.42 860.91 947.99 969.43 4,509.47 Aeronautical Allocation of Operating and Maintenance Expenses proposed by the Authority 4.9.112 The Authority has aligned the segregation principles and aero allocation methodology with the independent study conducted in the Third Control Period Order. Authority notes that MIAL has also adopted a similar approach (Refer Table 93). The ratios considered by the Authority are as follows: (i) Common costs incurred within the terminal building (T1 & T2) - 87.43% (ii) Corporate Overheads (Gross Fixed Assets ratio) - as determined in Table 73. 4.9.113 The segregation logic proposed by the Authority is detailed below: Table 127: Segregation Logic proposed by the Authority for allocation of Operating and Maintenance expenses for the True up of the Third Control Period Cost Head Particulars Segregation of man-power expenses is done based on department wise actual gross cost to company. Employee costs of departments engaged in Aeronautical activities have been taken as Aeronautical. Employee Cost Employees of departments engaged in non-aeronautical activities have been taken as non- aeronautical. Employee costs of common departments have been segregated based on the gross fixed assets ratio Electricity, water, and gas consumed by the concessionaires is charged from them and reduced from the gross consumption charges. Utilities Expenses Utility expenses (net of recovery) have been taken as fully Aeronautical other than expenses attributable to non-aeronautical activities. Consultation Paper No. 08/2024-25 Page 124 of 349TRUE UP OF THE THIRD CONTROL PERIOD Cost Head Particulars Segregation has been done on expense-by- expense basis. Repairs relating to Aeronautical assets have been classified as Aeronautical and those Repair & relating to non-aeronautical assets classified as non-aeronautical. Maintenance Common expenses other than corporate overheads have been segregated based on the Expenses weighted average floor area ratio of the terminals. Corporate overheads have been segregated based on gross fixed assets ratio Rent expenses have been segregated based on the usage of the premises. Property tax (net of recovery) has been considered wholly Aeronautical. Non-Agricultural Tax has been considered as common and segregated using the floor area Rents, Rates and ratio. Taxes Common expenses other than corporate overheads have been segregated based on the weighted average floor area ratio of the terminals. Corporate overheads have been segregated based on gross fixed assets ratio Promotional expenses relating to the company in general has been classified as common expenses/ corporate overheads. Promotional expenses relating to Aeronautical marketing have been classified as Aeronautical. Advertisement Promotional expenses relating to non-aeronautical activities/service lines have been Expenses classified as Non-Aeronautical. Common expenses other than corporate overheads have been segregated based on the weighted average floor area ratio of the terminals. Corporate Overheads have been segregated based on adjusted Gross Fixed Assets ratio Major items in administrative expenses are legal fees, professional fees, corporate allocation, travelling. Legal expenses have been considered as Corporate Overheads Administrative Professional fees have been segregated based on the nature of the expense. Expenses Common expenses other than corporate overheads have been segregated based on the weighted average floor area ratio of the terminals. Corporate overheads have been segregated based on the Gross Fixed Assets ratio. Airport Operator Agreement (AOA) fee (till FY21) has been segregated based on gross AOA Fees fixed assets ratio. Insurance Expense Insurance expenses have been segregated based on gross fixed assets ratio Consumable Consumables have been classified by MIAL based on their usage. Stores Operating Contract Services include cleaning, security, horticulture, trolley, medical emergencies etc. Trolley contracts are classified as fully aeronautical. Security and Cleaning is classified as Aeronautical except when deployed for wholly non- aeronautical activities. Operating Contracts Horticulture is considered Aeronautical except when relating to wholly non-aeronautical activities. Common expenses other than corporate overheads have been segregated based on the weighted average floor area ratio of the terminals. Corporate overheads have been segregated based on gross fixed assets ratio. Working Capital Working capital interest has been considered as a corporate overhead and has been Interest segregated using the gross fixed assets ratio Financing charges have been classified as corporate overhead. Segregated based on gross Financing Charges fixed assets ratio Runway Recarpeting and its Since these are core Aeronautical activities, considered as fully Aero. Carrying Cost Corporate Cost The Corporate Cost Allocation has been allocated in the ratio applied for employee cost. Allocation Consultation Paper No. 08/2024-25 Page 125 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.9.114 Based on the above-mentioned allocation principles, the Authority computed the Allocation ratios as per the table below: Table 128: Aeronautical allocation of O&M expenses as proposed by the Authority for the Third Control Period Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Employee Cost 89.69% 89.43% 88.07% 88.41% 88.41% Utilities Expenses 99.04% 98.60% 98.18% 98.85% 98.85% Repair & Maintenance Expense 93.56% 98.94% 93.27% 96.83% 95.82% Rents, Rates & Taxes 91.22% 91.18% 90.95% 84.80% 94.26% Advertisement Expense 92.53% 95.15% 89.21% 83.90% 86.48% Administrative Expenses 76.07% 83.08% 78.78% 82.57% 82.57% AOA Fees 82.83% 82.83% 0.00% 0.00% 0.00% Insurance Expense 82.83% 82.83% 82.92% 82.92% 83.38% Consumable Stores 87.90% 87.95% 87.72% 87.43% 87.30% Operating Cost 87.40% 87.11% 91.00% 90.91% 98.90% Bad Debts Written Off 100.00% 0.00% 61.18% 0.00% 0.00% Working Capital Interest 82.83% 82.83% 82.92% 82.92% 83.38% Financing Charges 82.83% 82.83% 82.92% 82.92% 83.38% Runway Recarpeting 100.00% 100.00% 100.00% 100.00% 100.00% Carrying Cost on Runway Recarpeting 100.00% 100.00% 100.00% 100.00% 100.00% Corporate Cost Allocation 89.69% 89.43% 88.07% 88.41% 88.41% 4.9.115 The Authority proposes the following Aeronautical Portion of Operating Expenses for the True up of the Third Control Period based on the Aeronautical Allocation ratios detailed in the above table: Table 129: Aeronautical Operating and Maintenance Expenditure proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Employee Cost 195.23 197.46 147.98 129.19 140.90 810.75 Utilities (net of recoveries) 119.78 62.64 72.07 107.15 131.23 492.87 Repair & Maintenance Expenses 167.96 125.14 153.34 198.89 172.77 818.10 Rent, Rate and Taxes 41.92 39.96 43.69 45.69 55.89 227.16 Advertisement Expenses 4.78 2.17 2.72 6.82 3.09 19.58 Administrative Expenses 58.64 49.29 18.81 34.51 49.39 210.63 AOA Fees 8.72 7.30 - - - 16.02 Insurance Expenses 7.58 12.87 12.55 13.31 14.87 61.17 Consumption of store 7.59 4.50 7.94 17.85 15.25 53.12 Operating Expenditure 139.21 130.76 116.12 146.89 172.79 705.77 Interest on Working Capital 20.69 23.19 22.58 14.51 14.59 95.57 Financing Charges 20.49 12.41 49.16 19.79 12.90 114.74 Runway Recarpeting along with carrying 52.00 55.91 51.83 46.89 59.39 266.03 cost on unamortized portion Corporate Cost Allocation - - 79.24 86.58 65.42 231.24 Total 844.59 723.60 778.01 868.07 908.49 4,122.76 4.9.116 In view of the above, the Authority proposes to consider Aeronautical Operating and Maintenance Expenditure of Rs. 4,122.76 crores as per Table 129 for the True up of the Third Control Period as against MIAL’s submission of Rs. 4,193.07 Crores. The Authority notes the variance is mainly due to aligning the expenditure in line with the practice consistently adopted by the Authority as below: Consultation Paper No. 08/2024-25 Page 126 of 349TRUE UP OF THE THIRD CONTROL PERIOD (i) As explained from para’s 4.9.89 to 4.9.93, financing charges rationalized and included on an amortized basis. (ii) Runway recarpeting expenses claimed by MIAL as part of Capex have been reclassified as Operating Expenditure. 4.10 TRUE UP OF NON-AERONAUTICAL REVENUE MIAL'S SUBMISSION ON NON-AERONAUTICAL REVENUE FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.10.1 MIAL has submitted the Non-Aeronautical Revenue for the Third Control Period (i.e., Revenue from Revenue Sharing Asset) as per the table below: Table 130: Revenue from Revenue Share Assets as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Retail License Revenues F&B 138.46 18.88 59.33 138.25 184.43 539.35 Flight Kitchen 25.15 6.08 14.31 36.80 55.09 137.43 Retail Concession 152.54 25.78 72.64 158.08 159.90 568.94 Foreign Exchange, Banks & ATM 61.24 4.34 15.43 62.38 71.29 214.68 IT & Communication 52.42 4.62 2.58 37.44 164.68 261.74 Car Rental & Hotel Reservation 24.66 5.20 10.39 24.78 25.51 90.54 Duty Free Shops 351.70 31.97 66.95 207.48 316.30 974.40 Advertising Income 155.02 32.05 113.43 187.35 218.87 706.72 Car Parking 33.42 4.89 41.01 51.27 56.38 186.97 Ground Handling 108.06 39.78 78.64 129.92 141.81 498.21 Others 45.23 21.57 68.20 69.26 54.33 258.58 Total (A) 1,147.90 195.16 542.91 1,103.02 1,448.59 4,437.58 Rent & Service Revenues Land Rent & Lease 96.23 91.89 97.65 151.72 185.34 622.83 Hanger Rent 18.01 15.01 20.06 25.67 33.01 111.76 Terminal Building Rent 63.41 59.50 65.85 76.96 108.77 374.49 Cute Counter Charges 12.85 3.57 6.13 12.07 13.98 48.60 Lounges 73.07 17.70 72.73 115.66 151.64 430.80 Cargo Building Rent & Other 28.26 27.66 29.75 29.00 35.08 149.75 Building Rent Total (B) 291.83 215.33 292.17 411.09 527.82 1,738.24 Cargo Revenues Domestic Cargo 32.28 25.85 32.85 37.80 30.74 159.52 International Cargo 202.55 202.00 221.49 231.84 311.39 1,169.27 Perishable Cargo 21.72 24.36 25.77 25.76 34.72 132.33 Courier Services 20.42 11.34 18.06 17.54 19.60 86.96 Others 25.15 16.61 25.17 28.53 31.36 126.82 Total (C) 302.12 280.16 323.34 341.46 427.81 1,674.89 Revenue from Other than Revenue Share Assets (i.e., Non-Transfer 13.75 14.83 15.30 15.81 19.13 78.82 Assets) ** Grand Total Revenues from RSA 1,741.85 690.65 1,158.42 1,855.57 2,404.22 7,850.70 (A+B+C) **Revenue other than revenue share assets has not been included in NAR for Target Revenue Computation as per the provisions of OMDA Consultation Paper No. 08/2024-25 Page 127 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.10.2 MIAL submitted a revised true up of Revenue from Revenue Share Assets by taking into consideration Hon’ble TDSAT order dated 6th October 2023. The Hon’ble TDSAT vide its order has pronounced that Other Income, Annual Fee payable to AAI and revenue from Existing assets are required to be excluded from the calculation of the ‘S’ factor. The relevant TDSAT excerpts have been discussed in detail under the section 2.4 under the True up for the First Control Period in this Consultation Paper. Table 131: Computation of ‘S’ factor for True up of the Third Control Period as submitted by MIAL (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Non-Aero Revenues a 1,741.85 690.65 1,158.48 1,855.57 2,404.22 7,850.76 Revenues from b 524.70 341.99 413.66 592.61 592.61 2,465.57 existing assets Revenues from RSA c=a-b 1,217.14 348.66 744.82 1,262.96 1,811.61 5,385.19 Annual Fee on above d=38.7%*c 471.03 134.93 288.24 488.77 701.09 2,084.07 Revenues from RSA after annual fee paid e=c-d 746.11 213.73 456.57 774.19 1,110.52 3,301.12 to AAI S Factor as 30% of f=30%*e 223.83 64.12 136.97 232.26 333.16 990.34 Revenue from RSA RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE NON- AERONAUTICAL REVENUE AS PART OF THE TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.10.3 The Authority had included Other Income as a part of the Non-Aeronautical Revenue in FY 2019-20 in the tariff determination for the Third Control Period order, alongside the otherwise projected non-aeronautical revenue. 4.10.4 The Non-Aeronautical Revenue forecasted during the tariff determination of the Third Control Period is as follows: Table 132: Non-aeronautical revenues as decided by the Authority in the Third Control Period Tariff Order (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Retail License Revenues F&B 138.00 23.31 65.83 111.55 126.85 465.53 Flight Kitchen 38.73 7.44 21.01 35.60 40.48 143.25 Retail Concession 154.00 26.37 74.47 126.20 143.51 524.55 Foreign exchange, Banks & 73.33 3.24 14.33 17.68 19.98 128.55 ATM IT & Communication 61.66 - - 70.00 79.60 211.26 Car Rental & Hotel Reservation 24.00 6.17 18.93 25.63 27.61 102.35 Duty Free Shops 370.00 22.41 151.35 253.42 290.73 1,087.92 Advertising Income 165.36 32.20 90.88 154.00 175.12 617.55 Car Parking 33.40 7.70 23.80 32.00 34.10 131.00 Ground Handling 126.93 35.02 71.20 114.85 131.99 479.98 Others (mainly relating to SEIS) 60.29 12.36 34.89 59.12 67.23 233.89 Total (A) 1,245.70 176.22 566.70 1,000.03 1,137.20 4,125.84 Rent & Service Revenues Land Rent & Lease 113.29 47.40 86.77 129.66 135.62 512.75 Hanger Rent 15.30 8.20 18.51 28.42 48.57 119.00 Terminal Building Rent 74.38 27.75 53.15 80.43 84.13 319.84 Consultation Paper No. 08/2024-25 Page 128 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Cute counter charges 13.71 6.85 10.27 13.70 14.94 59.47 Lounges 80.00 41.76 65.40 91.03 103.52 381.71 Cargo Building Rent & Other 35.74 15.37 28.91 44.40 47.73 172.17 Building rent Total (B) 332.43 147.33 263.01 387.64 434.51 1,564.93 Cargo Revenues Domestic Cargo 36.11 17.65 28.89 41.09 45.21 168.95 Cargo Handling Revenue 26.78 13.95 21.85 30.42 34.26 127.26 Perishable Cargo 19.96 20.22 20.50 21.22 24.33 106.24 Courier Revenue 20.51 11.35 17.08 23.30 26.64 98.88 International Cargo Revenue 228.88 88.43 154.32 264.94 287.99 1,024.56 Total (C) 302.12 280.16 323.34 341.46 427.81 1,674.89 Grand Total Revenues from 1,880.25 603.71 1,153.05 1,729.13 1,999.52 7,365.66 RSA (A+B+C) Less: Revenue from Other than Revenue Share Assets (i.e., Non- 13.75 14.83 15.30 15.81 19.13 78.82 Transfer Assets) Add: Other Income 22.31 22.31 Grand Total 1,918.93 460.32 1,057.05 1,752.84 1,971.01 7,160.15 Cross subsidization (30% of 575.68 138.10 317.12 525.85 591.30 2,148.05 above) 4.10.5 The Authority has decided to True up the non-aeronautical revenues for the Third Control Period on actuals, at the time of determination of tariff for the Fourth Control Period. AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF NON- AERONAUTICAL REVENUE FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 4.10.6 The Authority, has examined the Non-Aeronautical Revenue (“NAR”) as follows: (i) Agreed with the Gross NAR submitted by MIAL in comparison with the audited financial statements of MIAL. (ii) Obtained and reviewed few contracts / vouchers / invoices / other relevant documents and records supporting the NAR. (iii) Reviewed the variance between the NAR approved by the Authority in the Third Control Period Order with the NAR submitted by MIAL for the true-up of the Third Control Period. 4.10.7 The Authority proposes to reclassify the Revenue earned from the Fuel Farm Facility from NAR to Aeronautical Revenue. This is in alignment with the Authority’s consistent position of classifying all Fuel related activities as aeronautical (as per Schedule 5 of OMDA), a classification that has been upheld by the Hon’ble Supreme Court in their Order dated 11th July 2022 ruling out that all revenue related to Fuel and Into Plane Services are Aeronautical in nature. Thus, the Authority proposes to re-classify the revenue from the Fuel Farm Facility (Refer 4.10.9 and Table 137) from NAR and add it to the Aeronautical Revenue portion (Refer Table 146 and para 4.12.6). 4.10.8 The comparison of Non-Aeronautical Revenues (NAR) for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order is given in the below three tables: Consultation Paper No. 08/2024-25 Page 129 of 349TRUE UP OF THE THIRD CONTROL PERIOD Table 133: Comparison of Retail Licenses NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order (Rs. in crores) 3rd CP MIAL’s S. Difference Particulars Order Submission Reasons for Variance No. (c = b-a) (a) (b) A. Retail Licenses Basis of Forecast: Embarking International Passengers and Inflation (4.60%). Reasons for Variance: Embarking 1 Duty Free Shops 1,088 974 (114) international passengers lower than forecasted by 1.73 Mn i.e., 7.3%, primarily due to due to Covid impact until FY 23. Hence NAR from duty free shops lower by ~ 10%. Basis of Forecast: Total Passenger numbers and Inflation (4.60%). Advertising Reasons for Variance: Though actual no. of 2 618 707 89 Income passengers lower than forecast by 2.8%, advertising income higher by 14.40% due to higher rates. Basis of Forecast: Estimated Revenue Per Total Embarking Passenger and Inflation (4.60%). Retail 3 525 569 44 Reasons for Variance: Though actual no. of Concession passengers lower than forecast by 2.8%, retail income higher by 8.38% due to higher rates. Basis of Forecast: Total International ATM and Inflation. Reasons for Variance: Though actual 4 Ground Handling 480 498 18 International ATM was lower than forecast by 18.95%, the ground handling revenue higher by 3.75% due to higher rates. Basis of Forecast: Estimated Revenue Per Total Embarking Passenger and Inflation (4.60%). 5 F&B 466 539 74 Reasons for Variance: Though actual number of Embarking Passengers lower than forecast by 1.99%, F&B revenue higher by 15.67% due to higher rates. Basis of Forecast: Forecasts were based on Revenue per Embarking Passenger. However, FY21 and FY22 revenue forecast was nil revenue as estimated passenger numbers were below the sustenance level IT & 6 211 262 50 (due to COVID-19). Communication Reasons for Variance: Significant increase in FY 24 NAR (Rs. 164 Crores against Rs. 80 Crores forecasted) since MIAL took over IT operations from Wipro. Consultation Paper No. 08/2024-25 Page 130 of 349TRUE UP OF THE THIRD CONTROL PERIOD 3rd CP MIAL’s S. Difference Particulars Order Submission Reasons for Variance No. (c = b-a) (a) (b) Basis of Forecast: Forecasted based on Total Embarked Passengers. 7 Flight Kitchen 143 137 (6) Reasons for Variance: Since traffic was lower by 2.8%, flight kitchen income lower by ~ 4%. Basis of Forecast: Forecasted based on Per Total Passenger Revenue, along with Inflation (4.60%). 8 Car Parking 131 187 56 Reasons for Variance: Significant increase in Parking revenue in last 3 years of the 3rd Control Period (148 Crores against 90 Crores forecasted). Basis of Forecast: Foreign Exchange – Total International Passengers Banks & ATM – Total Passengers Foreign Reasons for Variance: Forecast was on the 9 Exchange, Banks 129 215 86 lower side due to uncertainties of covid. But & ATM due to strong recovery in the last 2 years of the 3rd Control Period, revenue higher overall by 66.67%. Basis of Forecast: Forecasted based on Total Disembarking Passengers and Inflation Car Rentals & (4.60%). 10 102 91 (12) Taxi Service Reasons for Variance: Major variance due to FY 22, where traffic was much lower than forecast. Basis of Forecast: Forecasted based on Passenger Traffic & Inflation (4.60%). 11 Others 234 259 25 Reasons for Variance: Revenue from Passenger Facilities and Meet & Assist Services higher than forecast. Total 4,126 4,438 312 Table 134: Comparison of Rents and Services NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order (Rs. in crores) 3rd CP MIAL’s S. Difference Particulars Order Submission Authority’s Inference No. (c = b-a) (a) (b) Rents & Services B. Revenue Basis of Forecast: Forecasted on Inflation. Land Rent & 1 513 623 110 Reasons for Variance: The actuals were Lease higher due to new leases. Basis of Forecast: Forecasted over Total Embarking Passengers. 2 Lounges 382 431 49 Reasons for Variance: There has been a significant increase in lounge revenue in the last 2 years. Consultation Paper No. 08/2024-25 Page 131 of 349TRUE UP OF THE THIRD CONTROL PERIOD 3rd CP MIAL’s S. Difference Particulars Order Submission Authority’s Inference No. (c = b-a) (a) (b) Basis of Forecast: Forecasted on the Average Rate Per Square Meter, and Terminal 3 320 374 54 Inflation. Building Rent Reasons for Variance: Rent rates have increased FY 24 onwards. Basis of Forecast: Authority increased the rent by 7.5% Y-O-Y which was much higher Cargo Building than MIAL’s submission during the Third 4 Rent & Other 172 150 (22) Control Period MYTP. Building Rent Reasons for Variance: Increase in rent was lower than 7.5% and hence the variance. Basis of Forecast: Authority increased rent by 7.5% Y-O-Y. 5 Hangar Rent 119 112 (7) Reasons for Variance: Very small variance. Basis of Forecast: Forecasted on Total ATMs, Reasons for Variance: Due to International Cute Counter 6 59 49 (10) ATM’s being lower than forecast, revenue is Charges also lower, since International ATMs are generally charged 3 times as that of Domestic ATMs. Total 1,565 1,738 174 Table 135: Comparison of Cargo NAR for True up of 3rd CP between MIAL’s submission and Authority’s decision in the Third Control Period order (Rs. in crores) 3rd CP MIAL’s Difference S. Particulars Order Submission Authority's Inference (c = b-a) No. (a) (b) C. Cargo Revenue Basis of Forecast: Forecasted based on Terms of the Contract. International Reasons for Variance: International Cargo 1 1,025 1,169 144 Cargo Revenue Rates increased significantly during the control period, thereby increasing revenue significantly. Basis of Forecast: Forecasted based on Inflation (4.60%). Reasons for Variance: During the 3rd CP, there was a change in concessionaire whose revenue share is lower than the previous one. MIAL submits that each time a 2 Domestic Cargo 169 160 (9) concessionaire is changed, the capex (interiors and P&M) has to be borne by the concessionaire. Usually, a lower revenue share % is quoted in bid for initial years to recover capex cost. Hence actuals lower than forecast. Consultation Paper No. 08/2024-25 Page 132 of 349TRUE UP OF THE THIRD CONTROL PERIOD 3rd CP MIAL’s Difference S. Particulars Order Submission Authority's Inference (c = b-a) No. (a) (b) Basis of Forecast: Forecasted over Inflation. 3 Cargo Handling 127 126 (1) No major variance. Basis of Forecast: Forecasted based on Terms of the Contract. 4 Perishable Cargo 106 132 26 Reasons for Variance: FY 24’s revenue has increased due to rates. Basis of Forecast: Projected on Inflation and Expected Courier Volume Growth %. Reasons for Variance: This revenue is ancillary to international cargo revenue. 5 Courier Revenue 99 87 (12) Since international cargo rates were increased, courier rates were not increased by much in the Third Control Period. Hence revenue lower than forecast. Includes X-Ray, Carting, Packing and others. 6 Others - 1 1 No major variance. Total 1,526 1,675 149 Table 136: Total Non-Aeronautical Revenue as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Retail License Revenues (A) 1,147.90 195.16 542.91 1,103.02 1,448.59 4,437.58 Rent & Service Revenues (B) 291.83 215.33 292.17 411.09 527.82 1,738.24 Cargo Revenues (C) 302.12 280.16 323.34 341.46 427.81 1,674.89 Grand Total Revenues from 1,741.85 690.65 1,158.42 1,855.57 2,404.22 7,850.70 RSA (D=A+B+C) 4.10.9 The Authority has reviewed the reasons for variances summarized in the table above and proposes considering MIAL’s submission for the True up of the Non-Aeronautical Revenue for the Third Control Period. However, the Authority proposes to consider the Revenue generated from the Fuel Farm Facility (constituted under Land, Rents & Leases), as Aeronautical Revenue (Refer para’s 4.10.7, 4.12.6 and Table 146) as per Table 137. Table 137: Total Non-Aeronautical Revenue proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Retail License Revenues (A) 1,147.90 195.16 542.91 1,103.02 1,448.59 4,437.58 Rent & Service Revenues as 291.83 215.33 292.17 411.09 527.82 1,738.24 submitted by MIAL (b) Land Rent & Leases Revenue 96.23 91.89 97.65 151.72 185.34 622.83 as submitted by MIAL (b1) Revenue Generated from Fuel 13.70 14.42 14.06 13.65 8.59 64.42 Farm Facility (b2) Net Land Rent & Leases 82.53 77.47 83.59 138.07 176.75 558.41 Revenue (b3 = b1-b2) Net Rent & Service Revenues 278.13 200.91 278.11 397.44 519.23 1,673.82 (B = b-b2) Consultation Paper No. 08/2024-25 Page 133 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Cargo Revenues (C) 302.12 280.16 323.34 341.46 427.81 1,674.89 Grand Total Revenues from 1,728.15 676.23 1,144.36 1,841.92 2,395.63 7,786.28 NAR (D=A+B+C) 4.10.10 The Authority noted that MIAL in line with the submission made in the First and the Second Control Period has submitted the revised computation of ‘S’ Factor based on the Hon’ble TDSAT Order AERA Appeal No. 9 of 2016 dated 6th October 2023 for the Third Control Period. 4.10.11 With regards to the Revenue Share Assets and subsequently the ‘S’ Factor derived, as mentioned in para 4.2.5 of this Consultation Paper, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same methodology. 4.10.12 Consequently, the Authority proposes the following: (i) Not to exclude Other Income (ii) Not to reduce the revenue from existing assets (iii) Not to exclude the annual fee paid to AAI from the calculation of the ‘S’ factor. 4.10.13 The Authority also notes that MIAL has earned a dividend income (forming part of Other Income) of Rs. 10.58 Crores from the Fuel Farm Facility in FY 2024. As mentioned in para 4.10.7, the Authority proposes to reclassify the revenue earned from the Fuel Farm Facility from NAR to Aeronautical Revenue. Therefore, the Authority proposes to reduce the said income from NAR as shown in Table 138 and add it to the Aeronautical Revenue of MIAL for the True up of the Third Control Period as shown in Table 146. 4.10.14 Accordingly, the Authority proposes the ‘S’ factor for the true up of the Second Control Period as per the table below: Table 138: Non-Aeronautical Revenue as proposed by the Authority for the True up of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Total Revenue from RSA (A) 1,728.15 676.23 1,144.36 1,841.92 2,395.63 7,786.28 (From Table 136) Other Income with dividend 13.91 37.24 80.19 32.38 60.62 224.34 from Fuel Farm Facility (b1) Dividend Income earned from - - - - 10.58 10.58 the Fuel Farm Facility (b2) Net Other Income (B = b1-b2) 13.91 37.24 80.19 32.38 50.04 213.76 Grand Total (C=A+B) 1,742.06 713.47 1,224.55 1,874.30 2,445.67 8,000.04 Cross subsidization (30% of 522.62 214.04 367.36 562.29 733.70 2,400.01 ‘C’) 4.10.15 In view of the above, the Authority proposes to consider Non-Aeronautical Revenue (NAR) of Rs. 8,000.04 Crores and the derived ‘S’ Factor of Rs. 2,400.01 Crores as per Table 138 for the True up of the Third Control Period as against MIAL’s submission of NAR of Rs. 7,850.70 Crores and the derived ‘S’ Factor of Rs. 990.34 Crores. The Authority notes the reasons for the variance as below: (i) Fuel Farm Facility being reclassified from NAR as Aeronautical Revenue. Consultation Paper No. 08/2024-25 Page 134 of 349TRUE UP OF THE THIRD CONTROL PERIOD (ii) As explained in para’s 4.10.11 and 4.10.12, the Authority has not given effect to the judgement of Hon’ble TDSAT and therefore has not excluded the revenue from existing assets, Other Income and the Annual Fee paid to AAI from the calculation of the ‘S” Factor. 4.11 TRUE UP OF AERONAUTICAL TAX MIAL'S SUBMISSION ON AERONAUTICAL TAX FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.11.1 MIAL has been computed ‘T’ – Tax reimbursement after considering the Impact of Hon’ble TDSAT judgment dated 6th October 2023 and the Hon’ble Supreme Court Judgment dated 11th July 2022 as follows: Table 139: Computation of Aeronautical Tax for the True up of the Third Control Period as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aero Revenues 1,721.98 882.24 668.05 1,225.41 1,500.95 5,998.62 Add: ‘S’ Factor (30% of 223.83 64.12 136.97 232.26 333.16 990.34 RSA) Total Revenues 1,945.81 946.35 805.02 1,457.67 1,834.11 6,988.96 Less: Aero Expenses 847.96 720.94 871.78 881.65 870.74 4,193.07 Less: Aero Depreciation 512.94 491.21 408.93 412.93 404.08 2,230.09 Less: Interest Cost* 269.32 261.55 257.71 267.39 249.38 1,305.34 Net Profit (P) 315.60 (527.34) (733.39) (104.31) 309.91 (739.53) Tax Rate (T) 34.94% 34.94% 34.94% 25.17% 25.17% Aero Taxation (P x T) 110.28 - - - 78.00 188.28 *Interest Cost = RAB X Gearing X Cost of Debt RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE AERONAUTICAL TAXES AS PART OF THE TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.11.2 The Authority vide its decision in para 8.5.4, for computation of tax in the Third Control Period Order has: (i) Considered the annual fees to AAI as an expense. (ii) Not considered the ‘S’ factor for revenue computation. (iii) Considered Depreciation as per the Income Tax Act. (iv) Calculated Interest expense at the actual interest paid on the existing debt. 4.11.3 Based on the above, the tax for the Third Control Period was decided by the Authority as shown in the table below: Table 140: Income Tax Re-imbursement considered by the Authority during the tariff determination of the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Aeronautical Revenue 1,708.50 696.95 777.18 1,342.19 1,526.96 6,051.78 Total Income for Aeronautical Tax 1,708.50 696.95 777.18 1,342.19 1,526.96 6,051.78 Computation Annual Fee to AAI 661.19 269.72 300.77 519.43 590.94 2,342.05 Aeronautical Expenses 723.15 716.61 761.01 852.13 886.25 3,939.15 EBITDA 324.16 (289.38) (284.60) (29.37) 49.77 (229.42) Depreciation as per Income Tax – 606.97 607.17 603.59 571.54 535.91 2,925.18 Aeronautical Interest Expense - Aeronautical 468.43 462.03 429.93 392.32 350.75 2,103.45 Consultation Paper No. 08/2024-25 Page 135 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Profit before Tax (751.24) (1,358.57) (1,318.12) (993.23) (836.89) (5,258.05) Tax Rate 34.94% 34.94% 34.94% 34.94% 34.94% Tax - - - - - - AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF AERONAUTICAL TAXES FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 4.11.4 The Authority examined the submissions made by MIAL for true up of aeronautical taxes and noted that MIAL has considered ‘S’ Factor as part of the revenue base (based on the Hon’ble TDSAT order dated 21st July 2023) and has not considered Annual Fee to AAI as an expense for the purpose of determination of Aeronautical PBT and consequently for the Aeronautical taxes (based on the Hon’ble Supreme Court order dated 11th July 2022). 4.11.5 With regards to the submission made by MIAL, the Authority consistent with the decision taken during the tariff determination for the Third Control Period proposes to retain the same approach, with regards to the TDSAT order on treating the ‘S’ Factor as a revenue base for the computation of Aeronautical Tax as mentioned in para 4.2.5 of this Consultation Paper. 4.11.6 As mentioned in para 4.2.6 of this Consultation Paper, the Authority proposes to implement the Hon’ble Supreme Court judgement dated 11th July 2022, and recompute the Aeronautical Taxes based on the regulatory accounts by not treating the Annual Fee pertaining to Aeronautical Revenues as an expense towards True Up of the Third Control Period as per the directions contained in the judgement of Hon’ble Supreme Court. 4.11.7 Accordingly, the Authority has recomputed the applicable interest and Tax as below: Table 141: Interest Expenses computed by the Authority for the calculation of Aeronautical Tax for the Third Control Period (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Average RAB (Refer Table A 5,511.74 5,112.02 4,741.03 4,542.24 4,436.41 75) Normative Gearing Ratio B 48.00% 48.00% 48.00% 48.00% 48.00% Interest Rate C 10.16% 10.30% 10.30% 10.30% 10.30% Aeronautical Interest D=A*B*C 268.79 252.74 234.40 224.57 219.34 1,199.83 Expense Table 142: Computation of the ‘T’ element for the True up of the Third Control Period as proposed by the Authority (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Aeronautical Revenue A 1,735.68 896.66 682.11 1,239.06 1,520.12 6,073.62 Aeronautical Operating B 844.59 723.60 778.01 868.07 908.49 4,122.76 Expenses EBITDA C=A-B 891.09 173.05 (95.90) 370.99 611.63 1,950.86 Depreciation (Refer D 497.99 477.03 395.46 390.31 355.90 2,116.69 Table 86) Interest Expense- E 268.79 252.74 234.40 224.57 219.34 1,199.83 aeronautical Consultation Paper No. 08/2024-25 Page 136 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total F=C-D- Profit Before Tax 124.31 (556.71) (725.75) (243.89) 36.39 (1,365.65) E Opening Accumulated G - - (556.71) (1,282.47) (1,526.36) (Losses) Current (Losses) H - (556.71) (725.75) (243.89) - Current year Set Off I 124.31 - - - 36.39 Closing Accumulated J=G+H- - (556.71) (1,282.47) (1,526.36) (1,489.97) (Losses) I Profit for Taxation K 124.31 - - - - Tax Rate L 34.94% 34.94% 34.94% 25.17% 25.17% Tax M=K*L 43.44 - - - - 43.44 Note: As per the order of the Hon’ble Supreme Court, the Annual Fee as reflected in Table 140 has not been treated as an expense (Refer para 3.1.5). 4.11.8 In view of the above, the Authority proposes to consider the Aeronautical Taxes as per Table 142 for the True up of the Third Control Period. 4.12 TRUE UP OF AERONAUTICAL REVENUE MIAL'S SUBMISSION ON THE TRUE UP OF AERONAUTICAL REVENUE FOR THE THIRD CONTROL PERIOD IN MYTP 4.12.1 MIAL submitted the following Aeronautical Revenue for the True up of the Third Control Period in MYTP: Table 143: Aeronautical Revenue as submitted by MIAL for the True up of the Third Control Period (Rs. in crores) Particulars FY20 FY21 FY22 FY23 FY24 Total Landing Revenue 1,259.27 499.79 580.46 991.57 1,224.13 4,555.21 Parking & Housing Revenue 79.59 167.14 32.08 62.08 59.24 400.12 User Development Fee (UDF) Revenue 151.26 16.6 22.64 93.81 117.25 401.56 Aerobridge Charges 95.61 43.69 20.57 63.78 70.25 293.90 FTC Revenue 114.93 - - - - 114.93 ITP Revenue 2.01 0.84 1.08 2.03 3.02 8.98 Unauthorized Overstay Charges 19.31 22.99 11.22 12.14 27.06 92.72 Additional Landing Domestic and - 131.2 - - - 131.20 International Total Aero Revenue 1,721.98 882.24 668.05 1,225.41 1,500.95 5,998.62 RECAP OF DECISION TAKEN BY THE AUTHORITY REGARDING THE AERONAUTICAL REVENUE DURING THE TARIFF DETERMINATION FOR THE THIRD CONTROL PERIOD 4.12.2 The Authority had considered the following aeronautical revenue in the Third Control Period Order. Table 144: Aeronautical Revenue as approved by the Authority during the Tariff determination of the Third Control Period Tariff Order (Rs. in crores) Particulars FY20 FY21 FY22 FY23 FY24 Total Landing Revenue 1,259.27 590.78 658.78 1,145.28 1,303.30 4,957.41 Parking & Housing Revenue 79.59 25.65 28.61 50.00 56.72 240.58 Aerobridge Charges 95.61 23.96 26.72 47.25 54.05 247.58 Consultation Paper No. 08/2024-25 Page 137 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY20 FY21 FY22 FY23 FY24 Total User Development Fee (UDF) Revenue 151.30 47.91 53.43 90.00 103.25 445.88 Others (FTC, ITP and Overstay Charges) 122.73 8.66 9.65 9.65 9.65 160.34 Total Aeronautical Revenues 1,708.50 696.95 777.18 1,342.19 1,526.96 6,051.79 Note: Actual Revenue earned by MIAL was taken during the tariff determination of the Third Control Period for FY 20. AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF AERONAUTICAL REVENUE FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 4.12.3 The Authority compared the above revenues submitted by MIAL of Rs. 5,998.62 crores (as per MIAL's financial statements) with the aeronautical revenues of Rs.6,051.79 crores as approved in the Third Control Period Order in (Refer Table 232 of the 3rd CP order). Table 145: Comparison between Aeronautical Revenue as submitted by MIAL for true up and as approved in the Third Control Period (Rs. in crores) Particulars Ref FY20 FY21 FY22 FY23 FY24 Total Aeronautical Revenue as approved A 1,708.50 696.95 777.18 1,342.19 1,526.96 6,051.79 in the Third Control Period Order Aeronautical Revenue submitted B 1,721.98 882.24 668.05 1,225.41 1,500.95 5,998.62 by MIAL for true-up Difference C = B-A 13.48 185.29 -109.13 -116.78 -26.01 -53.17 Difference % D = C/A 0.78% 26.59% -14.04% -8.70% -1.70% -0.88% 4.12.4 The Authority noted the major significant shortfall in revenue against the projection is in FY 2021-22 and FY 2022-23 which is on account of the global pandemic outage. Since the Covid-19 generally affected the economy of all major countries and restricted air travel to a larger extent, the Authority proposes to True up Aeronautical Revenue for the Third Control Period as per MIAL’s submission. 4.12.5 Since the variance between MIAL’s submission of Aeronautical Revenue and those approved by the Authority in the Third Control Period Order is very insignificant (~ 0.88%), the Authority proposes to consider MIAL submission of the aeronautical revenues of Rs.5,998.62 crores as the True up of the Third Control Period. 4.12.6 Additionally, the Authority proposes to re-classify the revenue earned from the Fuel Farm Facility from Non-Aeronautical Revenue to Aeronautical Revenue. This decision aligns with the Authority’s consistent position of classifying Fuel Farm activity (as per Schedule 5 of OMDA) as aeronautical, a classification upheld by the Hon’ble Supreme Court of India in their Order dated 11th July 2022. Consequently, the Authority has removed the revenue share earned from the Fuel Farm Facility from NAR (Refer para’s 4.10.7, 4.10.9 and Table 137) and has included it as a part of the Aeronautical Income of MIAL. 4.12.7 Thus, the Aeronautical Revenue proposed by the Authority to be True up for the Third Control Period is as follows: Table 146: Aeronautical Revenue as proposed by the Authority for the true up of the Third Control Period (Rs. in crores) Particulars FY20 FY21 FY22 FY23 FY24 Total Landing Revenue 1,259.27 499.79 580.46 991.57 1,224.13 4,555.21 Consultation Paper No. 08/2024-25 Page 138 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars FY20 FY21 FY22 FY23 FY24 Total Parking & Housing Revenue 79.59 167.14 32.08 62.08 59.24 400.12 User Development Fee (UDF) Revenue 151.26 16.6 22.64 93.81 117.25 401.56 Aerobridge Charges 95.61 43.69 20.57 63.78 70.25 293.90 FTC Revenue 114.93 - - - - 114.93 ITP Revenue 2.01 0.84 1.08 2.03 3.02 8.98 Unauthorized Overstay Charges 19.31 22.99 11.22 12.14 27.06 92.72 Additional Landing Domestic and - 131.2 - - - 131.20 International Revenue from Fuel Farm Facility 13.70 14.42 14.06 13.65 8.59 64.42 Dividend Income earned from Fuel - - - - 10.58 10.58 Farm Facility Total Aero Revenue 1,735.68 896.66 682.11 1,239.06 1,520.12 6,073.62 4.12.8 In view of the above, the Authority proposes to consider Aeronautical Revenue of Rs. 6,073.62 crores as per Table 146 for the True up of the Third Control Period. 4.13 TRUE UP OF THE TARGET REVENUE FOR THE THIRD CONTROL PERIOD MIAL'S SUBMISSION ON TRUE UP OF TARGET REVENUE FOR THE THIRD CONTROL PERIOD IN MYTP FOR THE FOURTH CONTROL PERIOD 4.13.1 Based on the above changes in various building blocks, MIAL has submitted the Target Revenue for the true up of the Third Control Period as below: Table 147: Computation of Target Revenue for the true up of the Third Control Period as submitted by MIAL (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Total Return on RAB and HRAB 803.02 741.49 685.35 658.57 639.08 3,527.51 Add: Operating Expenses 847.96 720.94 871.78 881.65 870.74 4,193.07 Add: Depreciation 566.41 542.39 450.86 454.47 441.68 2,455.81 Add: Aeronautical Taxes 110.28 - - - 78.00 188.28 Less:30% Revenue Share Assets (223.83) (64.12) (136.97) (232.26) (333.16) (990.34) True-up for the 2nd Control Period 4,624.47 - - - - 4,624.47 Target Revenue 6,728.31 1,940.70 1,871.01 1,762.43 1,696.34 13,998.81 Actual Aero revenues 1,721.98 882.24 668.05 1,225.41 1,500.95 5,998.62 True-up/true-down 5,006.33 1,058.47 1,202.96 537.02 195.39 8,000.18 Carrying Cost @13.15% 13.14% 13.14% 13.14% 13.14% 13.14% Years 5.00 4.00 3.00 2.00 1.00 True-up with carrying cost 9,280.46 1,734.27 1,742.14 687.41 221.07 13,665.34 AUTHORITY'S RECAP REGARDING THE TARGET REVENUE FOR THE THIRD CONTROL PERIOD AS PART OF THE TARIFF DETERMINATION OF THE THIRD CONTROL PERIOD Table 148: Target Revenue as decided by the Authority in the Tariff Order of the Third Control Period (Rs. in crores) Particulars Ref FY20 FY21 FY22 FY23 FY24 Total Control Period Year 1 2 3 4 5 Consultation Paper No. 08/2024-25 Page 139 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars Ref FY20 FY21 FY22 FY23 FY24 Total RAB & HRAB A 6,159.13 6,147.41 6,148.83 5,988.22 5,750.76 FRoR B 12.81% 12.81% 12.81% 12.81% 12.81% Return on RAB C = AxB 789.08 787.58 787.76 767.19 736.76 3,868.38 HRAB Impact D (258.83) - - - - (258.83) Depreciation E 551.78 549.49 483.00 471.43 446.00 2,501.70 O & M Expense F 723.15 716.61 761.01 852.13 886.25 3,939.15 Taxes G - - - - - - Gross Target Revenue H = C+D+ 1,805.18 2,053.68 2,031.77 2,090.75 2,069.01 10,050.39 (GTR) E+F+G Less: Cross subsidy from Revenue Share Assets I 575.68 138.10 317.11 525.85 591.30 2,148.04 (NAR) Net Target Revenue for the 3rd Control Period J = H–I 1,229.50 1,915.58 1,714.66 1,564.90 1,477.71 7,902.35 (NTR = GTR – NAR) True up of the 1st and 2nd Control Periods K (1,462.58) - - - - (1,462.58) (cumulative) Adjusted Net Target L = J+K (233.07) 1,915.58 1,714.66 1,564.90 1,477.71 6,439.77 Revenue (ANTR) Discounting Factor M 0.89 0.79 0.70 0.62 0.55 Discounted ANTR N = LxM (206.61) 1,505.20 1,194.31 966.21 808.76 4,267.87 Computation of Total Aeronautical Revenues Total Landing Revenues O 1,259.27 590.78 658.78 1,145.28 1,303.30 4,957.41 Total Parking Revenues P 79.59 25.65 28.61 50.00 56.72 240.58 Total Aerobridge Q 95.61 23.96 26.72 47.25 54.05 247.58 Revenues Total User Development R 151.30 47.91 53.43 90.00 103.25 445.88 Fee (UDF) Revenues Others (FTC, ITP and S 122.73 8.66 9.65 9.65 9.65 160.34 Overstay Charges) Total Aeronautical T = O+P+ 1,708.50 696.95 777.18 1,342.19 1,526.96 6,051.79 Revenues Q+R+S Discounting Factor U 0.89 0.79 0.70 0.62 0.55 Discounted Total V = TxU 1,514.47 547.64 541.33 828.70 835.73 4,267.87 Aeronautical Revenues X Factor (%) (38.37%) AUTHORITY’S EXAMINATION OF THE MATTERS REGARDING THE TRUE UP OF THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION EXERCISE FOR THE FOURTH CONTROL PERIOD 4.13.2 The Authority has computed the return on RAB as per the SCN as mentioned in para 4.2.7 as below: Table 149: Change in Return on RAB for the Third Control Period as proposed by the Authority (Rs. in crores) Third Control Period - Return on RAB Particulars Ref To tal FY 20 FY 21 FY 22 FY 23 FY 24 WDV Value as of A 194.52 183.89 173.47 164.86 156.80 previous year WDV Value as on B 183.89 173.47 164.86 156.80 149.26 current year Consultation Paper No. 08/2024-25 Page 140 of 349TRUE UP OF THE THIRD CONTROL PERIOD Third Control Period - Return on RAB Particulars Ref To tal FY 20 FY 21 FY 22 FY 23 FY 24 C = Average Return on RAB Impact (a,b) * FRoR 24.24 22.89 21.67 20.60 19.60 109.00 as per SCN (12.81%) 4.13.3 Based on the discussion above, summarized below are the key changes made for the true up of the Third Control Period: (i) Depreciation: Adjustments have been made due to higher depreciation rates applied by MIAL compared to those prescribed in Order 35, as well as reclassification of the re-carpeting cost of Runway 14/32. While MIAL submitted this cost as capital expenditure, the Authority has amortized it as Operating Expenditure. (Table 86). (ii) Asset Allocation Ratio: MIAL has calculated the asset allocation ratio for all the five years of the Third Control Period. However, they have applied the FY 2023-24 ratio in all the five years of the Third Control Period. The Authority has re-calculated and applied the ratio for each year of the Third Control Period. (Refer para 4.5.9). (iii) RAB (Regulatory Asset Base): Adjustments have been made to RAB based on the re-classification of the runway re-carpeting cost as operating expenditure (Refer Table 75). (iv) Operating Expenditure: Changes have been made to reflect the actual expenditure data submitted by MIAL. (Refer Table 129). (v) Non-Aeronautical Revenue: Updated based on the actual revenue values provided by MIAL (Refer Table 138). (vi) Self-Contained Note (SCN): Changes in depreciation and return on RAB and the true up of the previous control period as per the SCN as mentioned in para 4.2.7. (vii) In addition to the above changes, the Authority has not accounted for the impact of the TDSAT judgments on the computation of Target Revenue (TR) as explained in para 4.2.5. 4.13.4 Considering the above, the Authority proposes the Target Revenue for the True up of the Third Control Period as below: Table 150: Computation of Target Revenue for the True up of the Third Control Period as proposed by the Authority (Rs. in crores) Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Average RAB A 5,511.74 5,112.02 4,741.03 4,542.24 4,436.41 Average HRAB B 343.70 305.68 272.17 242.52 215.48 Total C = A + B 5,855.43 5,417.70 5,013.20 4,784.76 4,651.90 FRoR D 12.81% 12.81% 12.81% 12.81% 12.81% Return on RAB E = C x D 750.17 694.09 642.27 613.00 595.98 3,295.53 Impact on Return on F RAB due to non- (As per Table 24.24 22.89 21.67 20.60 19.60 109.00 existent assets as per 149) the SCN Net Return on RAB G = E-F 725.94 671.21 620.60 592.40 576.38 3,186.53 HRAB Impact H (259.00) - - - - (259.00) OM - Efficient Operation & I 844.59 723.60 778.01 868.07 908.49 4,122.76 Maintenance cost Consultation Paper No. 08/2024-25 Page 141 of 349TRUE UP OF THE THIRD CONTROL PERIOD Particulars Ref FY 20 FY 21 FY 22 FY 23 FY 24 Total Total Depreciation (Refer Table 86 and J 537.11 513.93 425.57 419.50 380.80 2,276.90 Table 87) Tax K 43.44 - - - - 43.44 Non-Aeronautical L 1,742.06 713.47 1,224.55 1,874.30 2,445.67 8,000.04 Revenue Share of Revenue from M = L x 30% (522.62) (214.04) (367.36) (562.29) (733.70) (2,400.01) Revenue Share Assets True up for the 2nd N (1,278.32) (1,278.32) Control Period O = G + H + Target Revenue I + J + K - M 91.14 1,694.70 1,456.82 1,317.68 1,131.97 5,692.39 + N P (at FRoR of Future Value Factor 1.83 1.62 1.44 1.27 1.13 12.81%) Aeronautical Q (From 1,735.68 896.66 682.11 1,239.06 1,520.12 6,073.62 Revenue Table 146) Under Recovery / R = O-Q (1,644.54) 798.04 774.71 78.62 (388.15) (381.23) (Over Recovery) Under Recovery / (Over Recovery) on S (3,004.78) 1,292.54 1,112.14 100.05 (437.88) PV Terms as on 01.04.2019 Projected Over Recovery pending to Sum (T) (937.84) be Trued Up as on 01.04.2019 4.13.5 Based on the above, the over-recovery of Rs. 937.84 Crores for the Third Control Period as determined by the Authority is proposed to be considered for true up in the subsequent Control Periods as part of tariff determination process for the Fourth Control Period. 4.14 AUTHORITY’S PROPOSALS REGARDING TRUE UP FOR THE THIRD CONTROL PERIOD AS PART OF TARIFF DETERMINATION FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its examination, the Authority proposes the following regarding for the True up for the Third Control Period as part of tariff determination for the Fourth Control Period: 4.14.1 To consider the Traffic for True up for the Third Control Period based on actuals as per Table 52. 4.14.2 To consider RAB as per Table 75 and HRAB as per Table 81 for the True up of the Third Control Period. 4.14.3 To consider Aeronautical Depreciation for the True up of the Third Control Period as per Table 86 and Table 87. 4.14.4 To consider the FRoR for the True up for the Third Control Period, i.e., 12.81%. 4.14.5 To consider Aeronautical Operation and Maintenance Expenses for the True Up for the Third Control Period as per Table 129. 4.14.6 To consider Non-Aeronautical Revenue for the True up for the Third Control Period as per Table 138. 4.14.7 To consider Aeronautical Revenues for the True up of the Third Control Period as per Table 146. Consultation Paper No. 08/2024-25 Page 142 of 349TRUE UP OF THE THIRD CONTROL PERIOD 4.14.8 To consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 4.14.9 To consider Aeronautical Taxes for the True up of the Third Control Period as per Table 142. 4.14.10 To consider the impact on depreciation as per Table 84 and Return on RAB as per Table 149 as identified by the Self-Contained Note (SCN) issued by the Authorized Investigation Agency (AIA). 4.14.11 To consider over-recovery of Rs. 937.84 crores (as per Table 150) for the tariff determination exercise for the Fourth Control Period. Consultation Paper No. 08/2024-25 Page 143 of 349Examination of MYTP for the Fourth Control PeriodTRAFFIC FOR THE FOURTH CONTROL PERIOD 5. TRAFFIC FOR THE FOURTH CONTROL PERIOD 5.1 MIAL SUBMISSIONS ON TRAFFIC FOR THE THIRD CONTROL PERIOD FOR THE FOURTH CONTROL PERIOD 5.1.1 MIAL, in its MYTP submission, has stated that Mumbai Airport is a land locked and constrained single runway airport and is also the most efficiently managed airport holding a world record for maximum movements on a single runway in a single day. 5.1.2 Historically, traffic has increased 5-6% on yearly basis which is attributed to increase in ATMs and Average Load Factor. Due to capacity constraint at Airside and the average load factor nearing to maximum planning position of 85%, the growth expected in future is almost negligible. Table 151: Historical Traffic at Mumbai Airport as submitted by MIAL Passengers (MPPA) ATM’s (000’s) Year Dom Pax Intl Pax Total Dom ATM Intl ATM Total FY10 17.37 8.23 25.61 164.63 65.17 229.80 FY11 20.00 9.08 29.07 173.98 68.68 242.66 FY12 21.04 9.70 30.75 179.31 72.21 251.51 FY13 20.28 9.93 30.21 173.25 71.26 244.51 FY14 21.88 10.34 32.22 188.31 72.36 260.67 FY15 25.21 11.43 36.63 195.37 74.09 269.46 FY16 30.05 11.62 41.67 220.25 76.38 296.63 FY17 32.72 12.43 45.15 224.90 80.57 305.47 FY18 34.85 13.65 48.50 234.61 86.08 320.69 FY19 34.09 14.74 48.83 232.65 88.62 321.26 FY20 33.57 12.36 45.92 228.68 75.99 304.68 FY21 9.84 1.22 11.05 91.81 23.18 114.98 FY22 18.56 3.18 21.75 150.75 34.90 185.65 FY23 32.72 11.21 43.92 221.86 67.78 289.64 FY24 38.50 14.32 52.82 241.81 83.15 324.96 CAGR 5 years from FY15 to FY20 5.90% 1.57% 4.62% 3.20% 0.51% 2.49% (pre-COVID) CAGR 10 years from FY10 to 6.81% 4.14% 6.01% 3.34% 1.55% 2.86% FY20 (pre-COVID) 5.1.3 MIAL has proposed to re-construct Terminal 1, which is currently handling approx. 15 MPPA domestic traffic. It is expected that once the operations at the existing Terminal 1 are halted for demolition and re- construction purposes, a portion of the traffic will be accommodated in Terminal 2. The remaining traffic is expected to shift to the upcoming Navi Mumbai International Airport, which is likely to commence operations in the early part of 2025. Once T1 reconstruction is completed, it will cater to the available demand in the Mumbai Metropolitan Region (MMR). 5.1.4 MIAL based its projections of Traffic for the Fourth Control Period on an Independent Traffic Study Report conducted by ICF (Inner City Fund – ICF International Inc.) for CSMIA. This study considered the overall traffic demand in the Mumbai Metropolitan Region (MMR) and various supply-side constraints. 5.1.5 The study report analyzed GDP-Traffic relationships from multiple points of views with the base intention of assuming that the peak hour ATMs will grow from the current 46 to 55 ATMs per hour in FY 34. To explore this, the report adapts regression analysis for three different scenarios, as detailed below. It studied how the number of passengers (the outcome) is influenced by two primary factors, i.e., the country’s economic growth (GDP) and ticket prices. The three scenarios analyzed by ICF are listed below: Consultation Paper No. 08/2024-25 Page 145 of 349TRAFFIC FOR THE FOURTH CONTROL PERIOD (i) Unconstrained Passenger Forecast for MMR –To estimate the growth rate that would fit best for CSMIA during the constrained period, ICF compared passenger growth rates between FY17 – FY23 for Delhi & Tier 1 airports. Based on the comparison, Tier 1 growth rates were considered to project the unconstrained MMR traffic forecast. (ii) Unconstrained Passenger Forecast for CSIA –Y-o-Y passenger growth rates from MMR unconstrained forecast were used to estimate an unconstrained passenger forecast of CSIA FY24 onwards. Further, based on LF and Seats per ATM assumptions, a forecast for pax per ATM by region was estimated. Pax per ATM estimates were then applied to unconstrained CSIA passengers to get unconstrained ATMs by regions at CSIA from FY24 onwards. (iii) Constrained view of CSMIA –Constrained Annual ATM forecast was used to constrain the passengers at CSIA. This is because while the passenger capacity at an airport can go beyond its stated capacity because of better LFs and higher seats per ATM by airlines, the total number of ATMs that an airport can handle can only be maximized to a certain level because of the constraints at runway. Within this constrained perspective, ICF assumed one alternate scenario as well, that being a conservative one – where it has assumed a peak hour ATM of 52 ATMs per hour instead of the 55 ATMs assumed in the other scenarios. 5.1.6 The Authority notes that MIAL has adopted this conservative projection of traffic of 52 peak hour ATMs for their traffic forecasts in their MYTP submission as per (iii) above. 5.1.7 Based on this, the likely traffic to be handled at the CSMIA in the Fourth Control Period as submitted by MIAL is as follows: Table 152: Projected Traffic for the Fourth Control Period as submitted by MIAL Passengers (Mn) ATM (‘000’s) Year Domestic International Total Domestic International Total FY25 38.60 14.11 52.72 250.73 81.18 331.91 FY26 33.61 11.01 44.62 214.36 63.02 277.37 FY27 31.49 9.54 41.04 200.03 54.13 254.16 FY28 32.83 9.63 42.46 207.62 54.13 261.75 FY29 38.63 9.72 48.34 243.17 54.13 297.30 5.2 AUTHORITY’S EXAMINATION REGARDING THE TRAFFIC FOR THE FOURTH CONTROL PERIOD 5.2.1 The Authority analyzes the CAGR of Traffic (both Passengers and ATMs) for the past Three Control Periods as given below: Table 153: Details of Passengers and ATMs for the First, Second and Third Control Periods along with CAGR Particulars (Mn) FY10 FY11 FY12 FY13 FY14 Total Domestic Pax 17.37 20.00 21.04 20.28 21.88 100.57 Domestic Y-o-Y Growth % 15.14% 5.20% (3.61%) 7.89% International Pax 8.23 9.08 9.70 9.93 10.34 47.29 International Y-o-Y Growth % 10.32% 6.82% 2.37% 4.13% Total Pax 25.61 29.07 30.75 30.21 32.22 147.86 % Yearly increase 13.51% 5.78% (1.76%) 6.65% Five Year CAGR 5.91% Domestic ATM 164.63 173.98 179.31 173.25 188.31 879.48 Consultation Paper No. 08/2024-25 Page 146 of 349TRAFFIC FOR THE FOURTH CONTROL PERIOD Particulars (Mn) FY10 FY11 FY12 FY13 FY14 Total Domestic Y-o-Y Growth % 5.68% 3.06% (3.38%) 8.69% International ATM 65.17 68.68 72.21 71.26 72.36 349.68 International Y-o-Y Growth % 5.39% 5.14% (1.32%) 1.54% Total ATM 229.8 242.66 251.52 244.51 260.67 1,229.16 % Yearly increase 5.60% 3.65% (2.79%) 6.61% Five Year CAGR 3.20% Particulars (Mn) FY15 FY16 FY17 FY18 FY19 Total Domestic Pax 25.21 30.04 32.72 34.85 34.09 156.91 Domestic Y-o-Y Growth % 15.22% 19.16% 8.92% 6.51% (2.18%) International Pax 11.43 11.62 12.44 13.65 14.74 63.88 International Y-o-Y Growth % 10.54% 1.70% 6.93% 9.79% 8.04% Total Pax 36.64 41.67 45.16 48.50 48.83 220.79 % Yearly increase 13.72% 13.73% 8.38% 7.40% 0.68% Five Year CAGR 7.44% Domestic ATM 195.37 220.25 224.90 234.61 232.65 1,107.77 Domestic Y-o-Y Growth % 3.75% 12.73% 2.11% 4.32% (0.84%) International ATM 74.09 76.38 80.57 86.08 88.62 405.73 International Y-o-Y Growth % 2.39% 3.09% 5.48% 6.84% 2.95% Total ATM 269.46 296.63 305.47 320.69 321.26 1,513.51 % Yearly increase 3.37% 10.08% 2.98% 4.98% 0.18% Five Year CAGR 4.49% Particulars (Mn) FY20 FY21 FY22 FY23 FY24 Total Domestic Pax 33.57 9.84 18.56 32.72 38.50 133.19 Domestic Y-o-Y Growth % (1.52%) (70.69%) 88.62% 76.29% 17.68% International Pax 12.36 1.22 3.18 11.21 14.32 42.29 International Y-o-Y Growth % (16.15%) (90.13%) 160.66% 252.52% 27.77% Total Pax 45.92 11.05 21.75 43.92 52.82 175.47 % Yearly increase (5.96%) (75.94%) 96.83% 101.93% 20.25% Five Year CAGR 3.56% Domestic ATM 228.68 91.81 150.75 221.86 241.81 934.91 Domestic Y-o-Y Growth % (1.71%) (59.85%) 64.20% 47.17% 8.99% International ATM 75.99 23.18 34.90 67.78 83.15 285.00 International Y-o-Y Growth % (14.25%) (69.50%) 50.56% 94.21% 22.68% Total ATM 304.68 114.98 185.65 289.64 324.96 1,219.92 % Yearly increase (5.16%) (62.26%) 61.46% 56.01% 12.19% Five Year CAGR 1.62% 5.2.2 The Authority observes that while ATM and Passenger growth was significant during the First Control Period, it slowed towards the end of the Second Control Period and was further impacted by COVID-19 in the Third Control Period, ultimately returning to pre-COVID levels by FY24. In this background, the Authority feels it is pertinent to also review the current and projected airside and terminal capacities, in order to take a holistic view of the traffic, projections submitted for the Fourth Control Period. 5.2.3 The Authority has also taken note of the report of International Air Transport Association (IATA) dated 9th January 2025 on Air Passenger Market Analysis for the month of November 2024, which indicate stable passenger growth for India. Consultation Paper No. 08/2024-25 Page 147 of 349TRAFFIC FOR THE FOURTH CONTROL PERIOD IATA in its report dated 9th January 2025 had presented the following: (i) The industry’s total Revenue Passenger-Kilometer (RPK) increased by 8.1% YoY in November, continuing to exceed historical records. Available Seat-Kilometer (ASK) rose by 5.7% YoY lagging demand growth. (ii) The Passenger Load Factor (PLF) improved by 1.9 percentage points compared to the previous year, reaching 83.4%, an all-time high for November. (iii) Domestic traffic overall grew by 3.1% YoY. India led the main markets this month with a 13.3% rise in RPK. All monitored markets showed stable demand growth, although seat capacity in some areas plateaued. (iv) International passenger traffic for the industry surged by 11.6% YoY in November. Carriers in the Middle East and Asia Pacific experienced higher growth, significantly contributing to global momentum. International RPK in Asia Pacific is now just 0.5% below pre-pandemic levels. 5.2.4 The Authority notes the peak-hour runway movement capacity in FY 24 is 46 for the primary runway 09/27 and 36 for the secondary runway 14/32, and with a total designated passenger handling terminal capacity of around 55 MPPA (15 MPPA in Terminal 1 and 40 MPPA in Terminal 2. 5.2.5 With the current airside constraints, CSMIA was able to handle 52.82 MPPA in FY 2024 at a total of 324,960 ATMs, being the highest traffic ever recorded. 5.2.6 However, the Authority notes MIAL’s submission on the proposed demolition and reconstruction of T1 (Refer from para 6.3.105), which would constraint the overall passenger handling capacity at terminal side. As mentioned in para 5.1.3, the Authority notes that some of the traffic from Terminal 1 will be accommodated at Terminal 2. On the Authority’s recommendation, MIAL commissioned a study to estimate the designed handling capacity at Terminal 2 post capacity enhancement initiatives proposed as part of the Fourth Control Period. This report, prepared by M/s Jacobs, estimated the revised passenger handling capacity at Terminal 2 to be 44.79 MPPA against the current 39.56 MPPA. 5.2.7 With this background, the Authority notes the following observations on the traffic projections of MIAL: (i) The traffic projected by MIAL for FY 25 is broadly consistent with the actual traffic levels achieved in FY 24. (ii) T1 is proposed to be demolished on Oct-25 and is expected to be completed in Sep-28. During this period, MIAL has restricted the traffic based on the passenger handling capacity at T2. The traffic estimated for this period is in the range of 40 MPPA to 45 MPPA, in line with the passenger handling capacity estimated for T2 (refer para 5.2.5). (iii) Once the reconstruction is completed, i.e., Oct-28 onwards, MIAL estimates that the traffic will gradually ramp-up. 5.2.8 Based on the above, the Authority could infer that Passenger Traffic (Pax) in both India and global markets has rebounded significantly from the pandemic-induced lows. Furthermore, current traffic levels have not only recovered but have also surpassed pre-pandemic benchmarks. It is projected that passenger traffic will fully realign with its original pre-pandemic growth trajectory within the next two to three years, marking a complete recovery from the impacts of Covid-19. Consultation Paper No. 08/2024-25 Page 148 of 349TRAFFIC FOR THE FOURTH CONTROL PERIOD 5.2.9 Based on above discussions, the Authority proposes to accept MIAL's traffic projections based on the study as per the table below: Table 154: Passenger/ATM Traffic as proposed by the Authority for the Fourth Control Period Particulars (Mn) FY25 FY26 FY27 FY28 FY29 Total Domestic Pax 38.60 33.61 31.49 32.83 38.63 175.16 International Pax 14.11 11.01 9.54 9.63 9.72 54.01 Total Pax 52.72 44.62 41.04 42.46 48.34 229.18 Domestic Increase % (12.93%) (6.31%) 4.26% 17.67% International Increase % (21.97%) (13.35%) 0.94% 0.93% Total Increase % (15.36%) (8.02%) 3.46% 13.85% Particulars ('000’s) FY25 FY26 FY27 FY28 FY29 Total ATM- Domestic 250.73 214.36 200.03 207.62 243.17 1,115.91 ATM- International 81.18 63.02 54.13 54.13 54.13 306.58 Total 331.91 277.37 254.16 261.75 297.30 1,422.49 Domestic Increase % (14.51%) (6.68%) 3.79% 17.13% International Increase % (22.37%) (14.11%) 0.00% 0.00% Total Increase % (16.43%) (8.37%) 2.98% 13.58% 5.3 AUTHORITY’S PROPOSALS REGARDING TRAFFIC PROJECTIONS FOR THE FOURTH CONTROL PERIOD Based on the available facts and analysis thereupon, the Authority proposes the following regarding the Traffic Projections for the Fourth Control Period: 5.3.1 To consider Traffic for the Fourth Control Period for CSMIA as per Table 154, which shall be trued up based on actuals at the time of tariff determination the tariff for the Fifth Control Period. Consultation Paper No. 08/2024-25 Page 149 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6. CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.1 BACKGROUND 6.1.1 RAB is an essential element in the process of tariff determination. The return to be provided on the RAB constitutes a considerable portion of the Target Revenue for an Airport Operator. To encourage the participation of the private sector in airport development and operations, investors must be fairly compensated for the capital outlays involved. At the same time, to safeguard the interests of the airport users, it must be ensured that the capital additions are efficient, their needs justified, and the return on investment is provided solely on the assets related to the core operations (i.e., Aeronautical services) of the airport. 6.1.2 Given this context, the Authority notes that MIAL has proposed capital expenditure for the Fourth Control Period based on its plan to develop CSMIA Airport to increase the annual passenger throughput capacity (domestic and international), along with ancillary facilities as per traffic demand projections. 6.1.3 The Authority, through its Independent Consultant, undertook a site visit to assess the capital expenditure proposed for the Fourth Control Period. During the site visit, the Independent Consultant engaged with the technical team of MIAL to understand the challenges in the existing airport infrastructure, traffic estimation methodologies, and the short, medium, and long-term development plans for the Airport. 6.1.4 As part of the exercise, discussions were held with the design and planning teams of MIAL to understand the scope of capital expenditure proposed by MIAL for the Fourth Control Period. These discussions included a review of the project plan, tentative drawings, and the phasing of projects to align with projected passenger traffic and operational needs. 6.1.5 The Independent Consultant conducted a physical survey of the land earmarked for new projects within the airport premises and reviewed existing infrastructure and physical assets where upgrades and refurbishments have been proposed. The technical feasibility, including spatial constraints and infrastructure integration, was assessed to validate the need and alignment of these projects with the airport’s growth plans. 6.1.6 Further, interactions were held with the costing team of MIAL to examine the basis of cost estimation, including unit rates, contingency provisions, escalation factors, and benchmarking against industry standards for similar infrastructure projects. The Authority also conducted an independent assessment of project timelines and proposed procurement strategies. The assessment also factored in the considerations for obtaining regulatory approval which are required for project completion. 6.1.7 The Independent Consultant performed an analysis of the submissions made by MIAL regarding CAPEX. In this respect, the Independent Consultant has performed the following functions: (i) Sought and verified various technical and study reports provided by MIAL, Drawings and Plans, BOQs, cost estimates and break-up, detailed justification and explanation, Copies of Letter of Intent (LOI), Letter of Award (LOA), Purchase Orders and Work Orders, etc. as applicable, provided by MIAL. (ii) Sought documentary evidence and verified the process of approval of CAPEX projects including competitive bidding process for award of various work orders, where applicable, to the contractors for such projects. Consultation Paper No. 08/2024-25 Page 150 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (iii) Analyzed the reasonableness of the proposed cost with reference to the Tentative Ceiling decided by the Authority vide order No. 7/2016-17 dated 13.06.2016 and based on the details of the rates and quantity as per Government / Industry approved norms. 6.1.8 With this background, the Authority has examined the capital expenditure proposed by MIAL for the Fourth Control Period, considering the historical traffic trends and future traffic estimates such that only essential, reasonable and efficient CAPEX is considered as part of RAB for the Fourth Control Period with a view to encourage the investment and maintain a balanced approach between the sustainable operations of MIAL and the interest of the airport users. Further, the Authority, along with the necessity of the capex, has also assessed the feasibility of implementing the proposed capex within the remaining years in the Fourth Control Period. It is imperative that MIAL completes the proposed capex within the time frame as otherwise the airport users would end up bearing the burden of the capex funding requirement in the form of higher tariff, without having access to the facilities. 6.1.9 Towards this objective, the Authority, through its independent consultant / aviation expert, has examined in detail the Aeronautical Capital Expenditure, Aeronautical Depreciation, HRAB and RAB submitted by MIAL. 6.1.10 The Authority has sought and examined MIAL’s submission based on the following details/criteria: (i) Nature of the expenditure (ii) Necessity/requirement of the expenditure (iii) Business plan and Master plan for all projects (iv) Airside capacity – present and projected (v) Number of passengers, both at present and projected, for the Fourth Control Period (vi) Terminal Capacity, both at present and projected for the Fourth Control Period (vii) Other short-term and long-term plans of MIAL (viii) Sustainability of airport operations (ix) Passenger service considerations (x) Safety and security of the airport (xi) Process of approval and sanction for various work orders/purchase orders 6.1.11 Based on the above, the Authority has rationalized the capital expenditure for some of the projects based on verification of item rates and optimization of the capacity augmentation proposed by MIAL and accordingly proposes capital additions for the Fourth Control Period. However, if the project is mandated by regulatory requirements or are incurred for improving operational efficiency, the Authority will true up the costs on an actual incurrence basis, subject to evaluation of reasonableness and efficiency at the time of determination of tariff for the next Control Period. 6.2 MASTER PLAN 2024 6.2.1 The Master Plan of the Airport provides the strategic framework for long-term airport growth, and the CAPEX proposal outlines the investments needed to achieve these objectives. 6.2.2 As per Clause 3.5.1 of the State Support Agreement, MIAL is required to prepare and submit a Master Plan based on realistic traffic forecasts, as assessed by an independent expert. The Master Plan shall be updated every 10 years, provided the same can be updated at shorter intervals if the JVC finds that the traffic growth is such as to require more frequent updates, or at such intervals as may be notified by the Consultation Paper No. 08/2024-25 Page 151 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD AAI or GOI or in the event the airport reaches passenger capacity, cargo capacity or other capacity constraints. Relevant clauses from the State Support Agreement regarding the Master Plan (Clauses 3.5.2 to 3.5.5) Clause 3.5.2 of the SSA: “…Within thirty (30) days of the JVC submitting to GOI the Master Plan in accordance with Clause 3.5.1 hereinabove, GOI shall provide (in writing) to the JVC any comments or suggested changes that GOI may have vis-à-vis the Master Plan, to the extent GOI feels that such Master Plan is in breach of the provisions set out under the OMDA and/or the parameters set out in Clause 3.5.1 hereinabove are not satisfied. In the event GOI does not, for whatsoever reason, submit any comments and/or suggested changes to the Master Plan in accordance with the provisions of this Clause 3.5.2, within the prescribed time limit, it shall be deemed that GOI has no comments and/or suggested changes to the Master Plan and the Master Plan submitted by the JVC in accordance with Clause 3.5.1 shall be deemed to be the final Master Plan, which shall be binding on the JVC and shall regulate the operation, management and development of the Airport in accordance with the OMDA. Clause 3.5.3 of the SSA: In the event GOI provides any comments and/or suggestions to the Master Plan pursuant to Clause 3.5.2 hereinabove, the JVC shall, within fifteen (15) days of receiving any such comments or suggested changes, submit to GOI a revised Master Plan, incorporating reasonable comments and/or changes suggested by GOI. Clause 3.5.4 of the SSA: Within fifteen (15) days of the JVC re-submitting the Master Plan in accordance with Clause 3.5.3 hereinabove, GOI shall provide any comments and/or suggested changes that GOI may have vis-à-vis the revised Master Plan, to the extent GOI feels that such Master Plan is in breach of the provisions set out under the OMDA and/or the parameters set out in Clause 3.5.1 hereinabove are not satisfied. In the event GOI does not, for whatsoever reason, submit any comments and/or suggested changes to the revised Master Plan in accordance with the provisions of this Clause 3.5.4, within the prescribed time limit, it shall be deemed that GOI has no comments and/or suggested changes to the revised Master Plan and the revised Master Plan submitted by the JVC in accordance with Clause 3.5.3 shall be deemed to be the final Master Plan, which shall be binding on the JVC and shall regulate the operation, management and development of the Airport in accordance with the OMDA. Clause 3.5.5 of the SSA: In the event GOI provides any comments and/or suggestions to the revised Master Plan pursuant to Clause 3.5.4 hereinabove, the JVC shall, within fifteen (15) days of receiving any such comments or suggested changes, submit to GOI the final Master Plan, incorporating reasonable comments and/or changes suggested by GOI. The Parties hereby acknowledge and agree that the final Master Plan submitted by the JVC shall be binding on the JVC and shall govern the operations, management and development of the Airport in accordance with the OMDA…" Consultation Paper No. 08/2024-25 Page 152 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Relevant clauses from the OMDA regarding the Master Plan As per Clause 8.3.1 of the OMDA, “…The JVC shall prepare a Master Plan for the Airport setting out the proposed development for the entire Airport, planned over a 20 year time horizon. The Master Plan shall include traffic forecasts for this period and link all planned major development to these forecasts..” Further, as per Clause 8.3.7 of the OMDA, “…(a) All developments (Aeronautical Assets, Non-Aeronautical Assets, Transfer Assets and Non- Transfer Assets) at the Airport shall be as per the then existing Master Plan; (b) No development (Aeronautical Assets, Non-Aeronautical Assets, Transfer Assets or Non-Transfer Assets) that is not envisaged in the Master Plan shall be allowed to be undertaken; and (c) The Airport, inclusive of aeronautical and non-aeronautical developments, Aeronautical Assets, Non- Aeronautical Assets, Transfer Assets and Non-Transfer Assets shall at all times comply with the then existing Master Plan…” 6.2.3 The Master Plan of CSMIA was last updated in 2019. As per the Master Plan submitted in 2019, the traffic forecast was estimated at 55 MPPA. CSMIA has surpassed 90% capacity of this target, handling 52.82 MPPA in FY 2023-24. 6.2.4 Accordingly, MIAL has prepared and submitted an updated Master Plan to Ministry of Civil Aviation for their comments and review, and to AAI for information in September 2024. This Master plan of CSMIA is prepared in compliance to section 8.3.5 of OMDA, which states: “…the JVC hereby undertakes to submit the initial Master Plan to the AAI for its information, and to the Ministry of Civil Aviation (“MoCA”) for its review and comments before the expiry of six (6) months from the date of execution of this Agreement, which thereafter must be updated and resubmitted to the AAI for its information and to the MCA for its review and comments periodically, every 10 years. Provided however that the Master Plan shall be updated at shorter intervals, if the JVC finds that the traffic growth is such as to require more frequent updates or for any other reasonable reason, or at such intervals as may be notified by AAI or MCA in the event the Airport reaches passenger capacity, cargo capacity and other capacity restraints…” 6.2.5 MIAL has prepared and submitted the updated Master Plan in 2024 and the main objective of the Master Plan 2024 is for achieving and sustaining airport capacity of 65+ MPPA, 1M+ tonnage of cargo handling and 52+ air traffic movements in peak hours. 6.2.6 Some of such projects identified for implementation for enabling the airport to cater to 65MPPA capacity are as below: (i) Reconstruction of T1 to enhance the capacity from 15 MPPA to 20MPPA (ii) Terminal 2 NW Pier (Check in Facilities, Construction of Bus boarding Gates(V3)) Terminal T2 Expansion etc., to enhance the capacity to 45MPPA (iii) Additional Aircraft Parking Stands in the Southern side of RWY 09-27 (iv) Construction of Parking Stand V2+V1 (v) Additional Aircraft Parking stand adjacent Apron J (vi) Construction of Airside Tunnel (vii) Construction of Eastern taxiway (between E5 and E7) parallel to RWY 14-32 Consultation Paper No. 08/2024-25 Page 153 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (viii) Extension of Taxiway M (ix) TWY West to 14-32 (x) TWY W1 parallel TWY to 14-32 West (xi) Construction of RET E6 (xii) Construction of RET W3 (xiii) Construction of Taxiway S (xiv) Kerbside improvements in front of T1 and T2 etc., Figure 4 – Existing CSMIA Land Use Plan Figure 5 – Proposed CSMIA Land Use Plan Consultation Paper No. 08/2024-25 Page 154 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.2.7 MIAL submitted updated Master plan of CSMIA to MoCA on 5th September 2024. The Authority, through its independent consultant, directed MIAL to confirm the status of approval from MoCA, and MIAL submitted the following: “…Mumbai Airport had submitted updated Master plan of CSMIA to MoCA on 5th September 2024. However, no comments have been received and hence same is deemed as approved as per provision 3.5.2 of State Support agreement. Communication to this effect has been shared with MoCA as well…” 6.2.8 The Authority has reviewed the capital expenditure submitted by MIAL in the context of the Airport’s Master Plan and proposed development. Capacity Assessment as per Master Plan 2024 6.2.9 As part of the Master Plan 2024, various new projects were identified to enhance operational efficiency of CSMIA and enhancing the airport capacity with peak hour runway operations in excess of 52 ATMs and enabling airport to cater to minimum of 65 MPPA. 6.2.10 As per the IMG norms, capacity creation in case of big airports with > 5 MPPA shall be from the 7th year from Planning Year. As per Traffic Study Report, based on unconstrainted projections, if traffic continues to grow at same pace, traffic forecast of Mumbai Metropolitan Region will reach 65.6 MPPA by 2025. Based on constrained projections, traffic at CSMIA likely to be 60.4 MPPA by 2032 (i.e., 7th year of planning). 6.2.11 Presently, the passenger handling capacity at Terminal 1 is 15 MPPA and at Terminal 2 is 40 MPPA. MIAL as part of its Master Plan 2024 has proposed the reconstruction of Terminal 1 (majorly from safety point of view to mitigate structural issues), with the reconstructed Terminal 1 having a capacity of 20 MPPA. MIAL has also proposed various capacity enhancements at Terminal 2 as part of the CAPEX of the Fourth Control Period, and had engaged M/s. Jacobs to undertake a capacity assessment study. As per the study, the following capacity enhancement initiatives are instrumental in increasing the passenger throughput at Terminal including: (i) A dedicated crew facility and Bus Boarding Gates in Northwest Pier Extension. (ii) Addition of Check-in desk (SBDs) at each Island. (iii) Reconfiguration Customs Handbag Screening Facility 6.2.12 Post these capacity enhancement, M/s Jacobs had identified the limiting factors for each category of passengers. For international passengers, the limiting infrastructure was noted to be immigration on arrivals, with 6 MPPA one-way capacity or 12 MPPA two-way capacity, an increase of around 0.5 million compared to existing capacity. For domestic passengers, security was the most constrained facility, providing a one-way annual capacity of 16 MPPA or 32 MPPA for two-way, an increase of 2 MPPA compared to existing capacity. Consequently, the enhanced capacity at Terminal 2 is expected to be 45 MPPA. Overall, the combined passenger handling capacity at the terminal side (T1+T2) is expected to be 65 MPPA. 6.2.13 Since the traffic at CSMIA is constrained due to airside, MIAL (as requested by AERA) in consultation with AAI has engaged independent consultant NATS to undertake an airside capacity assessment, after taking into consideration the planned CAPEX in the Fourth Control Period, and to determine potential future peak-hour ATM. Consultation Paper No. 08/2024-25 Page 155 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.2.14 MIAL in its master plan has submitted that the peak hour ATMs at CSMIA grew from 42 ATMs in FY13 to 47 in FY15. With 49 ATMs, peak hour ATMs maxed out in FY17. However, starting FY18, no growth in peak hour ATMs was observed and hence can be considered as the year when constraints finally hit the airport. The current declared capacity of CSMIA is 46 ATM per hour. Due to available slots over the last years, the number of movements have grown steadily with a maximum 48 to 50 movements reached in certain hours. 6.2.15 As per Master Plan 2024, the hourly airport capacity is expected to increase to 52-55 ATMs, after implementation of proposed improvements to airfield infrastructure and ATC procedures. It is also expected that the peaks will spread further throughout the day and late night, beyond current peak periods. 6.2.16 NATS, in their study, have mentioned that a reduction in Arrival-Departure-Arrival spacing could increase theoretical balanced runway demand capacity from 48 movements per hour to 52-55 movements per hour at CSMIA. However, it is further noted that Navi Mumbai International Airport is being developed approximately 10NM to the Southeast of CSMIA. Two parallel runways are planned, oriented in the direction 08/26, almost parallel to 09/27 at CSMIA. There are common waypoints used by inbound and outbound routes to both airports and as traffic increases, more arrivals and departures will be routed through these points, leading to possible congestion and potential conflicts. NATS has recommended that a CONOPs is produced for both airports that takes into consideration optimal usage of airspace. 6.2.17 MIAL, vide email dated 18th December 2024, had confirmed that the draft NATS Study Report has been shared with the AAI ATM Team for their comments / views, being the sole ANS service provider at CSMIA. The Authority, vide its letter dated 6th January 2025, had also requested AAI to review / examine the Study Report and furnish their comments / observations. 6.2.18 AAI, vide its letter dated 30-Jan-25 to AERA, submitted the following: “…MIAL to coordinate with all airlines and other stake holders to ensure Air Traffic Movements (ATM) of 44 during period of High Intensity Runway Operations (HIRO) and 42 Movements in Non-HIRO periods with two (02) General Aviation / Non-Scheduled Flights permissible in every Non-HIRO hours. The issue of air space congestion after any change may be addressed to. MIAL is to ensure that all Developments (Aeronautical Assets, Non-Aeronautical Assets, Transfer Assets and Non-Transfer Assets) at the Airport shall be as per existing Master Plan and no Development that is not envisaged in the Master Plan shall be undertaken as per Article 8.3.7 of OMDA…” Authority’s examination of Master Plan and capacity at CSMIA: 6.2.19 The Authority, as part of the examination, observes that: (i) MIAL had submitted Master Plan 2024 to Ministry of Civil Aviation (MoCA) in September 2024 for their comments or suggested changes. MoCA, vide OM No. AV-24011/9/2019-AD dated 07.02.2025 has written to different Ministry/agencies/departments to bring to the notice of MoCA by 28.02.2025 any deviation/violation of OMDA & SSA provisions. (ii) In response to MIAL’s letter dated 28.01.2025 regarding intimation of complete closure of operations at Terminal 1 at Mumbai Airport., MoCA vide letter no. AV-24032/41/2015-AD dated 11th February, 2025 sought clarifications from MIAL on phase wise timeline for T-1 demolition and construction, its impact on airside facilities, Terminal side capacity addition after reconstruction of new Terminal, Consultation Paper No. 08/2024-25 Page 156 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD year wise (till 2030) projected demand and how it will be catered through Mumbai and Navi Mumbai International Airport. The Airport Operator has submitted his reply vide letter dated 24.02.2025 which is reproduced below: “… Figure 6 – MIAL’s response letter to MoCA (1/3) Consultation Paper No. 08/2024-25 Page 157 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 7 – MIAL’s response letter to MoCA (2/3) Figure 8 – MIAL’s response letter to MoCA (3/3) …” The final view of MoCA as on date is not known to the Authority. (iii) As per the Master plan 2024, Terminal 1 is planned for reconstruction on account of structural defects identified and verified by IIT Mumbai, lack of segregation of arrival and departure passengers and capacity expansion. Accordingly, MIAL has proposed reconstruction for a passenger handling capacity of 20 MPPA, which the Authority has reviewed and dealt with in its analysis. (iv) MIAL (as requested by the Authority) has engaged NATS to provide an independent high-level review of the infrastructure and forecast demand contained in CSMIA Master Plan. NATS has done a study and has confirmed the peak hour theoretical capacity of 55 ATM’s based on its analysis benchmarking with other busy single runway airports like Gatwick but in respect to taxiway Consultation Paper No. 08/2024-25 Page 158 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD infrastructure, it has stated that the “Master plan changes appear to offer significant benefits, but they require more detailed assessment to confirm. The phasing of the taxiway infrastructure changes should be reviewed to ensure that sufficient capacity is provided as demand grows” (v) As per Schedule 1, Principle 8 of the State Support Agreement, “Master Plan and Major Development Plans: AERA will accept the Master Plan and Major Development Plan as reviewed and commented by the GOI and will not seek to question or change the approach to development if it is consistent with these plans. However, the AERA would have the right to assess the efficiency with which capital expenditure is undertaken.” (vi) AAI’s comment on the Authority’s request on the NATS study report as re-produced at the above para 6.2.18 would show that there is no categorical viewpoint given by AAI on the recommendations in the report but it has just mentioned Air Traffic Movements (ATM) during High Intensity Runway Operations (HIRO) and during Non-HIRO periods, while at the same time saying that the Airport Operator has to ensure development as per existing Master Plan as provided in the relevant article of OMDA. It is pertinent that Schedule 1, Principle 8 of SSA has stipulated the obligation of AERA in respect of Master Plan, the extract of which is given at above para 6.2.19(v). Hence, there is a need for clarity on this issue by AAI. 6.2.20 In view of the foregoing, although a need has been felt for demolition and reconstruction of Terminal 1 at CSMIA from a safety aspect, considering the air side constraints and Navi Mumbai International Airport getting built, the Authority in the light of the factors mentioned at above para 6.2.19 would require further clarity on the aforesaid issues based on the inputs from the stakeholders, including AAI and MoCA in order to take an informed decision in this matter. Accordingly, in the interim, the Authority has included the reconstruction of T1 with some area and cost rationalization in this Consultation Paper as discussed in para 6.3.105 to para 6.3.133 . However, a final view will be taken on the basis of updated status and comments by Airport Operator and other stakeholders on the following: (i) NATS Study (ii) Master Plan (iii) Requirement of T1 demolition and reconstruction The Authority seeks stakeholder inputs on these to ensure a well-informed assessment of capacity creation at CSMIA, in order to balance long-term traffic projections, airside constraints, and terminal expansion plans. 6.2.21 AUCC – MIAL has submitted that, pursuant to the provisions contained in the Authority’s (AERA) Guidelines, stakeholders were invited to attend a consultation meeting to discuss the capex proposal above Rs. 50 Crores planned in the Fourth Control Period. The meeting was held on 13th March 2024 and the Project Information File with respect to planned capex projects was also shared with the stakeholders. The minutes of this meeting is given in Appendix 1 (Refer 17.1). 6.3 CAPITAL EXPENDITURE FOR THE FOURTH CONTROL PERIOD MIAL SUBMISSION REGARDING CAPEX FOR THE FOURTH CONTROL PERIOD 6.3.1 MIAL has proposed total capital expenditure of Rs. 17,439.38 Crores for the Fourth Control Period for CSMIA. MIAL has provided a phasing plan and calculated the related aeronautical depreciation on these assets, determining the closing Regulatory Asset Base accordingly. Additionally, MIAL has computed and Consultation Paper No. 08/2024-25 Page 159 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD sought depreciation on HRAB based on their calculations. The Authority has organized the discussion in this chapter in the following order: (i) Capital expenditure proposed for the Fourth Control Period (ii) Aeronautical allocation of capital expenditure for the Fourth Control Period (iii) Aeronautical depreciation for the Fourth Control Period (iv) Regulatory Asset Base for the Fourth Control Period (v) Hypothetical Regulatory Asset Base for the Fourth Control Period 6.3.2 MIAL’s capex proposal for the Fourth Control Period includes several projects aimed at upgrading and enhancing the airport’s infrastructure. The primary objective of these Capex proposals is to cater to the increasing traffic demand, improve operational efficiency and maintain compliance with regulatory and safety standards. MIAL's Capex plan for the Fourth Control Period is divided into various categories, including airside improvement works, passenger terminal works, ancillary building development, kerbside improvements, and operational capital works. 6.3.3 The Authority, through its independent consultant / aviation expert, has undertaken a comprehensive analysis of the Capex proposals submitted by MIAL. This analysis includes an assessment of the necessity, feasibility, and cost-effectiveness of each proposed project, with a particular focus on ensuring that the proposed expenditure aligns with the long-term interests of airport users and other stakeholders. 6.3.4 In the following sections, the Authority presents its analysis of the capex projects proposed by MIAL as given in the table below: Table 155: Summary of Capital Expenditure projects submitted by MIAL for CSMIA for the Fourth Control Period (Rs. in Crores) Cost proposed Number of S. No. Particulars by MIAL Projects 1 Airport Project Capex 1.A Airside Improvement Works 3,188.79 38 1.B Passenger Terminal & Associated works 3,496.11 5 1.C Kerbside Improvements 280.20 5 1.D External Connectivity Improvements 58.87 2 1.E Ancillary Building Development Works 2,152.06 10 2 Operational / Sustaining / Minor Capex Works 3,109.48 251 Indexation, Technical consultancy, contingencies, pre- 3 operative cost, design cost, PMC, preliminary expenses & 5,153.85 - Interest During Construction TOTAL 17,439.38 311 6.3.5 Basis of capital expenditure considered in preparing the estimation as submitted by MIAL is as follows: (i) Block Cost Estimate – Block Cost estimation for works / projects as included in each category of capex is based on the Schedule of Rates published by various Departments of Govt. of Maharashtra / Delhi Schedule of Rates (DSR) published by CPWD / MoRTH, Govt. of India / Plinth Area Rates (PAR) / Market rate analysis at price level valid including all necessary Taxes, duties, levies etc. as applicable. For certain projects where applicable, cost is considered based on Contract / Work Order / PO / LOA / Budgetary Quotation. Consultation Paper No. 08/2024-25 Page 160 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (ii) Indexation @ 5% per annum has been considered based on the cash flow projections being made in the respective years of the Control Period. (iii) Soft Costs of approx. 16% covering contingencies, design cost and PMC. (iv) Interest During Construction (IDC) – IDC is calculated on the proposed capital expenditure based on construction phasing and capitalization of assets. The amount is calculated considering debt funding of 70% at an interest rate of 11.93%. AUTHORITY’S EXAMINATION REGARDING CAPITAL EXPENDITURE (CAPEX) FOR THE FOURTH CONTROL PERIOD 6.3.6 The Authority has analyzed MIAL’s submissions regarding CAPEX for the Fourth Control Period as submitted in the MYTP. The Authority has grouped the proposed CAPEX for the Fourth Control Period based on the categories submitted by MIAL for evaluation along with the respective base costs as detailed below. Further, the indexation increase based on expenditures across different years, technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses, and IDC are presented separately as a total for all proposed capital expenditures at the end of the table. Table 156: Project wise CAPEX as submitted by MIAL for CSMIA for the Fourth Control Period (Rs. in Crores) Completion S. No. Projects Base Cost* Start Date Date 1 PROJECT CAPEX PROPOSALS 9,176.04 A Airside Projects 3,188.79 A1 Runway Improvement Works A1-1 Recarpeting of RWY 09-27 148.71 Oct-27 May-28 A2 Taxiway Improvement Works Construction of Taxiway E (segment between E5 & E7), A2-1 73.59 Oct-27 Mar-28 North-East side, parallel to RWY 14-32 A2-2 Construction of Taxiway M Extension (East side) 60.99 Oct-26 Mar-28 Construction of TWY W (North-West side, parallel to RWY A2-3 161.65 Oct-26 Mar-28 14-32) A3 Apron Improvement Works A3-1 Construction of Additional Aircraft Parking Stands (V1+V2) 113.26 Oct-26 Mar-28 A3-2 Reconstruction of Apron C (Tier1) and Taxiway W6 53.16 Oct-25 Mar-27 Reconstruction of Additional Aircraft Parking Stands in the A3-3 53.12 Oct-25 Mar-27 Southern side of RWY 09-27 A4 to Other Airside Works A9 A4 Reconstruction of Perimeter Road 202.50 Apr-24 Mar-29 A5 Construction of Airside Tunnel 894.23 Oct-25 Mar-29 A6 Reconstruction of Airside Drain 498.80 Apr-24 Mar-29 A7 Aircraft Maintenance Hangar 92.76 Oct-25 Mar-28 A8 Parking Stands at NEC Hangar 120.00 Apr-24 Mar-25 A9 Airside improvement works less than Rs. 50 Crores 716.02 Apr-24 Mar-29 B Passenger Terminal Improvement & Associated Works 3496.11 B1 Reconstruction of T1 3,129.23 Apr-24 Sep-28 B2 Terminal 2 Expansion Project 141.88 Apr-25 Mar-27 B3 GA Terminal Expansion 225.00 Apr-24 Oct-25 C Kerbside Improvement Projects 280.21 New T1 Access Road (At-Grade) including demolition of 27.80 Oct-25 Oct-26 C1-1 existing pavement C1-2 New T1 Access Road (Elevated Departure Driveway for T1) 102.48 Oct-26 Mar- Consultation Paper No. 08/2024-25 Page 161 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Completion S. No. Projects Base Cost* Start Date Date At-Grade Road development over existing nallah in front of C2 81.80 Oct-25 Mar-28 T2 MLCP External Landscape & Horticulture with Irrigation system C3-1 including new trees, transplantation of trees and removal of 49.00 Apr-25 Mar-28 trees C3-2 At-Grade Road widening for International Airport Road 19.13 Oct-25 Mar-27 D External Connectivity Improvement Project 58.87 E Ancillary Building Development Works 2,152.06 Construction of Airport Management Corporate Office E1 1,229.36 Apr-24 Mar-29 Building E2 Construction of NAD Colony 282.65 Apr-24 Mar-28 Mumbai Metro Line 3: Construction of 3 Metro Stations at E3 216.00 Apr-24 Mar-28 CSMIA E4 Sewage Treatment Plant and associated works 16.41 Apr-28 Mar-29 E5 Development of T2 Forecourt 124.80 Apr-24 Mar-28 E6 Crew Terminal Oct-24 May-26 98.70 E7 Relocation of ATC Technical Block 184.14 Apr-25 Mar-27 2 OPERATIONAL CAPEX PROPOSALS 3,109.48 2A CT Handbag X-ray 320.00 2B Full Body Scanner 69.00 2C Crash Fire Tender 50.00 2D Refurbishment of Washrooms at T2 189.00 2E Transfer Hub Initiatives at Baggage Handling Systems at T2 190.00 Apr-24 Mar-29 2F Follow the Greens 200.00 2G Self-Bag Drops at T2 222.00 2H CT-EDS 78.00 2I Operational Capex Projects less than Rs. 50 Crores 1,791.48 SUB-TOTAL (Project Capex + Operational Capex) (1+2) 12,285.52 3 SOFT COSTS 5,153.85 3A Indexation @5% as per cash flow 1,703.07 Apr-24 Mar-29 Technical consultancies, contingencies, pre-operative 3B 2,238.17 Apr-24 Mar-29 Cost, design cost, PMC, preliminary expenses @16% 3C IDC at 11.93% Cost of Debt considering 70% Debt funding 1,212.61 Apr-24 Mar-29 TOTAL (Project Capex + Operational Capex + Soft 17,439.38 Costs) (1+2+3) *The base cost for each project line item excludes respective indexation, technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses and IDC which are given separately from 3A to 3C. 6.3.7 AUCC - The Authority notes that MIAL conducted an Airport Users Consultative Committee (AUCC) meeting on 13th March 2024 with all the stakeholders and discussed the CAPEX proposals above Rs. 50 Crores planned to be undertaken during the Fourth Control Period effective from FY 2024-25 to FY 2028- 29. The meeting was attended by various aviation stakeholders including International Air Transport Association (IATA), Federation of Indian Airlines (FIA), Maharashtra Metro Rail Corporation Limited (MMRCL), Airline Partners, and DGCA. 6.3.8 As per the minutes of the meeting (Refer 17.1), the Authority observed that MIAL had broadly discussed the following with the stakeholders: (i) Brief about Adani airport strategy, aviation outlook and a background of CSMIA along with the milestones achieved by the airport in last few years. (ii) Overview of the traffic forecast for the next 10 years and traffic drivers. Consultation Paper No. 08/2024-25 Page 162 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (iii) Presentation on challenges and bottlenecks in the existing infrastructure (iv) Master Plan of the Airport along with CAPEX projects proposed to be executed in the Fourth Control Period. 6.3.9 Certain observations made by stakeholders: (i) Federation of Indian Airlines (FIA) raised concerns about the downward trend in MIAL’s traffic forecast methodology. They suggested that certain airlines have projected a progressive increase in traffic, calling for an explanation of the rationale behind the current forecasts. (ii) IATA requested additional detailed information about the capital expenditure projects, particularly timelines, dependencies, and benefits expected from the projects to enable more informed feedback. (iii) IATA mentioned that the claims of increasing aircraft movements from 46 to 50+ ACMs per hour must be substantiated with thorough research. (iv) IATA also wanted to know T1 closure and re-provision impact, how the displaced demand will be provided in T2 and the assumptions regarding relocation of airlines to Navi Mumbai International Airport. They also wanted to understand the details of how the Fourth Control Period capital plan specifically accounts for capacity enhancement on account of the likely completion of Navi Mumbai International Airport in Summer 2025. MIAL has given its responses to these observations and the same is enclosed (Refer 17.1). 6.3.10 The Authority, through its independent consultant, examined the cost estimate submitted by MIAL and noted that they are generally based on CPWD DSR / PAR rates & MoRTH (exceptions noted to this have been detailed in the respective sections). The Authority has the following observations: (i) MIAL has considered 10% additional cost towards working in operational areas, in certain BOQ line items. However, the Authority is of the view that the provision made by MIAL towards additional cost for working in operational area is high and therefore proposes to consider the allowance for extra cost over applicable rates for working in operational areas to the maximum allowable level, i.e. 5% as considered in other airports, in the BOQ items where MIAL has claimed 10% additional cost for operational area works. (ii) MIAL has included costs for the diversion of existing utilities and infrastructure either as a lump sum or as a percentage of the total project cost. However, the Authority observes that the percentage varies from 2% to 10% across different projects. To ensure consistency and cost efficiency, the Authority proposes to rationalize these costs by applying a standard rate of 2% where diversion of utilities is deemed necessary subject to considering a lump sum in cases where the cost of utility diversion is significantly high or disallowing the cost altogether where utility diversion is not considered essential. (iii) MIAL has included 15% of the overall taxiway and apron costs for Airfield Ground Lighting (AGL) in the costing estimates of airside projects. The Authority, through its independent consultant / aviation expert, observes that AGL systems typically account for around 10% of the total taxiway and apron costs for similar projects. This includes the cost of installation, equipment, and electrical infrastructure required for safe ground operations. Given this industry standard, the Authority proposes considering only 10% of the overall taxiway and apron costs towards AGL. (iv) MIAL has included the demolition cost of existing structures as an enabling cost, where projects involve demolition of structures. However, the Authority observes that demolition of structures typically involves the recovery of salvageable materials, such as steel, concrete, and other reusable components. These materials have a residual value and can be sold as scrap, generating a net inflow Consultation Paper No. 08/2024-25 Page 163 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD for the operator. In most cases, contractors engaged for demolition can offset their costs through the resale of these materials, and hence the operator would not incur costs for demolition of structures. Hence, the Authority proposes not to consider demolition costs of buildings as enabling costs in the overall cost estimate. (v) MIAL has included costs for Project Management Consultancy (PMC), contingency, and indexation within certain individual project cost estimates. Since these costs have already been proposed separately for all projects as a whole, the Authority proposes not to include them within the individual CAPEX projects, and has dealt with these items separately for all projects together in Paras 6.3.277 to 6.3.288. 6.3.11 The Authority, through its independent consultant, interacted with the technical team of MIAL on the aspects of airport planning, traffic estimation, designing and its short, mid and long term impact on Airport Economics. The Authority has considered various applicable factors such as current capacity, traffic estimates, normative cost benchmarks, need assessment etc. together with the need for phased development of facilities, and has rationalized the Capital Expenditure proposed. 6.3.12 The Authority observes that MIAL has submitted various Operational Capex Proposals under different heads consisting of numerous sub-projects/procurements planned to be carried out over the Fourth Control Period. The Authority notes that for certain Operational Capex Proposals, MIAL has provided POs and BOQs for only a portion of the cost. For the remaining amounts, which consist of multiple line items, only a broad level cost estimate has been submitted to justify the proposed costs. In the absence of such details, it is not possible to assess the reasonableness of these expenses. Thus, the Authority proposes to rationalize the capital expenditure for some of the projects / capital items at this stage. In the event that such projects are necessary and critical to airport operations, MIAL may incur the remaining amounts and the same would be taken into due consideration on an actual incurrence basis subject to evaluation of efficiency and reasonableness, by the Authority, at the time of determination of tariffs for the Fifth Control Period. 6.3.13 The Authority has reviewed the projects proposed by MIAL (refer Table 156), with a project-wise analysis provided in the following paragraphs. The cost mentioned represents the base cost of each item, while the evaluation of soft costs added to the base cost. 6.3.14 The Authority, through its independent consultant / aviation expert, has also examined the individual line items under each project and classified them based on the nature of the project into aeronautical, non- aeronautical and common. The common assets were further bifurcated using the Terminal Area Ratio as applicable. Accordingly, only the aeronautical portion of the cost has been considered as part of aeronautical capital expenditure. A - Airside Improvement Works (Rs. 3,188.79 Crores) 6.3.15 MIAL has proposed the following Airside Improvement Works in the Fourth Control Period in order to: (i) create additional aircraft parking stands and associated GSE areas (ii) increase and sustain the ATM capacity of Runway 14-32 by providing parallel taxiways (iii) reconstruct the outlived and damaged taxiways and apron areas (iv) ensure overall operational efficiency, airside safety and enhance airside capacity Table 157: Summary of Projects proposed by MIAL for Airside Improvement Works (A): (Rs. in Crores) S. No. Project Name Cost proposed by MIAL A1 - Runway Improvement Works Consultation Paper No. 08/2024-25 Page 164 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD S. No. Project Name Cost proposed by MIAL A1-1 Recarpeting of RWY 09-27 148.71 A2 - Taxiway Improvement Works Construction of Eastern Taxiway (between E5 & E7) parallel to RWY 14- A2-1 73.59 32 A2-2 Taxiway M Extension East Side including Taxiway bridge over Mithi river 60.99 A2-3 Taxiway West to RWY 14-32 161.65 A3 - Apron Improvement Works A3-1 Construction of Additional Aircraft Parking Stand (V1+V2) 113.26 A3-2 Reconstruction of Apron C (Tier 1) and Taxiway W6 53.16 Reconstruction of Additional Aircraft Parking Stands in the Southern side A3-3 53.12 of RWY 09-27 A4 to A9 - Other Airside Works A4 Reconstruction of Perimeter Road 202.50 A5 Construction of Airside Tunnel 894.23 A7 Aircraft Maintenance Hangar 92.76 A6 Reconstruction of Airside drain 498.80 A8 Parking Stands at NEC Hangar 120.00 A9 Airside Projects less than 50 Crores 716.02 TOTAL 3,188.79 A1 – Runway Improvement Works A1-1 Recarpeting of RWY 09-27 (Rs 148.71 Crores) MIAL’s submission: 6.3.16 MIAL has proposed the recarpeting of RWY 09-27, which is the primary runway at CSMIA and used approximately 94% of the time for aircraft operations. The last recarpeting of this runway was undertaken in 2019, and MIAL has projected that the next round of recarpeting will be necessary in 2027, which is in line with the typical recarpeting cycle of every 7 to 10 years for high-traffic runways. 6.3.17 The proposed work involves recarpeting of runway surface over an area of 3,27,983 Sqm which will consist of three layers: (i) One layer of 75 mm Dense Bituminous Macadam (DBM), (ii) Two layers of 50 mm Bituminous Concrete (BC). 6.3.18 MIAL has represented that recarpeting is essential for maintaining good riding surface and surface friction necessary for safe aircraft operations, particularly in the monsoon season when the runway is subject to heavy use under wet conditions. The project also includes the resurfacing of taxiways that connect to RWY 09-27 and fall under the runway clearance area. Authority’s examination regarding recarpeting of RWY 09-27 6.3.19 The Authority, through its independent consultant / aviation expert, has examined the submission of MIAL and is of the view that periodic recarpeting of primary RWY 09-27 is necessary to ensure the continued safety and operational efficiency of the airport. The primary RWY 09-27 is 3,448m long and 60m wide, and the total area is 3,27,983 sqm, considered by MIAL for recarpeting includes the primary runway, runway shoulders on both sides, inter-section of RWY 09-27 and RWY 14-32 and the taxiways leading to and from RWY 09-27 up to the runway strip. MIAL has proposed this recarpeting with three layers of bituminous work, as explained in Para 6.3.17 above. Consultation Paper No. 08/2024-25 Page 165 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.20 The Authority, through its independent consultant / aviation expert, observes that, typically, recarpeting works at other airports involve the use of only two layers of Bituminous Concrete. In line with industry standards and practices followed at other airports, the Authority proposes to consider the cost for two layers of BC, as against the cost for three-layers proposed by MIAL. 6.3.21 Based on the MoRTH analysis and considering only 2 layers of BC, the cost / sqm recomputed by the Authority works out to Rs. 3,350 for the primary runway as against Rs 4,440 proposed by MIAL, and Rs. 2,470 for the runway shoulders as against Rs 3,850 proposed by MIAL. 6.3.22 Further, the Authority, through its independent consultant / aviation expert, notes that MIAL has included costs for the diversion of existing utilities and infrastructure at 5% of the total project cost. The Authority is of the view that this cost is very high since only the runway edge lights have to be made available for operations during the recarpeting work, and accordingly proposes to consider only 2% as detailed in para 6.3.10(ii). 6.3.23 Based on the above discussions, the adjustments to Recarpeting of RWY 09-27 as proposed by the Authority is given in the table below: Table 158: Cost proposed by the Authority towards Recarpeting of RWY 09-27 (Rs. In Crores) Base Cost as per Particulars Ref Variance Remarks MIAL Authority Cost rationalized considering Resurfacing of Runway - A 115.56 87.19 28.37 only 2 layers of BC instead of 3 Rigid Pavement layers proposed by MIAL Cost rationalized considering 1 Resurfacing of shoulders layer of DBM & 1 layer BC B 26.07 16.73 9.34 - Flexible Pavement instead of 3 layers proposed by MIAL. Diversion of Existing Lumpsum provision reduced to C 7.08 2.08 5.00 Utilities & Infrastructure 2% from 5% proposed by MIAL. D = SUM Total 148.71 106.00 42.71 (A:C) 6.3.24 The Authority has also referred to its decision in Order No. 35/2017-18 dated 12th January 2018 in the matter of ‘Determination of Useful Life of Airport Assets’, which states that: “…Resurfacing & runway: The cost of resurfacing & runway leading to restoration of original PCN value would be amortized over 5 years for the purpose of tariff computation…” 6.3.25 The Authority notes that MIAL has not provided sufficient evidence to indicate that the proposed recarpeting will result in an increase in the Pavement Classification Number (PCN) of the runway, and accordingly proposes that the recarpeting should be treated as Operation and Maintenance expenses and amortized over a period five years as per Table 267. Based on the above examination, the Authority proposes to consider Rs. 106.00 Crores for Recarpeting of RWY 09-27. Consultation Paper No. 08/2024-25 Page 166 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD A2 Taxiway Improvement works A2-1 Construction of Eastern Taxiway (between E5 & E7) parallel to RWY 14-32 (Rs 73.59 Crores) MIAL’s submission 6.3.26 MIAL has submitted that full-length parallel taxiways are currently unavailable on both the eastern and western side of RWY 14-32. As a result, its peak hour ATM capacity (35 ATMs per hour) is significantly lower compared to RWY 09-27 (46 ATMs per hour). This limitation causes considerable congestion and flight delays whenever the primary RWY 09-27 is closed for maintenance or due to adverse weather conditions. Additionally, on the eastern side, aircraft’s operating to and from T2 are required to backtrack on RWY 14-32, resulting in increased fuel consumption. 6.3.27 In view of the above, MIAL proposes to construct Taxiway E (29,989 Sqm) to reduce Runway Occupancy Time (ROT) for aircrafts landing on RWY 32 and proceeding towards T2 apron. This project was approved by the Authority in the Third Control Period, but MIAL could not execute the project due to external dependencies. MIAL has now proposed this in the Fourth Control Period. Figure 9 – Proposed location of Eastern Taxiway (between E5 & E7) parallel to RWY 14-32 (labeled 1-1) Authority’s examination regarding construction of Eastern Taxiway (between E5 & E7) parallel to RWY 14-32 6.3.28 The Authority, in its examination through the Independent Consultant, noted that the project is needed for improving the airside operations at CSMIA. However, the Authority notes that this construction is dependent on the following enabling works: (i) Relocation of the ATC Technical Block, (ii) Relocation of the pump house, water tank, cargo sheds, and cargo buildings. 6.3.29 The Authority observes that the relocation of the ATC Technical Block is contingent on the conclusion of ongoing discussions with AAI. This dependency is critical, as the relocation is a prerequisite for executing this project. Given that the ATC Technical Block falls under the purview and operational control of AAI, its relocation is outside the immediate control of the Airport Operator. 6.3.30 In view of these external dependencies, the Authority proposes not to consider this project cost at this stage as part of additions to RAB. If the project is commissioned and put to use in the fourth control period, the same will be considered based on incurrence, at the time of true up, subject to evaluation of efficiency and reasonableness. Consultation Paper No. 08/2024-25 Page 167 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD A2-2 Taxiway M extension (East side) including Taxiway bridge over Mithi river (Rs 60.99 Crores) MIAL’s submission 6.3.31 MIAL has proposed extending the existing taxiway M to link it with the physical beginning of RWY 27, including the construction of a bridge over the Mithi river. The proposed Taxiway M extension will create an additional holding area for aircraft from Apron of T2 entering Runway 27. It will be designed for Code F aircraft. Authority’s examination regarding Taxiway M extension (East side) including Taxiway bridge over Mithi river 6.3.32 The Authority notes that this project was allowed in the Third Control Period only on an incurrence basis, considering the external dependencies like acquisition of land and the need for vacation of encroachments from the vicinity of RWY 09-27. 6.3.33 The Authority also observes, based on the physical site inspection, that these encroachments still remain to be shifted from the vicinity of RWY 09-27 as can be seen from Figure 10. Figure 10 – Closer view of the land required for construction of Taxiway M extension (East Side) including Taxiway bridge over Mithi river (labeled 1-2) 6.3.34 In view of these external dependencies, the Authority proposes not to consider this project cost at this stage as part of additions to RAB. If the project is commissioned and put to use in the Fourth Control Period, the same will be considered based on incurrence, at the time of true up, subject to evaluation of efficiency and reasonableness. A2-3 Taxiway West to RWY 14-32 (Rs 161.65 Crores) MIAL’s submission 6.3.35 MIAL has submitted that full-length parallel taxiways are currently unavailable on the western side of RWY 14-32. The aircrafts operating from T1 apron and Kalina (Western side) are required to cross active RWY 14-32. Further, large aircrafts landing using RWY 32 are required to backtrack, increasing Runway Occupancy Time (ROT) and defeating the objective of achieving environmental sustainability. 6.3.36 In view of the above, MIAL proposes to construct Taxiway W (1,04,301 Sqm) to reduce ROT, and also to function as a buffer area during departure peaks, freeing up space on the congested domestic apron (i.e. T1 apron). Consultation Paper No. 08/2024-25 Page 168 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 11 – Proposed location of Taxiway West to RWY 14-32 (labeled 1-10) 6.3.37 MIAL submitted a cost estimate of Rs. 161.65 Crores for construction of Taxiway West to RWY 14-32. The taxiway area considered by MIAL is 59,649 sqm of rigid pavement and 44,652 sqm of flexible pavement for shoulders. Authority’s examination regarding Taxiway West to RWY 14-32 6.3.38 The Authority notes the importance of this project in enhancing operational efficiency, particularly during the use of Runway 14-32 and for aircraft utilizing the Apron near T1. 6.3.39 The Authority notes the following observations regarding the cost proposed by MIAL: (i) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise the extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (ii) MIAL has included costs for the diversion of existing utilities and infrastructure at 5% of the total project cost. The Authority is of the view that this cost is very high and hence proposes to include lumpsum provision as detailed in para 6.3.10(ii). (iii) MIAL has included a 15% mark-up on cost for AGL. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise cost for AGL area to 10% as detailed in para 6.3.10(iii) on the BOQ items on which MIAL has claimed 15% additional cost. (iv) MIAL has included the cost of constructing a portion of the compound wall, which is also separately included in Project A9-16. To avoid duplication, the Authority proposes not to consider this cost as part of this project. 6.3.40 The Authority further notes that MIAL is proposing a parallel taxiway with a length of approximately 1,800m with four connections to RWY 14-32. Out of these, three connections are proposed within the land available with MIAL, and one connection at the end of RWY 14-32 is proposed on the land currently under encumbrance. After a review of the land requirements as part of the site visit, the Authority observed that a significant portion of the project can be carried out at present, except for approximately 200m of taxiway connection as explained above, which is contingent upon removal of encumbrance. The Authority further notes that this portion of 200m is only proposed as a redundant and additional parking space for one aircraft queuing for take-off while using RWY 14-32, and notes that the rest of the taxiway can be made operational even without this strip. Considering this, the Authority proposes to only consider 90% of the project cost after making the aforementioned adjustments to cost. Consultation Paper No. 08/2024-25 Page 169 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.41 Based on the above, the cost estimate proposed to be considered by the Authority is given in table below: Table 159: Cost proposed by the Authority towards Taxiway West to RWY 14-32 (Rs. In Crores) Base cost as per Particulars Ref Variance Remarks MIAL Authority • Revision of costs for working in operational areas from 10% to 5%. • Demolition cost of buildings / Enabling Cost – A 41.25 21.84 19.41 structures not considered for 10 Demolition buildings of G+2 concrete structures, and a slum area covering 20 sqm. Enabling Cost - New • Compound wall separately Construction of B 0.81 - 0.81 considered in project A9-16. Compound Wall • Revision of costs for working in New Construction - C 78.14 70.98 7.16 operational areas from 10% to 5% Rigid Pavement and for AGL from 15% to 10%. • Revision of costs for working in New Construction - D 35.72 32.60 3.13 operational areas from 10% to 5% Flexible Pavement and for AGL from 15% to 10%. Diversion of Existing Utilities & E 5.73 1.00 4.73 • Lumpsum provision considered. Infrastructure F = Total SUM 161.65 126.42 35.23 (A:E) 90% of the project G = F * cost as explained 113.78 90% above 6.3.42 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with CPWD DSR and MoRTH rates and thus proposes considering Rs.113.78 Crores (i.e., 90% of Rs.126.42 Crores) for this project in this control period. A3 Apron Improvement Works A3-1 Construction of Additional Aircraft Parking Stand (V1+ V2) (Rs 113.26 Crores) MIAL’s submission 6.3.43 MIAL has proposed the construction of additional parking stands, associated GSE areas and Taxiway Z extension adjoining T2. This is expected to meet the increasing demand of overnight halt by Indian domestic carriers, and for additional flights by foreign carriers during peak periods at night. Authority’s examination regarding construction of Additional Aircraft Parking Stand (V1+ V2) 6.3.44 The Authority notes the need for this project to meet demand for aircraft parking stands. MIAL had proposed the construction of Parking stand V1, V2 & V3 in the Third Control Period. The Authority had allowed the proposal for the construction of Parking Stand V2 and V3, but deferred the construction of V1 stand as the land was not readily available. The Authority observes that MIAL has constructed parking stand V3 during the Third Control Period but was unable to construct parking stand V2 due to non- availability of land. Consultation Paper No. 08/2024-25 Page 170 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.45 The land identified for the proposed construction of parking stands V1 and V2 was previously occupied by the structures and buildings of AI Assets Holding Limited (“AIAHL”). MIAL has now taken over the possession of these buildings and structures by compensating AIAHL for the book value of Rs 23.39 Crores (Refer Project A9-26 which is considered as an enabling cost). For this purpose, MIAL has executed a Handing Over and Taking Over Note (“HOTO Note”) dated 12th January 2024 with AIAHL. These existing buildings / structures have been subsequently demolished to enable the construction of these parking stands. The Authority has also physically inspected the availability of land through the site inspection conducted by the independent consultant. 6.3.46 The Authority notes that MIAL has issued the work order for construction of parking stand V2 at a cost of Rs 34.92 Crores. 6.3.47 The Authority notes the following observations on cost proposed by MIAL for construction of parking stand V1 over a total area of approx. 50,269 sqm: (i) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (ii) MIAL has included costs for the diversion of existing utilities and infrastructure at 5% of the total project cost. The Authority is of the view that these costs are high and proposes to consider a lump sum amount as detailed in para 6.3.10(ii). (iii) MIAL has included the cost of constructing a portion of the compound wall, which is again separately included in Project A9-16. To avoid duplication, the Authority proposes to not consider the cost under this project. (iv) MIAL has included the demolition cost of existing structures as an enabling cost. The authority proposes not to consider these as detailed in para 6.3.10(iv) on the BOQ items. 6.3.48 Based on the above, the cost estimate proposed to be considered by the Authority is given in the table below: Table 160: Cost proposed by the Authority towards Construction of Additional Aircraft Parking Stand (V1+ V2) (Rs. In Crores) Base Cost as per P articulars Ref Varia nce Rem arks MIAL Authority Parking Stand V1 Revision of costs for working in operational areas from 10% to 5%. Demolition costs of Enabling Cost - buildings / structure not A 8.54 1.65 6.89 Demolition considered for 4 buildings of concrete structure and for the steel truss structure access gate to cargo. Enabling Cost - New New construction of compound Construction of B 1.17 - 1.17 wall considered separately in Compound Wall project A9-16. New Construction - Revision of costs for working C 67.26 61.33 5.93 Rigid pavement in operational areas from 10% Consultation Paper No. 08/2024-25 Page 171 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost as per P articulars Ref Varia nce Rem arks MIAL Authority to 5% and for AGL from 15% to 10%. Diversion of existing Lumpsum provision D 1.37 0.5 0.87 utilities & infrastructure considered. E = SUM Total - V1 78.34 63.48 14.86 (A:D) Parking Stand V2 F 34.92 34.92 - Based on awarded cost Total - V2 G = E + F 113.26 98.40 14.86 6.3.49 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with the CPWD DSR and MoRTH rates and accordingly proposes considering Rs. 98.40 crores for this project in this control period. A3-2 Reconstruction of Apron C (Tier 1) and Taxiway W6 (Rs. 53.16 Crores) MIAL’s Submission 6.3.50 MIAL has submitted that Apron C (Tier 1 and Tier 2) is situated in front of T1 and is the busiest apron in CSMIA having 3 Tiers of Parking stands. Tier 1 and Tier 2 of Apron C are made of Pavement Quality Concrete (PQC). These aforementioned Tiers have served the design life and are severely damaged, having developed signs of serious deterioration and full depth cracks, leading to safety issues. 6.3.51 To address this issue, MIAL proposed for reconstruction of Tier 1 and Tier 2 of Apron C to ensure the airside operations safety and submits that this apron after reconstruction will meet Code E and Code F compliance. Authority’s examination regarding reconstruction of Apron C (Tier 1) and Taxiway W6 6.3.52 The Authority notes that this project was already approved in the Third Control Period and a part of the Tier 2 was constructed by MIAL. The Authority observes that the balance portion of Tier 2 (which could not be constructed to keep Taxiway W6, which is in between Tier 1 and Tier 2, operational) along with Tier 1, is now proposed for reconstruction. Figure 12 – Apron C (Tier1) and Taxiway W6 (labeled 1-8) 6.3.53 The Authority notes that the reconstruction is required to ensure operational safety at airside. This reconstruction involves rigid pavement of 16,271 sqm for taxiway and 12,606 sqm for Apron. 6.3.54 The Authority notes the following observations regarding the cost proposed by MIAL: Consultation Paper No. 08/2024-25 Page 172 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (i) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (ii) MIAL has included a 15% mark-up on cost for AGL. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise cost for AGL area to 10% as detailed in para 6.3.10(iii) on the BOQ items on which MIAL has claimed 15% additional cost. (iii) MIAL has included a provision for miscellaneous works at 15% of pavement cost. Since all relevant costs have already been factored in cost estimate, the Authority proposes not to include these costs. (iv) MIAL has included costs for the diversion of existing utilities and infrastructure at 10% of the total project cost. The Authority is of the view that since this work is of reconstruction and not expected to have any diversion of utilities. The Authority hence proposes not to include these costs. 6.3.55 Based on the above, the cost proposed to be considered by the Authority is given in the table below: Table 161: Cost proposed by the Authority for Reconstruction of Apron C (Tier1) and Taxiway W6 (Rs. In Crores) Base Cost as per Particulars Ref Variance Rem arks MIAL Authority Revision of costs for Enabling Cost - working in operational areas A 6.86 5.83 1.03 Demolition from 10% to 5% and for AGL from 15% to 10%. New Construction - Revision of costs for AGL B 36.6 33.42 3.18 Rigid Pavement from 15% to 10%. Miscellaneous costs No miscellaneous works relating to construction C 5.49 - 5.49 expected being of pavement reconstruction of Apron. Not considered necessary Diversion of existing D 4.21 - 4.21 being a reconstruction utilities & infrastructure project. Total E=SUM(A:D) 53.16 39.25 13.91 6.3.56 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with the CPWD DSR and MoRTH rates and thus proposes considering Rs.39.25 crores for this project in this control period. A3-3 Reconstruction of Additional Aircraft Parking Stands in the Southern side of RWY 09-27 (Rs 53.12 Crores) MIAL’s Submission 6.3.57 MIAL submits that there is increasing demand for parking stands from various airlines and there is requirement of 155 stands against 114 stands present available (17 stands out of existing 131 stands are occupied by disabled Aircrafts and cannot be used actively). 6.3.58 Further, presently, the GA Apron on the southern side of RWY 09-27 is being used by GA Aircrafts. Aircraft parked in this apron infringe the Obstacle Limitation Surface (OLS) and the GA hangars adjacent to this Apron also infringe the OLS. The DGCA has granted only temporary exemption and this needs to be rectified immediately. Consultation Paper No. 08/2024-25 Page 173 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.59 MIAL has submitted that the lease term of the GA Hangars expired in the month of September 2024, and that action has been initiated by MIAL for shifting/relocating these GA hangars to Navi Mumbai International Airport. Consequently, MIAL proposes constructing additional parking stands (6 code C and 14 Code B) on the southern side of RWY 09-27 in the existing GA Apron after removing the GA Hangars. Figure 13 – Proposed location of Reconstruction of Additional Aircraft Parking Stands in the Southern side of RWY 09-27 (labeled 1-19) Authority’s examination regarding Reconstruction of Additional Aircraft Parking Stands in the Southern side of RWY 09-27 6.3.60 The Authority notes that this project was approved in the Third Control Period for Rs 15.11 Crores. MIAL has now proposed to develop the entire GA apron on the southern side of Runway 09-27 (including existing hangars) of 47,666 sqm with rigid pavement, to be used as additional parking stands. 6.3.61 Considering the need for the additional parking stands and MIAL’s submission that the Hangars will be vacated, the Authority notes that the site will be available for construction. Accordingly, Authority proposes to consider this project in the Fourth Control Period. 6.3.62 The Authority notes the following observations regarding the cost proposed by MIAL: (i) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (ii) MIAL has included a 15% mark-up on cost for AGL. The Authority is of the view that the provision made by MIAL is high and therefore proposes to reduce the cost for the AGL area to 10% as detailed in para 6.3.10(iii) on the BOQ items on which MIAL has claimed 15% additional cost. (iii) MIAL has included the demolition cost of existing structures as an enabling cost. The authority proposes not to consider these as detailed in para 6.3.10(iv) on the BOQ items. 6.3.63 Based on the above, the cost proposed to be considered by the Authority is given in the table below: Consultation Paper No. 08/2024-25 Page 174 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Table 162: Cost proposed by the Authority for Construction of Additional stands on southern side of RWY 09-27 (Rs. In Crores) Base Cost as per Particulars Ref Variance Remarks MIAL Authority Enabling Cost – • Demolition of buildings / hangar A 7.36 - 7.36 Demolition sheds not considered. • Revision of costs for working in New Construction operational areas from 10% to B 45.76 41.95 3.81 - Rigid Pavement 5% and for AGL from 15% to 10%. C = SUM Total 53.12 41.95 11.17 (A:B) 6.3.64 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with the CPWD DSR and MoRTH rates and accordingly proposes considering Rs. 41.95 Crores for this project in this control period. Other airside projects A4 – Reconstruction of Perimeter Road (Rs 202.50 Crores) MIAL’s submission 6.3.65 MIAL has stated that the Perimeter Road at CSMIA comprises of a bituminous pavement, which is prone to damage during monsoon. Over the years, due to wear and tear, this Perimeter Road has significantly degraded. This has led to severe safety issues. There are numerous incidents of near-miss accidents by GSE vehicles, which have damaged nearby properties. Further the poor condition of the roads causes great damage to the airside and GSE vehicles. MIAL also submits that various complaints are received from Airlines especially during Monsoon period and has also provided a copy of few letters to the Authority. To ensure airside safety, MIAL proposes to reconstruct the existing bituminous Perimeter Road as Pavement Quality Concrete (PQC) roads, with proper crust layers to ensure longevity. 6.3.66 Further, due to certain proposed modifications at airside (addition of Parallel Taxiway, Aprons, etc.), re- alignment of the Perimeter Roads is also proposed in certain areas. 6.3.67 MIAL has submitted that stretches which are expected to be permanent in nature are proposed to be constructed with PQC (approx. 1,39,060 Sqm) and stretches where other airside infrastructure is expected to come up in subsequent phases as per the Master Plan are proposed to be constructed with bituminous layers (approx. 60,900 Sqm). Authority’s examination regarding reconstruction of Perimeter Road 6.3.68 The Authority notes that this project was earlier approved in the Third Control Period, and MIAL has only undertaken the portions where immediate reconstruction was required. It is observed that only the balance area covering a stretch of 14 kms is proposed in this control period. 6.3.69 The Authority has reviewed the submissions made by MIAL and has undertaken a physical inspection of the perimeter road through its independent consultant / aviation expert. The Authority notes, after site inspection, that a major portion of road measuring 8.5 kms (approximately) is in good condition, and that reconstruction of road is required only for 2 km (approximately) like the head of stand road and road where Consultation Paper No. 08/2024-25 Page 175 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD movement of GSE vehicles are frequent. In all other areas, routine maintenance activity would be sufficient. 6.3.70 Further, the Authority notes that the immediate realignment of the Perimeter Road, as outlined in the Master Plan, is necessary for 3.5 km (approximately) to accommodate the proposed additions / modifications to the Apron and Taxiways. 6.3.71 Accordingly, the Authority proposes to consider only 40% of the area planned by MIAL (i.e only 5.5 kms out of the entire stretch of 14 kms). 6.3.72 The Authority notes the following observations regarding the cost proposed by MIAL: (i) The Authority, through its Independent Consultant / Aviation Expert has verified the BOQ and found that estimate considered is as per CPWD DSR / MoRTH rates. (ii) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (iii) MIAL has included costs for the diversion of existing utilities and infrastructure at 5% of the total project cost. The Authority is of the view that this cost is very high and proposes to make a lumpsum provision as detailed in para 6.3.10(ii). 6.3.73 Based on the above, the cost estimate proposed to be considered by the Authority is given in the table below: Table 163: Cost proposed by the Authority for Reconstruction of Perimeter Road (Rs. In Crores) Base cost as per Particulars Ref Variance Remarks MIAL Authority Demolition works A 33.81 12.88 20.93 • Revision of costs for New construction - Rigid working in operational B 116.81 44.56 72.25 Pavement areas from 10% to 5%. • Only 40% of the New construction - perimeter road C 43.85 16.59 27.26 Flexible Pavement considered for reconstruction. • Lumpsum provision Diversion of utilities D 8.03 1.00 7.03 considered. E = SUM Total 202.50 75.03 127.47 (A:D) 6.3.74 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with the CPWD DSR and MoRTH rates and accordingly proposes considering Rs. 75.03 Crores for this project in this control period. A-5- Construction of Airside Tunnel (Rs. 894.23 Crores) MIAL’s submission 6.3.75 MIAL has proposed the construction of Airside Tunnel below Runway between T1 & T2 Apron also connecting proposed additional parking stands on the Southern Side of RWY 09-27, since there is strong operational inter-dependence between T1 and T2. During nighttime, some of the flights operating at T2 Consultation Paper No. 08/2024-25 Page 176 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD are required to be parked at the T1 apron due to shortage of stands at T2. When the flights are parked at T1 apron, passengers and baggage are required to be transported between T1 apron and T2 apron via the perimeter road around RWY 14-32, which takes a considerable time. The situation becomes especially adverse during monsoon season as the adverse weather significantly delays transportation of baggage and passengers between these aprons. MIAL has submitted that in the past, CSMIA has received numerous complaints/ grievances in this regard. 6.3.76 MIAL further stated that: (i) T1 is proposed to be reconstructed in the Fourth Control Period and accordingly, all operations will be shifted to T2. (ii) To access the aircraft parking stands in T1, it is imperative that a direct connectivity is established through an underground tunnel, to ensure operational efficiency (movement of staffs, GSE vehicles, etc.) and passenger convenience. (iii) Additional aircraft parking stands are proposed on the Southern side of the RWY 09-27, it is imperative to connect this apron with T1/T2 apron. In view of the above-mentioned strong interdependence among various aprons and to reduce transit time among them, it is proposed to construct a tunnel. (iv) The alignment of Tunnel proposed as below: ➢ T1 and T2 apron: alignment is underneath RWY 14-32; and ➢ T1 apron and the proposed new Southern apron: alignment is underneath RWY 09-27. ➢ Proposed length of the tunnel is 3.042 kms. Figure 14 – Location and alignment of Airside Tunnel Proposed Tunnel RWY alignmen 14-32 RWY 09-27 Authority’s examination regarding Airside Tunnel 6.3.77 The Authority observes that MIAL had proposed the construction of an S shaped tunnel in the Third Control Period connecting only apron T1 to apron T2 (710 m long below RWY 14-32) at a cost of Rs. 401 Crores. The Authority proposed to consider this on an incurrence basis in the Third Control Period. Consultation Paper No. 08/2024-25 Page 177 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.78 The Authority notes that this project will be an enhanced feature for passenger convenience with the proposed tunnel spanning 3,042m against the 710m proposed in the Third Control Period, especially during monsoon season, and is expected to improve airside efficiency and support future capacity enhancements. However, the Authority notes that MIAL only prepared a concept level design with consultant M/s Jacobs and is yet to undertake further technical feasibility study for execution of this project, with required technical evaluation for tunnelling below active Runway and continuous operations thereafter. Further, the Authority notes that various approvals from DGCA and BCAS are required to be obtained before commencing construction. 6.3.79 In view of these external dependencies, the Authority proposes not to consider this project at this stage, as part of additions to RAB for the Fourth Control Period. If the project is commissioned and put to use in the Fourth Control Period, the same will be considered based on incurrence, at the time of true up, subject to evaluation of efficiency and reasonableness. A6- Reconstruction of Airside Drain (Rs. 498.80 Crores) MIAL’s submission 6.3.80 MIAL has proposed the reconstruction of Airside drains with RCC and has given the following justification: (i) The existing storm water drains (SWDs) are made of brick / stone masonry. At many places, the SWDs have collapsed, leading to severe flooding issues. Frequent damages at multiple locations lead to various operational mis-happenings and challenges. In a place like Mumbai which receives heavy rainfall, it is proposed to reconstruct the SWDs with RCC. (ii) In addition to existing storm water drains, the proposed airside development (with paved surface areas e.g. addition of Aircraft Parking Stands, Taxiways, etc.) will result in an increase in storm water run-off in the existing drainage network, so enhancement of existing airside storm water drainage system will be required. (iii) Runway 09 and certain portions of the Taxiway get flooded during monsoon. Also, water from T1 apron and the Runway aggravates this situation. In order to mitigate this, it is proposed to reroute the drain and connect to the river/stream on the opposite side. Accordingly, MIAL proposes to construct approx. 44,821 meters of RCC storm water drains to avoid flooding of operational area and effectively protect the airside. Authority’s examination regarding Airside Drain 6.3.81 The Authority during site inspection conducted through the independent consultant, notes that the major portion of airside drain appears to be in good condition, except in few locations where damages to the drain walls observed. The Authority also observed that it would be difficult to modify the culverts below active Taxiways. 6.3.82 In view of the above, the Authority proposes to consider the reconstruction of the airside drain only for the area where reconstruction is required i.e., around 9 km length of drain against proposed 44 km (i.e. only 20%) as detailed below: (i) To avoid flooding of area near RWY 09, re-routing the drain towards Mithi river ~ 3.8km approximately Consultation Paper No. 08/2024-25 Page 178 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (ii) Realignment required due to Taxiway and Apron works proposed ~ 3.5km approximately (iii) Reconstruction of damaged area ~ 1.7km approximately 6.3.83 The Authority notes the following on the cost proposed by MIAL: (i) MIAL has considered reinforcement steel of 150 kg per cum of RCC which appears to excessive for reconstruction of drain. The Authority proposes to consider the cost only for 120 kg per cum as per standard engineering practice. (ii) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (iii) MIAL has included costs for the diversion of existing utilities and infrastructure at 2% of the total project cost. The Authority is of the view that this cost is very high and proposes to make a lumpsum provision as detailed in para 6.3.10(ii). (iv) The Authority, through its Independent Consultant / Aviation Expert has checked the BOQ and found that estimate considered is as per CPWD DSR rates. 6.3.84 Based on the above, the cost estimate proposed by the Authority is given in the table below: Table 164: Cost proposed by the Authority for Reconstruction of Airside Drain (Rs. In Crores) Base Cost as per Particulars Ref Variance Remarks MIAL Authority • Revision of costs for working in RCC open drain operational areas from 10% to 5%. A 208.12 39.54 168.58 • Only 20% of drain is considered for reconstruction. RCC closed • Revision of costs for working in drain operational areas from 10% to 5% B 280.90 53.30 227.60 • Only 20% of drain is considered for reconstruction. Diversion of C 9.78 1.00 8.78 • Lumpsum provision considered. utilities D = Total 498.80 93.84 404.96 SUM(A:C) Accordingly, the Authority proposes a cost of Rs 93.84 Crores for this project in this control period. A7 – Aircraft Maintenance Hangar (Rs. 92.76 Crores) MIAL’s submission 6.3.85 MIAL proposes to construct one common Hangar (approx. 10,000 Sqm) in the Southern side of RWY 09- 27, in lieu of the existing Hangars which are non-compliant since they infringe the Obstacle Limitation Surfaces. MIAL submits that DGCA has given only temporary exemption for these obstacles until December 2025. To ensure compliance with DGCA norms, MIAL has already served notices to the hangar operators and represents that the hangar lease term came to an end by September 2024. MIAL has also confirmed that the shifting / relocation of the GA hangars to Navi Mumbai International Airport is expected to commence in June 2025, once the new Navi Mumbai International Airport is operationalized. Consultation Paper No. 08/2024-25 Page 179 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.86 MIAL submits that presently there is no common hangar available at CSMIA for undertaking maintenance work and accordingly proposes an aircraft maintenance hangar for parking of aircrafts which require long- term maintenance work. The modality of usage and allocation to Airlines is yet to be determined by MIAL. Figure 15 – Location of Aircraft Maintenance Hangar (labeled 1-28) Authority’s examination regarding construction of Aircraft Maintenance Hangar 6.3.87 The Authority notes that, while hangars are categorized as “Non-Aeronautical Services” as per Part I of Schedule 6 of OMDA, the proposal for an aircraft maintenance hangar is to be further examined in detail. Accordingly, the Authority sought further clarification regarding the necessity of the proposed aircraft maintenance hangar, the projected revenue from its usage, and the criteria differentiating it from other hangars which are classified as non-aeronautical. The airport operator's submissions in this regard are provided below: (i) MIAL’s submission on need for an aircraft maintenance hangar: “…Currently maintenance activities of the aircraft of scheduled airlines are carried out by the respective airlines in the open parking stand. However given the constraint airside at CSMIA, this is not a safe practice especially when aircrafts are stranded for long period of time. Hence common maintenance hangar has been proposed which can be used for long term parking of the aircraft for carrying out maintenance activities...” (ii) MIAL’s submission on revenue proposed to be collected from the usage of the aircraft maintenance hangar: “…Annual revenue will be function of the parking charges approved by AERA. Except from parking charges, no other revenue will be collected by MIAL...” “…MIAL will not provide maintenance services. Airlines will be responsible for carrying out these maintenance activities…” (iii) MIAL’s submission on the criteria differentiating the aircraft maintenance hangar from other hangars which are classified as non-aeronautical: “…Revenue earned by Airport Operator from Maintenance facilities/Hangar provided by Airport Operator to MRO operator which provides aircraft maintenance services to Airlines as a distinct line of business will be classified as Non-Aero as per the provisions of OMDA. However, in our case, the hangar is not for MRO operator, but it is for Airlines which will do basic maintenance for their own aircraft and Consultation Paper No. 08/2024-25 Page 180 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD airport operator does not earn any revenue from these activities. MIAL is responsible for providing only appropriate infrastructure to airlines to carry out aircraft maintenance work…” 6.3.88 The Authority notes that, as per MIAL’s submissions, the aircraft maintenance hangar is proposed be used exclusively for aeronautical activities and all revenues collected in this regard will be aeronautical. The airport operator has also demonstrated why this aircraft maintenance hangar does not squarely fall into the definition of hangars under Part I Schedule 6 of OMDA. Accordingly, the Authority finds the submissions of MIAL satisfactory and proposes to consider this as an aeronautical asset. 6.3.89 The Authority notes the following on the cost proposed by MIAL: (i) MIAL has considered structural steel of 170 kg per sqm which appears to be excessive for the pre- engineered structure of hangar. The Authority proposes to consider the cost only for 100 kg per sqm as per standard engineering practice. (ii) MIAL has included the demolition cost of existing structures as an enabling cost. The Authority proposes not to consider these as detailed in para 6.3.10(iv) on the BOQ items. (iii) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items on which MIAL has claimed 10% additional cost. (iv) MIAL has included costs for the diversion of existing utilities and infrastructure at 5% of the total project cost. The Authority is of the view that there are no utilities that require diversion and accordingly has not considered the cost for diversion of existing utilities & infrastructure as detailed in para 6.3.10(ii). 6.3.90 Based on the above, the cost estimate proposed by the Authority is given in the table below: Table 165: Cost proposed by the Authority for Aircraft Maintenance Hangar (Rs. In Crores) Base Cost as per Particulars Ref Variance Remarks MIAL Authority • Demolition of structures not Demolition of structures A 0.43 - 0.43 considered. • Revision of costs for working in operational New Construction- areas from 10% to 5% Structure (PEB Truss B 68.90 48.60 20.30 • Reduction in quantity of Hangar) structural steel from 170kg/sqm to 100kg/sqm • Revision of costs for New Construction - C 18.20 17.25 0.95 working in operational Building areas from 10% to 5% New Construction - Site • Estimate considered D 0.83 0.83 - Circulation reasonable Diversion of existing E 4.40 - 4.40 • Not considered necessary utilities & infrastructure F = SUM Total 92.76 66.68 26.08 (A : E) Consultation Paper No. 08/2024-25 Page 181 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.91 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with the CPWD DSR and MoRTH rates and accordingly proposes considering Rs. 66.68 Crores for this project in this control period. 6.3.92 The Authority proposes to take this into account the hangar charges while evaluating the annual tariff plan after the finalization of Target Revenues. Additionally, MIAL is directed to submit the modalities for allocation of this aircraft maintenance hangar to airlines. A8 – Parking Stands at NEC Hangar (Rs. 120 Crores) MIAL’s submission 6.3.93 MIAL states that currently there is a shortage of aircraft parking stands at CSMIA (requirement of 155 stands against available 114 stands) and is not able to meet the increasing demand of night parking from airlines. In order to increase airside capacity, MIAL plans to acquire the NEC hangar from AIESL, which can accommodate 8 additional parking stands. MIAL submits that the written down value of the NEC Hangar is expected to be Rs. 120 Crores. Authority’s examination regarding parking stands at NEC Hangar 6.3.94 During the site visit by the Independent Consultant, it was observed that the existing New Engineering Complex (NEC) hangar, presently with Air India Engineering Services Limited (AIESL), houses a rigid pavement which can accommodate 8 code C Aircrafts. MIAL has submitted that AIESL is willing to vacate and hand over this NEC Hangar, provided MIAL compensates the written down value of existing structures. MIAL further submits that there has been a preliminary discussion held with AIESL, during which AIESL has indicated the written down value of structures to be approximately Rs.120 Crores. 6.3.95 While the Authority notes the need for additional parking stands at CSMIA, it is also observed that no agreement / MOU has been executed between MIAL and AIESL till date, and no further discussion / communication have been held post the preliminary discussion. 6.3.96 In view of the above, the Authority proposes not to consider the construction of additional parking stands at NEC Hangar, at this stage, as part of additions to RAB for the Fourth Control Period. If the project is commissioned and put to use in the Fourth Control Period, the same will be considered based on incurrence, at the time of true up, subject to evaluation of reasonableness and efficient usage. A9 – Airside improvement works less than Rs. 50 Crores (26 projects aggregating to Rs. 716.02 crores) 6.3.97 MIAL has submitted 26 airside projects, under Rs. 50 Crores each, for improving airside safety and operational efficiency. 6.3.98 The Authority has categorized and examined all these projects in the following manner: (i) Table 166 –Projects not proposed to be considered as part of CAPEX by the Authority. (ii) Table 167- Projects partly proposed to be considered as part of CAPEX by the Authority. (iii) Table 168 – Projects proposed to be considered as part of CAPEX by the Authority, subject to certain adjustments on cost. Consultation Paper No. 08/2024-25 Page 182 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD All estimates / BOQs were prepared by MIAL based on per CPWD DSR / PAR, MoRTH / Market rates, the same has been verified by independent consultant and found to be reasonable, except for the following rationalizations proposed by the Authority through its independent consultant / aviation expert: Table 166: Airside improvement works less than Rs. 50 Crores not proposed to be considered as part of CAPEX by the Authority (Rs. In Crores) Base cost as per S. No Project /Item Name Remarks MIAL Authority Since the cost of resurfacing is not proven to lead Recarpeting of to increase over the original PCN value, this cost A9-10 balance portion of 21.89 - is proposed to be considered as Opex. Refer Table RWY 14-32 267. This runway intersection area has already been Runway intersection A9-13 20.97 - included in the scope of project “A1-1 Recarpeting overlay works of Runway 09-27.” TOTAL 42.86 - Table 167: Airside improvement works less than Rs. 50 Crores partly proposed to be considered as part of CAPEX by the Authority (Rs. In Crores) Project /Item Base Cost as per S. No Remarks Name MIAL Authority • During the site visit conducted by the independent consultant appointed by the Authority, it was observed that a major portion of the boundary wall is in good condition, while damages were noted in locations such as the additional stands near Apron J, Airport Taxiway W parallel to Runway 14-32, and Parking Boundary Wall Stand V1. In some cases, realignment of the (New boundary wall is required on account of proposed A9-16 Construction) 41.78 19.85 airside projects. Based on these observations, the including Authority proposes to consider only 50% of the area demolition of for the Fourth Control Period. The Authority, existing wall through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with CPWD DSR rates and accordingly proposes considering Rs. 19.85 crores for this project in this control period. • MIAL states that the emergency service road is provided from the Fire Station connecting the Taxiways for the movement of fire tenders and operational vehicles whenever required, and is made of asphalt which requires regular maintenance work Construction of every monsoon. MIAL plans to demolish the A9-24 Emergency 45.02 10.58 existing asphalt road and construct a concrete road Service Road which will avoid the annual recurring maintenance expenditure. During the site visit conducted by the consultant appointed by the Authority, it was observed that the majority of this road is in good condition, except for some small patches. The Authority further notes that there is no specific Consultation Paper No. 08/2024-25 Page 183 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Project /Item Base Cost as per S. No Remarks Name MIAL Authority necessity for Rigid Pavement at present for these areas. Accordingly, the Authority proposes to consider only 25% of the area and recommends MIAL to focus on areas with water stagnation, damaged sections, or where realignment is necessary. • Further, Authority proposes revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i) and not to consider diversion of existing utilities & infrastructure as same is not expected to be required. • The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with CPWD DSR and MoRTH rates and accordingly proposes considering Rs. 10.58 crores for this project in this control period. TOTAL 86.80 30.43 Table 168: Airside improvement works less than Rs. 50 Crores proposed to be considered as part of CAPEX by the Authority, subject to certain adjustments in cost (Rs. In Crores) Project /Item Base Cost as per S. No Remarks Name MIAL Authority • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i) Taxiway M • Revision of costs for AGL from 15% to 10% as A9-1 Extension West 19.74 17.27 detailed in para 6.3.10(iii) Side • Non consideration of diversion of existing utilities & infrastructure as same is not expected to be required. • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). • Revision of costs for AGL from 15% to 10% as detailed in para 6.3.10(iii). A9-2 Taxiway M 45.98 39.09 • Non consideration of demolition costs as enabling costs as detailed in para 6.3.10(iv). • Non consideration of diversion of existing utilities & infrastructure as same is not expected to be required. • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). • Revision of costs for AGL from 15% to 10% as A9-3 Taxiway N1 26.39 23.48 detailed in para 6.3.10(iii). • Non consideration of diversion of existing utilities & infrastructure as same is not expected to be required • Revision of costs for working in operational A9-4 Taxiway N7 21.66 19.12 areas from 10% to 5% as detailed in para 6.3.10(i). Consultation Paper No. 08/2024-25 Page 184 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Project /Item Base Cost as per S. No Remarks Name MIAL Authority • Revision of costs for AGL from 15% to 10% as detailed in para 6.3.10(iii). • Non consideration of diversion of existing utilities & infrastructure as same is not expected to be required • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). Re-Construction • Revision of costs for AGL from 15% to 10% as A9-5 20.83 18.41 of Taxiway U detailed in para 6.3.10(iii). • Non consideration of diversion of existing utilities & infrastructure as this is a reconstruction project • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). Taxiway W1 • Revision of costs for AGL from 15% to 10% as Parallel Taxiway A9-6 49.36 38.38 detailed in para 6.3.10(iii). Compound wall cost toRWY14-32 not considered as it is given separately in West Project A9-16. • Non consideration of demolition costs as enabling costs as detailed in para 6.3.10(iv) Construction of A9-7 34.86 34.86 • Based on awarded cost RET E6 Construction of A9-8 31.72 31.72 • Based on awarded cost RET W3 • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). Construction of • Revision of costs for AGL from 15% to 10% as A9-9 44.01 40.17 Taxiway S detailed in para 6.3.10(iii) • Non consideration of diversion of existing utilities & infrastructure as same is not expected to be required • Revision of costs for working in operational areas from 10% to 5% as detailed in para CBR for RWY A9-11 46.80 43.70 6.3.10(i). 09-27 • Non consideration of diversion of existing utilities & infrastructure as this is a new project. • This work is for providing civil and electrical infrastructure for ILS for runway 14 which allows aircraft to conduct a precision approach, providing azimuth and vertical guidance to aircraft. The current ILS for runway 14 is an Replacement of A9-12 5.05 5.05 end-of-life product. The current equipment is ILS RWY 14 20 years old, and AAI upgraded the current 14 aperture LLZ antennae to 20 aperture antennae to provide better and more accurate coverage. Considering the quantum of work involved, the awarded cost appears to be reasonable. • Revision of costs for working in operational Construction of A9-14 44.67 37.22 areas from 10% to 5% as detailed in para New Fire Station 6.3.10(i). Consultation Paper No. 08/2024-25 Page 185 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Project /Item Base Cost as per S. No Remarks Name MIAL Authority • Revision of costs for AGL from 15% to 10% as detailed in para 6.3.10(iii) • Non consideration of demolition costs as enabling costs as detailed in para 6.3.10(iv) • Reduction of AC Tonnage from 211 TR to 143 TR (considering 85% of building except CFT parking area). • Non consideration of diversion of existing utilities & infrastructure as same is not considered necessary. • Revision of costs for working in operational Construction of areas from 10% to 5% as detailed in para A9-15 New Fire Sub 13.15 11.90 6.3.10(i). Station • Non consideration of diversion of existing utilities & infrastructure as this is a new project. • MIAL has proposed the construction of residential quarters of 30 numbers for the gazetted officers of CISF in the Airport land, instead of hiring accommodation outside which is an expensive affair in Mumbai City. CISF Staff • Non consideration of demolition costs as A9-17 36.78 29.46 Quarters enabling costs as detailed in para 6.3.10(iv) • Non consideration of diversion of existing utilities & infrastructure as this is a new project • Non consideration of enhancement to project cost by 20% in the absence of any substantiation. New Retaining Wall including • Revision of costs for working in operational A9-18 demolition of 24.06 23.05 areas from 10% to 5% as detailed in para existing retaining 6.3.10(i). wall Airside CISF • Revision of costs for working in operational Watch Tower (14 areas from 10% to 5% as detailed in para A9-19 Nos.) & 3.35 2.96 6.3.10(i). Goomties (30 • Non consideration of demolition costs as Nos.) enabling costs as detailed in para 6.3.10(iv). • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). • Non consideration of demolition costs as enabling costs as detailed in para 6.3.10(iv). Refurbishment of A9-20 4.12 3.52 • Non consideration of construction of temporary Gate 8 roads for diversion of roads / traffic as this is a new project. • Non consideration of the cost of road (flexible pavement) since this is not considered necessary for this project. • MIAL has proposed a cost of Rs 47.20 Crores, Additional but has provided detailed cost breakup for only Aircraft Parking A9-21 47.20 20.05 Rs 23.08 Crores. The Authority has considered stand adjacent to only the cost estimate provided by MIAL for Apron J further analysis. Consultation Paper No. 08/2024-25 Page 186 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Project /Item Base Cost as per S. No Remarks Name MIAL Authority • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i). • Revision of costs for AGL from 15% to 10% as detailed in para 6.3.10(iii) • Non consideration of diversion of existing utilities & infrastructure as this is a new project • Revision of costs for working in operational areas from 10% to 5% as detailed in para Reconstruction of 6.3.10(i). A9-22 drain along TWY 30.17 25.85 • Non consideration of diversion of existing K1 utilities & infrastructure as this is a new project. • Reduction in quantities of reinforcement steel from 150 kg/cum to 120 kg/cum of RCC. • Revision of costs for working in operational areas from 10% to 5% as detailed in para Relocation of 6.3.10(i). A9-23 existing Airside 8.60 7.42 • Non consideration of diversion of existing Fire Tank utilities & infrastructure as this is outside operational area • MIAL proposed a cost of Rs 4.12 Crores in the MYTP, but later submitted a cost breakup of Perimeter Rs 4.48 Crores. The Authority has considered Intrusion the cost estimate provided by MIAL for further A9-25 4.48 3.92 Detection System analysis. (PIDS) • Revision of costs for working in operational areas from 10% to 5% as detailed in para 6.3.10(i) Enabling cost of NW Pier, Additional Aircraft Parking A9-26 Stands in the 23.40 23.40 • Based on awarded cost. Southern side of RWY 09-27 and Taxiway West to RWY 14-32 TOTAL 586.38 499.98 6.3.99 The Authority, through its Independent Consultant, has verified the rates adopted for computing the cost and found it to be in accordance with CPWD DSR / CPWD PAR / MoRTH rates (as applicable) and thus proposes considering these costs for these projects in the above table for this control period. 6.3.100 As discussed in Table 166, Table 167 and Table 168, the Authority proposes to consider Rs.530.41 Crores against Rs.716.02 Crores proposed by MIAL. 6.3.101 The Authority has, after detailed analysis, issued its Order on Normative cost vide Order No. 07/2016-17 on 13th June 2016 where in the normative cost was given as Rs. 4,700 per sqm. The Authority, through its Independent Consultant / Aviation Expert notes that the cost mentioned is inclusive of taxes applicable at that time, which is 12%. Subsequently, GST has been introduced wherein the GST rate is 18%. Therefore, the Authority has rationalized the normative cost submitted by MIAL and computed the inflation adjusted normative cost by considering an additional 6% thereby resulting in total GST of 18% as given below: Consultation Paper No. 08/2024-25 Page 187 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Table 169: Inflation-adjusted normative rate considered for Apron and taxiway Inflation adjusted Financial CPI Inflation Inflation adjusted normative cost @18% Reference Year % Cost GST FY16 4,700** 4,952 As per RBI Bulletin* FY17 4.50% 4,912 5,175 As per RBI Bulletin* FY18 3.60% 5,088 5,361 As per RBI Bulletin* FY19 3.40% 5,261 5,543 As per RBI Bulletin* FY20 4.76% 5,512 5,807 As per RBI Bulletin* FY21 6.18% 5,852 6,166 As per RBI Bulletin* FY22 5.51% 6,175 6,506 As per RBI Bulletin* FY23 6.70% 6,589 6,942 As per RBI Bulletin* FY24 5.40% 6,944 7,316 As per RBI Bulletin* As per 90th Round CPI FY25 4.50% 7,257 7,646 Headline Rate FY 24-25 As per 90th Round CPI FY26 4.40% 7,576 7,982 Headline Rate FY 24-25 As per 90th Round CPI FY27 4.40% 7,909 8,333 Headline Rate FY 24-25 As per 90th Round CPI FY28 4.40% 8,258 8,700 Headline Rate FY 24-25 * Source: https://www.rbi.org.in/scripts/bs_viewbulletin.aspx ** Base amount as per Order No.7/2016-17 dated 13th June 2016 which is inclusive of prevalent tax of 12% Note: Inflation adjusted base amount (inclusive of 12% GST) (A) = Rs. 4,700 per sqm Inflation adjusted base amount (exclusive of 12% GST) (B=A*100/112) = Rs. 4,196 per sqm Add GST @ 18% (C=B*18%) = Rs. 755 per sqm Normative cost including GST (D = B+C) = Rs. 4,952 per sq 6.3.102 The Authority has compared the cost proposed by MIAL for apron and taxiway works and observes that the cost proposed by MIAL is lower than / in line with the inflation-adjusted normative cost for apron and taxiway. 6.3.103 Based on the above discussions, the cost estimate proposed to be considered by the Authority for Airside Improvement Works is given in the table below: Table 170: Cost proposed by the Authority for Airside Improvement Works (Rs. In Crores) Base Cost as per S. No Project Name Variance Remarks MIAL Authority Recarpeting of RWY • Considered as part of Operation A1-1 148.71 - 148.71 9-27 & Maintenance Expenses Construction of • To be considered on an actual Eastern Taxiway A2-1 73.59 - 73.59 incurrence basis, subject to (between E5 & E7) relocation of facilities parallel to RWY 14-32 Taxiway M Extension • To be considered on an actual A2-2 East Side incl Taxiway 60.99 - 60.99 incurrence basis, subject to bridge over Mithi river relocation of facilities Taxiway West to • Revision of costs for working in A2-3 161.65 113.78 47.87 RWY 14-32 operational areas from 10% to Consultation Paper No. 08/2024-25 Page 188 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost as per S. No Project Name Variance Remarks MIAL Authority 5% and provision for AGL from 15% to 10% • Non consideration of demolition costs as enabling costs • Non consideration of cost of construction of Boundary wall • Revision of costs for working in operational areas from 10% to 5% and provision for AGL from Construction of 15% to 10% Additional Aircraft A3-1 113.26 98.40 14.86 • Non consideration of demolition Parking Stand costs as enabling costs (V1+V2) • Cost of construction of Boundary wall considered in separate item. • Revision of costs for working in operational areas from 10% to Reconstruction of 5% and provision for AGL from A3-2 Apron C (Tier 1) and 53.16 39.25 13.91 15% to 10% Taxiway W6 • Cost of miscellaneous works and diversion of utilities not considered. • Revision of costs for working in Reconstruction of operational areas from 10% to Additional Aircraft 5% and provision for AGL from A3-3 Parking Stands in the 53.12 41.95 11.17 15% to 10% Southern side of RWY • Non consideration of demolition 09-27 costs as enabling costs • Revision of costs for working in operational areas from 10% to 5% and provision for AGL from Reconstruction of 15% to 10% A4 202.50 75.03 127.47 Perimeter Road • Provision of only 40% of length of road considered for reconstruction in this control period based on site inspection. • Not considered currently. Will Construction of be considered on actual A5 894.23 - 894.23 Airside Tunnel incurrence basis, subject to due approvals • Only 20% of drain considered Reconstruction of A6 498.80 93.84 404.96 for reconstruction in this control Airside drain period based on site inspection. • Revision of costs for working in Aircraft Maintenance operational areas - 10% to 5% A7 92.76 66.68 26.08 Hangar • Quantity of steel rationalized from 170 kg to 100 kg per sqm • Considered on an incurrence Parking Stands at NEC basis due to pending MoU with A8 120.00 - 120.00 Hangar AIESL for transfer/handing over of Hangar. Airside Projects less • As explained in Table 166, A9 716.02 530.41 185.61 than 50 Crores Table 167 and Table 168. Consultation Paper No. 08/2024-25 Page 189 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost as per S. No Project Name Variance Remarks MIAL Authority TOTAL 3,188.79 1,059.34 2,129.45 B – Passenger Terminal & Associated works (Rs. 3,496.11 Crores) 6.3.104 MIAL has proposed the following Passenger Terminal & Associated works in the Fourth Control Period with the objective of increasing passenger handling capacity from 55 MPPA to 65 MPPA. These developments are planned to cater to growing passenger traffic, enhance service quality, and ensure improved convenience and facilities for passengers. Table 171: Cost proposed by MIAL for Passenger Terminal & Associated works (Rs. In Crores) S. No Project Cost proposed by MIAL B1 Reconstruction of Terminal T1 3,129.23 B2-1 New Terminal 2 NW Pier 23.10 B2-2 New Terminal 2 NW Pier BUS BOARDING GATE (V3) 4.78 B2-3 TERMINAL T-2 EXTENSION 113.99 B3 GA Terminal Expansion 225.00 TOTAL 3,496.11 B 1 – Reconstruction of Terminal T1 (Rs. 3129.23 Crores) Need for reconstruction of Terminal Building T-I 6.3.105 MIAL proposes to demolish the entire T1 complex (comprising T1A, T1B & T1C) and reconstruct a new Terminal 1 building of 2,01,074 sqm which will have the same feel and comfort of T2, with an objective to ensure passenger safety and convenience. MIAL has given the following justification for the proposed reconstruction of Terminal 1: “The existing T1 building at Santacruz comprises of T1A, T1B and T1C. Currently, T1B and T1C are used for domestic operations (T1A was decommissioned after shifting of some domestic airlines to T2). T1B building is more than 65 years old – it was constructed between 1957 and 1964, and the structure has developed various defects / distresses and seepage / leakage, which cannot be addressed by repair activities. Structural Audit conducted through third party independent agency has recommended demolition of a significant portion of the building. T1C currently houses the Security Hold Area (SHA) – however, the current spatial arrangement of the building leads to mix of departure and arrival passengers, which is in violation of security regulations. Segregation of departure and arrival passengers will call for addition of floors, which will necessitate major alteration of the existing structure. Hence there is a need for comprehensive reconstruction of T1 to ensure safety of passengers and compliance with security regulations”. 6.3.106 In the Third Control Period, MIAL proposed the reconstruction of T1B for 72,414 sqm with a two level building, stating that one part of the structure is very old and unsafe. The Authority had allowed the reconstruction of T1B considering the structural safety aspect at a cost of Rs. 832 Crores at the Consultation Paper Stage. However, MIAL later deferred the project due to the impact of Covid and consequent reduction in traffic. Consultation Paper No. 08/2024-25 Page 190 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.107 To assess the interdependence of T1A, T1B and T1C, the Authority sought details from MIAL on the current usage of all parts of Terminal 1. MIAL provided the following note: “…CSMIA has two terminals T1 and T2, wherein T1 complex consists of T1A, B and C buildings. T1 complex is built over last 60 years, part of T1B was constructed in 1960s, T1A in 1992 while T1C was built in 2010. Various domestic airlines like Indigo, Spice Jet and Akasa operate from T1. T1 B has 74 check-in counters, 3 Security X-Ray machines for SHA 1 and 5 Security X-Ray machines for SHA 2 and 5 belts in baggage claim hall. T1 B has 20 bus gates and is connected to T1C for contact gates through security gates. T1 C on the other hand does not have any check in counters but only security check area and 6 contact gates only. Passengers using T1C have to use T1B check in hall at present. There are no check in counters in T1C. T1 A is isolated as passengers from T1B or T1C cannot use T1A landside due to various constraints like lack of depth of drop off ramp and lack of parking facilities due to vicinity of metro station. Further equipment at T1A like check in counters, X-ray machines are beyond repair and have outlived their useful life. Due to these reasons T1A is not presently in use. As such it can be noted that T1 A, B and C are not complete/full-scale terminals independently. The demand is managed between T1B SHA2, T1 C and T1B SHA1. The complexity of fragmented operations between these terminals leads in inefficiency of operations and constraints optimization of assets. This also impacts passenger service quality as passengers are restricted to individual security hold areas and are unable to use facilities provided elsewhere...” Figure 16 – Overview of the existing T1 6.3.108 MIAL has also submitted the report of structural study recently conducted by IIT Mumbai, where it is mentioned that Terminal T1A and T1B buildings show signs of distress and would need structural and non-structural measures to improve its serviceability. Terminal T1C building is generally free from any structural distress. The extract from the report is given below: “…The Terminal T1A is presently disused building. It is approximately 30 years old. Although, the structure was unkempt, no major structural distress was observed in the building. Deteriorations in the paint and plaster of the structure were seen at many places. Some vegetation was also observed, and the steel elements had corroded. Lateral cracks were observed in the exposed columns, indicating corrosion in the tie bars. The terminal T1B is more than 50 years old building. Most of the interior of the building is covered in claddings and false ceilings. The terrace at the first floor had brick bat coba with China mosaic as the water proofing. At another location on the first-floor terrace, had signs of being repaired with membrane. Consultation Paper No. 08/2024-25 Page 191 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Both of these appeared to be damaged. The steel structural elements had corroded and spalling with exposed rebars was observed on the chajjas. The first-floor terrace had several installations. The waterproofing consisted of membrane waterproofing. The reinforced concrete structural elements on the terraces were severely deteriorated and longitudinal cracks, due to corrosion, were evident on them. At one location the rebar loss on the column was more than 50%. On the first-floor ceiling, extensive repairs on the columns were visible. Spalled concrete with exposed rebar was seen on one beam. Signs of seepage and leakages were also observed on the walls and structural members. On the ground floor, longitudinal cracks on columns and spalled concrete was seen on the exposed structural members. Some spalling of the beams and cracking due to corrosion was also seen on the airside structural members. Deterioration of paint and plaster was also seen at many places. At some places the kerb stones have been dislodged and concrete at the plinth level was severely damaged due to corrosion. The terminal T1C building was mostly free from any structural and non-structural defects. The canopies outside the terminal appeared in sound condition. In general, no corrosion is observed on the connections. At one location, excessive debris was observed on the chute. At few other locations, vegetation was seen to have overgrown on the canopy, which may overload the canopy edges, especially during the rains. The UPV results of the terminal T1A building show that the concrete is of poor structural integrity. The rebound hammer results show that the concrete is of good quality. The carbonation results on the columns indicate that the carbonation depth is very high. This indicates a high probability of loss of the passive layer on the rebars and increases the chances of corrosion of steel. As per IS 516 (Part 5/Sec 4):2020, carbonation can overestimate the Rebound Hammer test results upto 50% in extreme cases. The UPV results of the terminal T1B building show that the concrete is of poor structural integrity. The rebound hammer results show that the concrete is of good quality. The carbonation results on the columns indicate that the carbonation depth is very high. This indicates a high probability of loss of the passive layer on the rebars and increases the chances of corrosion of steel. As per IS 516 (Part 5/Sec 4):2020, carbonation can overestimate the Rebound Hammer test results upto 50% in extreme cases. The corrosion analysis shows more than 90% chances of corrosion in the structural members. The UPV results of the terminal T1C building show that the concrete is of good structural integrity. The rebound hammer results show that the concrete is of good quality. The carbonation results on the columns indicate that the carbonation depth is low, indicating that the passive layer is intact.…” 6.3.109 MIAL also stated that T1 and T2 of CSMIA handled 52.8 million passengers in FY 2023-24 and is expected to handle similar number of passengers in FY 2024-25. However, from FY 2025-26, with the operationalization of Navi Mumbai International Airport, reduction in passenger traffic at CSMIA is expected. Further, certain modifications and additions are proposed in T2 to increase the capacity to 45 MPPA from the present 40 MPPA. 6.3.110 Taking the above into consideration, MIAL has stated that this will be the most appropriate time for undertaking the reconstruction of T1 as there will be minimum operational difficulty and passenger inconvenience can also be minimized. After reconstruction, the passenger handling capacity of T1 will increase by 5 MPPA i.e., from 15 MPPA to 20 MPPA. Overall capacity of CSMIA will become 65 MPPA (T1-20 MPPA & T2-45 MPPA) and can cater to additional traffic. The proposed plan of T1 is shown below: Consultation Paper No. 08/2024-25 Page 192 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 17 – Indicative layout of proposed T1 building Figure 18 – Indicative floor plan at Arrival Level 6.3.111 MIAL has proposed to commence the reconstruction work in October / November 2025 and is expected to complete it by September 2028. Post completion, the passenger handling capacity will increase to 20 MPPA from the present 15 MPPA. Authority’s Examination regarding Reconstruction of Terminal Building T-I Current location and usage of T1A and T1B 6.3.112 The Authority, through its independent consultant, conducted a site walkthrough with the terminal operations and the engineering team of MIAL. During this site visit, the Authority noted that T1 consists of 3 buildings viz., T1A, T1B and T1C. T1A is a two storied building of 36,716 sqm which is constructed in 1992 with departure at first floor level and arrival at ground floor level. This Terminal was not in use after all airlines shifted their operations to T2 in 2015. Also, the entrance ramp of T1A cannot be used as it falls in the alignment of the upcoming metro station. T1B is housing the check-in-area, security hold area (Gate 1 to 20) with arrival in Ground floor, and offices of MIAL, airlines and CISF in the first and second floor. A part of T1B (the RCC Structure) was constructed in the 1960s (around 30,000 sqm). The front portion, where check-in-processes are being handled, was constructed in 2005 and is only a steel structure with one floor. Consultation Paper No. 08/2024-25 Page 193 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.113 Further, during this site visit, the Authority has observed that T1A and T1B buildings have several structural and nonstructural distresses related to corrosion, leakage and seepage, which have resulted in the formation of longitudinal cracks and spalling of concrete at several places on the building. Sample pictures taken during the site visit are given below: Figure 19 - BMA Area of existing T1-B Building Figure 20 – BMA Area and AHU Room of existing T1-B Building Figur e 21 – Terrace and Mezzanine Floor of existing T1-B Building Consultation Paper No. 08/2024-25 Page 194 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 22 –First Floor and Canteen of existing T1-B Building Figure 23 – Demolished T1-B in 2019-20 as per Struckwel Report Figure 24 – T1 B – Check-in area Consultation Paper No. 08/2024-25 Page 195 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 25 – T1 A – Departure Area (First Floor) Figure 26 – T1 A – Arrival Area (Ground Floor) Figure 27 – T1 A – Arrival (GF), AHU (Terrace) Consultation Paper No. 08/2024-25 Page 196 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Current location and usage of T1C 6.3.114 T1C is housing the security hold area and airside corridor connecting PBBs on the first floor, and the BMA and utilities on the ground floor. T1C building is around 20,600 sqm in area and was constructed in 2010. 6.3.115 The Authority also notes that since T1C does not have any check-in facility, and the passengers after checking in at T1B proceed to the security check / security hold area through the link corridor in the cityside T1C, in order to access the Boarding gates 21 to 28. The airside corridor on the first floor in T1C is used for both arrival and departing passengers who use the PBBs. On account of this, there is a possibility of passengers arriving from one flight mixing with departing from another flight while moving through this corridor (i.e. adjacent to SHA-1C - Boarding Gates 21 to 28), violating BCAS guidelines as outlined in Circular No. 28/2006. MIAL has also submitted various letters from CISF, where instances of such incidents have been recorded. Authority’s examination of proposed reconstruction of T1 6.3.116 The Authority, with respect to T1 reconstruction, notes that there are various critical assessments and deliberations are currently underway and are essential for determining the optimal infrastructure development at the airport as detailed in Para 6.2.20. The Authority reiterates its position that only the infrastructure necessary / essential to cater to the future projected traffic should be developed. 6.3.117 The Authority, through its independent consultant, has engaged in discussions with MIAL’s design team to explore the feasibility of a modular approach to T1 reconstruction with an initial Phase for 10 MPPA and later expanding to 20 MPPA based on the actual traffic assessment after opening of the Navi Mumbai International Airport. This approach, if viable, would allow for phased development in response to demand fluctuations while optimizing capital investment. However, MIAL has clarified that due to the specific spatial constraints and the shape of the available land parcel, modular construction is not feasible. 6.3.118 Therefore, the Authority proposes to accept, tentatively, MIAL’s submission that the reconstruction of the entire Terminal 1 is necessary for ensuring the safety and security for smooth conduct of the Airport operation and in compliance to BCAS directives, and based on the justification provided in the above para. In view of the above, the Authority expects stakeholders (including AAI and MoCA) to provide valuable inputs which will enable a comprehensive and balanced evaluation of the necessity, scope, and timing of the proposed reconstruction, and ensure that the final decision aligns with the capacity requirement, operational feasibility and long-term infrastructure planning at CSMIA. Accordingly, the Authority will take a final view on this issue at tariff order stage based on comments / views received from the stakeholders during the consultation process. 6.3.119 The Authority also directs the Airport Operator to ensure that the reconstruction of T1 be performed in a seamless manner, ensuring that only the essential activities are carried out in the upgradation process avoiding all capex that can be avoided/deferred. Evaluation of area 6.3.120 The Authority notes that MIAL has proposed an area of 2,01,074 sqm for the new Terminal 1 with separate levels for arrival and departure. As per the OMDA, the terminal building is to be constructed as per the IATA norms. It was observed that the area proposed by the Airport operator for Terminal 1 was slightly higher than the requirements for 7,000 PHP (as per IATA norms). As informed by MIAL, they have proposed this additional area due to recent circulars/directives of BCAS on reducing queuing time in Consultation Paper No. 08/2024-25 Page 197 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD check-in and security. It was observed that MIAL has not provided details of usage of an area of 11,691 sqm. Accordingly, the Authority has considered terminal building area of 1,89,383 sqm for Terminal 1. 6.3.121 The Authority has reviewed the proposal of reconstruction of T1 considering the feedback awaited from stakeholders on the airside capacity and the operationalization of new Airport at Navi Mumbai in 2025. The Authority has also considered the proposed enhancement of approximately 5 MPPA of T2 by way of additions, modifications and automations etc., and the traffic projections made by MIAL for this control period. 6.3.122 Presently, the Authority has considered the construction of Terminal 1 with a capacity of 20 MPPA considering the constraints projected by MIAL for modular construction. Out of which, 10 MPPA shall be a complete terminal with all utilities and furnishes and the balance 10 MPPA with core shell and without equipment, in order to ensure optimal utilization of resources and avoid overcapacity. The installation of additional processing capacities and building finishes can be undertaken progressively, based on actual traffic growth and demand requirements in the future. However, the Authority will take a final decision on this matter at tariff order stage based on comments / views received from the stakeholders (including AAI and MoCA) during the consultation process. 6.3.123 The Authority notes that MIAL has projected to start the work in November 2025 and proposed to complete construction by September 2028. It is seen that the proposal is still under a concept/design stage and necessary approvals are yet to be obtained. MIAL has further confirmed that they are planning to close operations at T1 by November 2025. Evaluation of cost estimates 6.3.124 MIAL has proposed a construction cost of Rs 3,094.43 Crores (Terminal Building at a cost of Rs.2,992.25 Crores for built-up area of 1,89,383 sqm at Rs. 1,58,000 per sqm, terminal extension at a cost of Rs.71.55 Crores for built-up area of 11,691 sqm at Rs. 61,200 per sqm, and the cost for construction of temporary roads / temporary barricading, signages, diversion of existing utilities etc. at a cost of Rs. 30.63 Crores) along with demolition cost of Rs 34.79 Crores. 6.3.125 MIAL has not provided adequate justification for the proposed terminal extension area of 11,691 sqm. Therefore, the Authority proposes not to consider it for the cost and consider only for 1,89,383 sqm. Table 172: Area of Terminal 1 Building as submitted by MIAL and as proposed by the Authority Area in Sqm proposed by Proposed by the Particulars Ref MIAL Authority Total Area: Superstructure A 1,67,197 1,67,197 Level 0 – Arrivals 64,529 64,529 Level 1- Arrivals Mezzanine 29,264 29,264 Level 2- Departure 73,404 73,404 Total Area: Fore Court B 22,186 22,186 Level 0 - Arrivals Forecourt 8,886 8,886 Level 2- Departure Forecourt 13,300 13,300 Terminal Building Extension C 11,691 - Total Built-up Area D = A + B + C 2,01,074 1,89,383 6.3.126 The Authority is of the view that demolition of structures typically involves the recovery of salvageable materials generating a net inflow as detailed in para 6.3.10(iv) and accordingly proposes to not include the costs proposed by MIAL for demolition works. Consultation Paper No. 08/2024-25 Page 198 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.127 The Normative cost approved by the Authority vide its Order No. 07 / 2016-17 dated 6th June 2016 for Terminal Buildings is Rs. 65,000 per sqm. The cost of following items of specification have been considered for analysis of the prescribed rate per sqm - cost of terminal building, air conditioning, fire- fighting system, water supply, sanitary, substation equipment for power supply including stand by system, passenger facilities viz FIDS, Furniture, Signages and Security surveillance, airlines related services viz Check-in, CUTE, CUSS and Baggage Reconciliation System, In-line X ray screening, Standalone screening, BHS for arrival and departure, Escalators, Elevators, Travelators and PBB are included. 6.3.128 In respect of Terminal construction, the Authority notes that it has considered a normative cost of Rs. 1,00,000 per sqm for FY 2020-21 in some of the recent tariff orders of Ahmedabad, Lucknow, Patna, Thiruvananthapuram etc, based on the superior specifications, processes and the architectural features of modern Terminal Buildings. Further, the Authority feels that as the work on Terminal Building projected by MIAL would be carried out over the Fourth Control Period, it would be reasonable and justifiable to derive the project cost based on inflation-adjusted normative cost up to FY 2028-29 (using CPI inflation index) to address the time value of money. 6.3.129 The Authority has derived the inflation adjusted normative rates for Terminal Building for the current Control Period by considering the rate of inflation in the table below: Table 173: Details of Inflation-adjusted Normative rates derived by the Authority for Passenger Terminal Building CPI Inflation adjusted Financial Inflation Inflation normative cost at Reference Year adjusted Cost % 18% GST FY21 1,00,000 1,05,357 All India Consumer Price Index as FY22 5.51% 1,05,510 1,11,162 per the Reserve Bank of India Bulletin All India Consumer Price Index as FY23 6.70% 1,12,579 1,18,610 per the Reserve Bank of India Bulletin All India Consumer Price Index as FY24 5.40% 1,18,658 1,25,015 per the Reserve Bank of India Bulletin As per 90th Round CPI Headline FY25 4.50% 1,23,998 1,30,641 Rate FY 24-25 As per 90th Round CPI Headline FY26 4.40% 1,29,454 1,36,389 Rate FY 25-26 As per 90th Round CPI Headline FY27 4.40% 1,35,150 1,42,390 Rate FY 25-26 As per 90th Round CPI Headline FY28 4.40% 1,41,097 1,48,655 Rate FY 25-26 As per 90th Round CPI Headline FY29 4.40% 1,47,305 1,55,196 Rate FY 25-26 *Note Inflation adjusted base amount (inclusive of 12% GST) (A) = Rs. 1,00,000 per sqm Inflation adjusted base amount (inclusive of 12% GST) (B = A*100/112) = Rs. 89,286 per sqm Add GST at 18% (C = B*18%) = Rs. 16,071 per sqm Normative Cost including GST (D = B+C) = Rs. 1,05,357 per sqm Consultation Paper No. 08/2024-25 Page 199 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.130 The Authority accordingly proposes to consider the cost of Rs. 1,55,196 per sqm as the normative cost for the expansion proposed against Rs. 1,58,000 per sqm considered by MIAL for the main terminal building. 6.3.131 The cost proposed to be considered by the Authority is worked out in the table below: Table 174: Cost proposed by the Authority for Reconstruction of Terminal T1: As per MIAL As per the Authority Description of Quantity Amount Quantity Amount in Ref Rate Rate Remarks Item in Sqm in Crores in Sqm Crores Building Demolition demolition A 4,500 77,311 34.79 - - - Works cost not considered. New Construction- On Passenger B 1,58,000 2,01,074 2,992.25 1,55,196 1,89,383 2,939.15 Normative Terminal Building cost basis T1 including Forecourt Not New considered as Construction- C 61,200 11,691 71.55 - - - details of Terminal Building usage not extension provided Construction of temporary roads for diversion of Cost traffic, temporary proposed by barricading, D 30.64 5.00 MIAL Signages, rationalized. Diversion of Existing utilities etc Less: 50% of the Equipment cost of passenger cost processing and E (378.76)* considered security only for 10 equipment (Refer MPPA Para 6.3.122) Less: 50% of the Envelope and cost for envelope interior and interior finishes F (142.63)** finishes considered (Refer Para only for 10 6.3.122) MPPA G = Total Cost (Rs.) SUM 3,129.23 2,422.75 (A:F) *MIAL estimates the cost of passenger processing and security equipment for 20 MPPA to be Rs 757.53 Crores (comprising airport systems at Rs.568.15 Crores and ICT Systems at Rs.189.38 Crores). From this, the Authority has reduced the cost associated with 10 MPPA considering only 50% of the cost, i.e, Rs. 378.76 Crores. ** MIAL estimates the cost of envelope and interior finishes for 20 MPPA to be Rs 285.26 Crores (comprising envelope at Rs.161.57 Crores and interior finishes at Rs.123.69 Crores). From this, the Authority has reduced the cost associated with 10 MPPA considering only 50% of the cost, i.e, Rs. 142.63 Crores. Consultation Paper No. 08/2024-25 Page 200 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.132 Accordingly, the Authority proposes to consider the cost of reconstruction of T1 of 20 MPPA (10 MPPA complete terminal with all utilities and finishes and balance 10 MPPA with core shell without equipment’s / fitouts) at Rs 2,422.75 Crores. 6.3.133 As elaborated in paras from 6.2.9 to 6.2.20 and as mentioned in the above paras 6.3.105 onwards, the Authority reiterates that the decision to include Terminal 1 reconstruction cost in the tariff computations at this stage is tentative and the Authority will make a final decision after taking into account all the comments from the stakeholders, including AAI and MoCA and accordingly the same will be reflected in the final tariff order. B2-1, B2-2 & B2-3 - Terminal 2 NW Pier extension, Terminal 2 NW Pier Bus Boarding Gate (V3), Terminal 2 Expansion Project (Rs. 141.88 Crores) along with examination of & E-6 Crew Terminal (Rs. 98.70 Crores) included under Ancillary Building Development Works MIAL’s proposal MIAL proposes extending the pier on the Northwest on airside (along with the construction of V2 Parking stand) which will be housing Bus gates, contact gates, a dedicated crew Terminal and extension of T2 southside facing main Apron on airside with integrated passenger amenities area (as shown in Figure 29), as part of proposed additions to increase the passenger handling capacity of T2. (i) B2-1 and B2-2 Northwest Pier Extension along with bus boarding gate: MIAL has proposed constructing the balance portion of the North-West Pier (V1, V2, V3), which will increase the passenger handling capacity. The pier will be constructed as per the original design of T2, with gate and other associated terminal facilities for efficient terminal processing. (ii) B2-3 Terminal 2 Expansion Project: MIAL submits that, currently, various passenger amenities are scattered in T2 Security Hold Area (SHA) in Level 3 and Level 4. With several initiatives being taken, CSMIA is set to transform itself as a major transfer hub, this will also require creation of appropriate passenger amenities comparable with global Hubs. Accordingly, MIAL proposes construction of approx. 13,080 Sqm of additional floor space to facilitate this. (iii) E6 Crew Terminal: MIAL proposes construction of a Crew Terminal of approximately 3,000 sqm, since at present, air crew (approximately 2,000 numbers per day) are using common passenger security. If separate facilities are created for crew, the passenger’s throughput at security check level will increase and result in operational efficiency. Figure 28 – Proposed expansion of T2 Consultation Paper No. 08/2024-25 Page 201 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 29 – Indicative Plan of T2 NW Pier & Crew Terminal with Level 1 (2,160 sqm), Level 2 (2,160 sqm) and Level 3 (2,160 sqm) Figure 30 – Indicative Plan of Expansion of T2 6.3.134 MIAL submits that the concept design is finalized, and the tender action is being initiated. MIAL intends to start construction by June 2025, with the Terminal 2 NW Pier Bus Boarding Gate (V3) and Crew Terminal expected to be completed by May 2026, and the Terminal 2 extension and Terminal 2 NW Pier works expected to be completed by March 2027. Authority’s examination regarding Terminal 2 NW Pier extension, Terminal 2 NW Pier Bus Boarding Gate (V3), Terminal 2 Expansion Project and E-6 Crew Terminal 6.3.135 The Authority notes that this expansion will be required for having contact gates for parking stands V2 and V3 and would also improve the passenger facility and passenger handling capacity of Terminal 2. 6.3.136 The Authority notes the following observations regarding the cost proposed by MIAL: (i) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i) on the BOQ items. (ii) In the case of T2 Extension (Project B2-3), a new project, diversion of existing utilities & infrastructure is not considered necessary. Accordingly, the Authority proposes not to consider the same in the proposed cost. (iii) MIAL has estimated the cost of Crew Terminal including civil works, interior works, mechanical, electrical, plumbing, and equipment installations with a construction rate of Rs.2.82 lakhs per square meter, which is higher than the normative cost for Passenger Terminal Building. Hence, the Authority proposes to consider the cost of the Crew Terminal at the normative cost of Passenger Terminal Consultation Paper No. 08/2024-25 Page 202 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Building. The Authority, through its Independent Consultant / Aviation Expert, has checked the BOQ and found that the estimate considered is as per normative cost of passenger terminal building, as the Crew Terminal is an extension of T2 (below the V3 Bus Boarding Gate) and is required to have similar aesthetics as is required in case of T1 and T2. 6.3.137 Based on the above, the cost estimate proposed to be considered by the Authority is given in the table below: Table 175: Cost proposed by the Authority for Terminal 2 NW Pier extension, Terminal 2 NW Pier Bus Boarding Gate (V3) and Terminal 2 Expansion Project (Rs. In Crores) Base Cost as per Particulars Reference Variance Remarks MIAL Authority TERMINAL 2 NW PIER Enabling Cost - Building demolition cost is not A 0.22 - 0.22 Demolition considered. Revision of costs for working New Construction B 22.66 21.52 1.14 in operational area-10% to 5%. Construction of temporary roads for diversion of traffic, Considered at 1% post above C 0.23 0.22 0.01 temporary barricading, mentioned adjustments. Signages, Diversion of Existing utilities, etc D = SUM Total 23.10 21.74 1.37 (A:C) CONSTRUCTION OF BUS BOARDING GATE (V3) Enabling Cost - Building demolition cost is not A 0.11 - 0.11 Demolition considered. Revision of costs for working New Construction B 4.63 4.39 0.24 in operational areas-10% to 5% Diversion of existing Considered at 1% post above utilities & C 0.05 0.04 0.00 mentioned adjustments. infrastructure D = SUM Total 4.78 4.44 0.35 (A:C) TERMINAL 2 EXPANSION PROJECT Revision of costs for working New Construction A 108.56 107.26 1.31 in operational areas-10% to 5% Diversion of existing Not considered necessary, utilities & B 5.43 - 5.43 since this is only an extension. infrastructure C = SUM Total 113.99 107.26 6.74 (A:B) Table 176: Cost proposed by the Authority for E-6 Crew Terminal As per MIAL As per Authority Amount Description of Quantities Amount Quantities Ref Rate Rate in Remarks Item in Sqm in crores in Sqm crores Construction On of Crew A 2,82,000 3,000 84.60 1,42,390 3,000 42.71 Normative Terminal cost basis Consultation Paper No. 08/2024-25 Page 203 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD As per MIAL As per Authority Amount Description of Quantities Amount Quantities Ref Rate Rate in Remarks Item in Sqm in crores in Sqm crores Other Equipment’s (IFRA and Included Enabling in B 14.11 - Works, normative Furniture & cost Fixtures, FIDS and TV etc.) Total Cost C = 98.70 42.71 (Rs.) A+B 6.3.138 The Authority, through its Independent Consultant / Aviation Expert, has reviewed the BOQ and found that the estimated costs align with the CPWD PAR rates, and considers them appropriate and reasonable. B3 – GA Terminal Expansion (Rs. 225.00 Crores) MIAL’s submission 6.3.139 MIAL proposes to expand the existing GA Terminal by constructing another approx. 9,893 Sqm of Gross Floor Area. In this regard, MIAL submits the following: (i) CSMIA experiences high demand for GA. In FY 2022-23, it recorded 12,444 GA ATMs in FY 2022- 23, and in FY 2023-24, it recorded 13,831 GA ATMs (average of 38 ATMs per day). (ii) The existing size and facilities in the GA Terminal are not sufficient to handle the GA Traffic and spread over Gross Floor Area of 890 Sqm only resulting in highly constrained operations. In addition to GA flights, there is an increasing trend for using bigger Charter flights (Code C equivalent, with 180 average seating capacity) by the Corporates, which are currently being operated from T2. Also, the current GA Terminal does not have any provision to handle International Passengers and they are being handled through T2 only. (iii) To cater to the growing demand for GA and Charter flights with larger capacity, it is proposed to extend the existing GA Terminal, so that the Terminal is equipped to house the increased number of passengers from Charter flights. Also, it is proposed to have an Integrated Terminal for handling both Domestic as well as International Passengers from this Terminal without mixing of passengers. Figure 31 –Proposed location GA Terminal (labeled 2-1) Consultation Paper No. 08/2024-25 Page 204 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding GA Terminal Expansion 6.3.140 The Authority notes that there is increased demand for GA flights to Mumbai, especially from business travelers. Also, there is increased movement of International Charter flights, which justifies the need for expansion of GA Terminal. 6.3.141 The Authority notes that as per Part 1 of Schedule 6 of the OMDA, “General Aviation” is considered as a non-aeronautical service. Accordingly, the Authority proposes consider this project as non-aeronautical asset for the purpose of Tariff determination. 6.3.142 Based on the above discussions, the cost estimate proposed to be considered by the Authority for Passenger Terminal & Associated works is given in the table below: Table 177: Cost proposed by the Authority for Passenger Terminal & Associated works (Rs. In Crores) S. Base Cost as per Project Variance Remarks No. MIAL Authority Terminal Building of area 1.89 lakh sqm inflation adjusted normative cost, rationalized for Reconstruction of envelope, interior finishes and passenger B1 3,129.23 2,422.75 706.48 Terminal T1 processing / security equipment only for 10 MPPA considered, against area of 2.01 lakhs sqm for processing 20 MPPA proposed by MIAL. B2- New Terminal 2 23.1 21.74 1.36 1 NW Pier New Terminal 2 Estimate of extra cost over approved rates for B2- NW Pier Bus working in operational area reduced to 5%, cost 4.78 4.44 0.34 2 Boarding Gate of dismantling & diversion of utilities not (V3) considered. B2- Terminal T-2 113.99 107.26 6.73 3 Extension GA Terminal B3 225.00 - 225.00 Considered as Non-Aeronautical asset Expansion TOTAL 3,496.11 2,556.18 939.93 C- Kerbside Improvement Works (Rs. 280.20 Crores) 6.3.143 MIAL has proposed the following Kerbside Improvement Works in the Fourth Control Period: Table 178: Cost Proposed by MIAL for Kerbside Improvement Works (Rs. In Crores) Base Cost Proposed by S. No Project MIAL New T1 Access Road (At-Grade) including demolition of existing C1-1 27.80 pavement C1-2 New T1 Access Road (Elevated Departure Driveway for T1) 102.48 C2 At-Grade Road development over existing nallah in front of T2 MLCP 81.80 External Landscape & Horticulture with Irrigation system including C3-1 49.00 new trees, transplantation of trees and removal of trees C3-2 At-Grade Road widening for International Airport Road 19.13 Consultation Paper No. 08/2024-25 Page 205 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost Proposed by S. No Project MIAL Total 280.20 C1-1 - New T1 Access Road (At-Grade) including demolition of existing pavement and C1-2 New T1 Access Road (Elevated Departure Driveway for T1) (Rs. 130.28 Crores) MIAL’s submission 6.3.144 Terminal 1 is proposed to be reconstructed with departures and arrivals segregated at different levels. To facilitate this, MIAL proposes the construction of the following Kerbside access roads for Terminal 1: (i) New At-Grade Access Road (Rs. 27.80 Crores): This involves the demolition of the existing pavement and construction of a new at-grade access road at the arrival level, covering approximately 27,253 sqm. (ii) Elevated Departure Driveway (Rs. 102.48 Crores): This involves constructing a new elevated road with ramps at the departure level, covering approximately 14,725 sqm. This elevated road will separate the departures and arrivals, ensuring smoother traffic flow and improving passenger convenience. Figure 32 –Location access roads to T1 (labeled 4-1) 6.3.145 MIAL has submitted that design consultants have been appointed, and construction of the at-grade road is scheduled to start in October / November 2025 along with Terminal 1, and the elevated road expected to start by October 2026. The at-grade road is expected to be completed by October 2026 and the elevated road is expected to be completed by March 2028. Authority’s examination regarding Access Roads 6.3.146 The Authority, through the examination conducted by the independent consultant / aviation expert, is of the view that MIAL's assessment regarding the separation of departure and arrival levels through the construction of kerbside roads is essential for efficient terminal operations. The proposed elevated departure driveway and at-grade arrival road will ensure that passenger drop-off and pick-up areas are clearly segregated, reducing congestion and improving accessibility to T1. Given T1’s proposed reconstruction, the Authority observes that these kerbside improvements are necessary to align with standard airport design. Consultation Paper No. 08/2024-25 Page 206 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.147 The Authority notes that the cost estimate provided by MIAL are based on CPWD DSR and MoRTH rates which includes the cost of bituminous road, horticulture in central median portion, roadside drainage and road signage gantries, and RCC structure for elevated road portion. On comparison with industry benchmarks, the cost per sqm of Rs.7,200 for the at-grade roads and Rs. 83,000 for the elevated road appear reasonable. However, the Authority notes that MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise the extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i). 6.3.148 Accordingly, the Authority proposes considering Rs 130.01 Crores as cost of construction of kerbside roads for T1 as against Rs 130.28 Crores proposed by MIAL. C2 - At-Grade Road development over existing nallah in front of T2 MLCP (Rs. 81.80 Crores) MIAL’s submission 6.3.149 MIAL has proposed the construction of an at-grade road over the existing nallah in front of Terminal 2, covering an approximate area of 12,818 sqm. The purpose of this project is to accommodate the increased vehicular traffic volume at T2 and streamline traffic circulation in the forecourt area. The new road will reduce congestion and improve traffic flow, enhancing the overall efficiency of vehicular movement in front of the terminal. The project is currently in the concept stage, with construction expected to commence in October 2025 and completion projected by March 2027. Figure 33 – Proposed location of at-grade road development over existing nallah in front of T2 MLCP (labeled 4-3) Authority’s examination regarding at-grade road development over existing nallah in front of T2 MLCP 6.3.150 The Authority reviewed MIAL's submission and noted the potential benefits of constructing the proposed at-grade road over the existing nallah to streamline traffic in front of T2. However, based on an analysis of the current traffic flow, there does not appear to be significant congestion in this area at present. The Authority, therefore, directs MIAL to carefully consider the timing and necessity of this project at the time of execution. 6.3.151 The Authority notes that approval from MMRDA requires intense study on the flow of water in the Nallah River. Further, extensive coordination with State Government / MMRDA is necessary to ensure smooth Consultation Paper No. 08/2024-25 Page 207 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD traffic management during construction of this bridge over the Nallah River. As such, any delays in obtaining this approval could impact on the project's schedule and overall viability. 6.3.152 The Authority is also of the view that the portion of this road will also cater to the planned T2 forecourt, which is a non-aeronautical asset. Accordingly, only 50% of the project cost is proposed to be considered as aeronautical infrastructure, on an actual incurrence basis subject to evaluation of efficiency and reasonableness. The project should be subject to further review and analysis based on evolving traffic conditions. C3-1 - External Landscape & Horticulture with Irrigation system including new trees, transplantation of trees and removal of trees (Rs. 49.00 Crores) MIAL’s submission 6.3.153 MIAL has proposed the External Landscape and Horticulture project as part of the master plan to comply with environmental sustainability guidelines. The project involves the development of an irrigation system, planting new trees, transplantation of existing trees, and the removal of decayed plants and trees across the airport premises. This development is intended to enhance the aesthetic appeal of the airport and support environmental sustainability initiatives. Figure 34 –Proposal for external landscape and horticulture with irrigation system including new trees, transplantation of trees and removal of trees Authority’s examination regarding external landscape & horticulture with irrigation system including new trees, transplantation of trees and removal of trees 6.3.154 The Authority has reviewed this project and fully supports environmental sustainability initiatives. However, upon reviewing the existing landscape around the airport, especially near the Chhatrapati Shivaji Maharaj Statue in front of T2 and within the T2 premises, the Authority observes that the existing landscape is in a good condition, and only replacements of decayed plants and shrubs may be required, which can be claimed as operating expenditure as and when incurred. 6.3.155 Additionally, the Authority considers that landscape planning for the T1 area should be taken up as part of the T1’s reconstruction itself. The balance landscaping area proposed of approximately 40 acres appears excessive. Moreover, the hardscape costs proposed by MIAL includes the cost for granite, vitrified Consultation Paper No. 08/2024-25 Page 208 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD flooring, and paver blocks aggregating to Rs. 37.70 Crores, which has not been fully justified, and the cost- benefit analysis has not been sufficiently provided by MIAL. 6.3.156 Given the large scale of this project and the lack of clear necessity for certain elements, the Authority proposes to disallow the hardscape cost due to the absence of detailed area justification, and recommends considering only Rs. 6 Crores for tree plantation and related landscape improvements as given in the table below: Table 179: Cost proposed by the Authority for External Landscape & Horticulture with irrigation system including new trees, transplantation of trees and removal of trees (Rs. In Crores) Base Cost as per Particulars Ref Variance Remarks MIAL Authority Landscape and Cost of hardscaping not horticulture with A 46.37 9.09 37.28 considered due to lack of irrigation system sufficient justification. New trees B 0.75 0.75 - Estimate considered Transplantation of trees C 1.34 1.34 - reasonable, subject to Remove trees D 0.55 0.55 - rationalization. E = Total 49.00 11.72 37.28 SUM(A:D) Proposed Amount 6.00 Accordingly, the Authority proposes a cost of Rs 6.00 Crores, based on the prevailing market rates, towards this project. C3-2 - At-Grade Road widening for International Airport Road (Rs. 19.13 Crores) MIAL’s submission 6.3.157 MIAL has proposed the At-Grade Road Widening project for the International Airport Road to support improved traffic management and facilitate better passenger flow. The project is also intended to enhance connectivity between the upcoming Metro Line 3 and Metro Line 7 stations and Terminal 2 at Sahar. The widening of the road will ease vehicular movement and reduce congestion in the area, ensuring smoother access for passengers traveling to and from T2. Figure 35 –Location of at-grade International Airport Road (labeled 4-4) 6.3.158 MIAL has estimated the cost for the project at Rs. 19.13 Crores in its MYTP submission. As part of subsequent submissions, MIAL provided a cost breakup of Rs 21.26 Crores, which included demolition costs for approximately 15,037 sqm of the existing road at a cost of Rs. 6.6 Crores, demolition of 1,400 Consultation Paper No. 08/2024-25 Page 209 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD sqm of existing compound wall at a cost Rs. 1.2 Crores and construction of new road with compound wall, street lights, drains and temporary barricading, signages, etc at a cost of Rs 13.46 Crores. Authority’s examination regarding at-grade road widening for International Airport Road 6.3.159 The Authority has reviewed the project and notes the following observations on cost: (i) Upon reviewing the project’s specifics, the Authority has determined that the demolition of 15,037 sqm of existing road included in MIAL's cost estimate may not be required. Since the objective of the project is only to widen the existing road, the demolition costs appear excessive and unnecessary for the scope of this project. Accordingly, the Authority proposes not to consider demolition cost of Rs. 6.6 Crores proposed by MIAL. (ii) MIAL has included a 10% mark-up on costs for working in operational areas. The Authority is of the view that the provision made by MIAL is high and therefore proposes to revise the extra cost over approved rates for working in operational area to 5% as detailed in para 6.3.10(i). (iii) The Authority also proposes not to include the cost diversion of existing utilities & infrastructure as it may not be required for widening the road. Table 180: Cost proposed by the Authority for At-Grade Road widening for International Airport Road (Rs. In Crores) Amount submitted Amount proposed Particulars Ref by MIAL as cost Variance Remarks by the Authority estimate Revision of costs for working in operational areas from 10% Demolition Works A 7.81 1.15 6.66 to 5%. Demolition of roads not considered necessary. New Main T1 & T2 Estimate found Access Road to be Carriageway B 8.67 8.67 - reasonable by (Flexible the independent Pavement) consultant Estimate found New Structure - to be Compound Wall C 1.98 1.98 - reasonable by and Street Lights the independent consultant Estimate found to be New Road Drain D 2.17 2.17 - reasonable by the independent consultant Construction of Not considered temporary roads for E 0.64 - 0.64 necessary. diversion of traffic, Consultation Paper No. 08/2024-25 Page 210 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Amount submitted Amount proposed Particulars Ref by MIAL as cost Variance Remarks by the Authority estimate temporary barricading, Signages, Diversion of Existing utilities etc F = Total 21.26 13.96 7.30 SUM(A:E) 6.3.160 The Authority, through its Independent Consultant / Aviation Expert has checked the BOQ and found that the estimate considered is as per CPWD DSR / MoRTH rates, considering it to be reasonable. 6.3.161 Based on the above discussions, the cost estimate proposed to be considered by the Authority for Kerbside improvement works is given in the table below: Table 181: Cost proposed by the Authority for Kerbside Improvement Works: (Rs. In Crores) S . No P roject Base Cost as per V ariance Remarks MIAL Authority C1-1 New T1 Access Road Considered reasonable based on (At-Grade) including CPWD DSR and MoRTH rates 27.80 27.80 - demolition of existing pavement C1-2 New T1 Access Road Working restraints considered at 5% (Elevated Departure 102.48 102.21 0.27 instead of 10% Driveway for T1) C2 At-Grade Road To be considered on an incurrence development over basis, subject to due approvals. 81.80 - 81.80 existing nallah in front of T2 MLCP C3-1 External Landscape & Estimate cost of hard scaping like Horticulture with Granite, Vitrified tile flooring and Irrigation system paver block etc., not considered. 49.00 6.00 43.00 including new trees, Only 50% of soft scaping proposed transplantation of trees in this control period. and removal of trees C3-2 At-Grade Road Estimate cost of dismantling of widening for pavements and diversion of utilities 19.13 13.96 5.16 International Airport n ot considered. Road T otal 280.20 149.98 130.23 D - External Connectivity Improvement Works (Rs 58.87 Crores) 6.3.162 MIAL has proposed the following External Connectivity Improvement Works in the Fourth Control Period: Table 182: Cost proposed by MIAL for External Connectivity Improvement Works (Rs. In Crores) S. No Project Cost Proposed by MIAL D-1 Construction of Overpass including roadway ramps 17.39 D-2 Construction of Underpass below WEH at T2 elevated road 41.48 Total 58.87 Consultation Paper No. 08/2024-25 Page 211 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD D-1 Construction of Overpass including roadway ramps and D-2 Construction of Underpass below WEH at T2 elevated road (Rs. 58.87 Crores) MIAL’s submission 6.3.163 MIAL has proposed two projects under the External Connectivity Improvement Works to enhance traffic flow between T1 and T2 at CSMIA. The distance between T1 and T2 is approximately 5 kilometers, and due to heavy vehicular congestion on the Western Express Highway (WEH) and other adjoining roads, the travel time between the terminals can take up to 30-45 minutes. To address this issue and reduce travel time, MIAL has proposed two projects: (i) Construction of an Overpass (VOP) at a cost of Rs. 17.39 Crores - To reduce travel time between T1 and T2 by means of allowing quick access to the North-bound flyover located near T1 on Western Express Highway. This flyover has direct access to the already existing T2 elevated road entry underpass. All three signalized junctions on the existing route can be bypassed with reduced travel distance. Implementation of the VOP is possible with limited traffic management measures during construction on the Western Express Highway. (ii) Construction of an Underpass (VUP) at a cost of Rs. 41.48 Crores – A 2 lane underpass is proposed at T2 elevated road on the Western Express Highway. This will facilitate North-bound movement of T2 exit traffic. For traffic movement between T2 and T1, the stretch between T2 elevated road and Nehru Road on the Western Express Highway becomes congested currently mainly due to ongoing flyover construction at T1 and North-bound traffic from T2 coming up to Nehru Road for U turn movement. Grade separation at T1 along with this underpass will help relieve traffic congestion on the Western Express Highway and provide faster connection from T2 to T1. The proposed underpass has been designed in such a manner that it will meet the existing underpass at its highest point with limited length of ramps. Further, existing landscaping will not be hampered. Figure 36: Proposed Overpass (labeled 5-1) Consultation Paper No. 08/2024-25 Page 212 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Figure 37: Proposed Underpass (labeled 5-2) Figure 38: Another view of proposed overpass and underpass 6.3.164 MIAL has based its cost estimates on CPWD DSR and MoRTH rates, using tentative drawings for determining the quantities. The construction of these projects is planned to begin in April 2026 for the Overpass and October 2025 for the Underpass, with both projects expected to be completed by March 2028. Authority’s examination regarding construction of overpass including roadway ramps and construction of underpass below WEH at T2 elevated road 6.3.165 The Authority notes the necessity of improving connectivity between T1 and T2 to reduce travel time and alleviate the traffic burden on the Western Express Highway. These improvements will enhance operational efficiency and passenger convenience, particularly given the high volume of passenger transfers between the terminals. Consultation Paper No. 08/2024-25 Page 213 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.166 The Authority, however, notes that MMRDA approval is required for the execution of these projects. Further, since these are proposed in public roads / expressway, extensive coordination with State Government / MMRDA is necessary to ensure smooth traffic management during construction. As such, any delays in obtaining this approval could impact on the project's schedule and overall viability. 6.3.167 Hence, the Authority proposes to consider these projects on an incurrence basis, subject to evaluation of efficiency and reasonableness. 6.3.168 Based on the above discussions, the cost estimate proposed to be considered by the Authority for External Connectivity Improvements is given in the table below: Table 183: Cost proposed by the Authority for External Connectivity Improvements (Rs. in Crores) Base Cost as per S. No Project Variance Remarks MIAL Authority Construction of Overpass D-1 17.39 - 17.39 Will be considered on an including roadway ramps actual incurrence basis, Construction of Underpass below D-2 41.48 - 41.48 subject to due approvals WEH at T2 elevated road Total 58.87 58.87 E. Ancillary Building Development Works (Rs. 2,152.06 Crores) 6.3.169 MIAL has proposed the following Ancillary Building Development Works in the Fourth Control Period to meet the evolving demands at CSMIA. These projects are proposed to strengthen the backend infrastructure that supports the airport’s functions, ensuring that essential staff and critical operations have adequate and modern facilities to meet the growing demands. Table 184: Cost proposed by MIAL for Ancillary Building Development Works (Rs. in Crores) Cost proposed by S. No Project MIAL E-1 Construction of Airport Management Corporate Office Building 1,229.36 E-2 Construction of NAD Colony 282.65 E-3-1 Cost of 3 levels of basements for 2 metro stations 141.00 E-3-2 Additional Cost of T-1 Metro Station payable to MMRC 75.00 E-4-1 Sewage Treatment Plant for new Terminal T2 12.00 E-4-2 Hazardous Waste Storage 1.13 E-4-3 Distribution network for Utilities 3.28 E-5 Development of T2 forecourt (Metro Station) 124.80 E-6 Crew Terminal 98.70 E-7 Relocation of ATC Technical block 184.14 Total 2,152.06 E1 - Construction of Airport Management Corporate Office Building (Rs. 1,229.36 Crores) MIAL’s submission 6.3.170 MIAL has submitted that currently, most of its staff are scattered across various small office spaces, including Terminal T1-B, Terminal T2, and the Apron Control Building. However, the T1-B office, which houses a significant portion of MIAL’s employees, is scheduled for demolition in 2025 as explained in the section on project “B1 New Construction of Terminal T1” under Passenger Terminal & Associated works. MIAL proposes consolidating its employees into one centralized Corporate Office to streamline airport Consultation Paper No. 08/2024-25 Page 214 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD operations and improve staff efficiency. The office building is also planned to address the growing operational and administrative needs of the airport and of MIAL. 6.3.171 The building is proposed to be designed as a G+6 structure with a total area of 1,20,203 sqm, consisting of 70,073 sqm of office space and 50,130 sqm of basement area reserved for parking and utilities. The office will accommodate apart from 1,500 employees of MIAL, Customs, AAI, airlines, CISF, and other airport-related entities, with an average of 15-20 sqm allocated per staff member. 6.3.172 In addition to on-payroll employees, MIAL anticipates the need for off-payroll staff, consultants, subject matter experts, and third-party contractors who will work closely with MIAL in critical areas such as Detailed Design, Project Management, Master Planning, Slum Rehabilitation, and Terminal Operations. These off-payroll staff will require working space within the new office. Once these works are concluded in 5-7 years, MIAL estimates off-payroll staff will be replaced by additional MIAL staff since passenger capacity at CSMIA is expected to increase from 55 MPPA to 65 MPPA. MIAL has proposed this building with the intent of housing 1,500 employees over the present 1,200 employees. 6.3.173 MIAL has provided a detailed space breakdown for the building, which will feature modern amenities such as auditoriums, an Airside Operations Simulator Room, and dedicated workstations for different teams. The breakdown includes 43,660 sqm of office area, divided into workstations, meeting rooms, conference rooms, training rooms, and storage areas as detailed below: Figure 39: Details of Airport Management Corporate Office Building as submitted by MIAL Consultation Paper No. 08/2024-25 Page 215 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.174 MIAL also stated that, currently, employees are using MLCP for parking vehicles as there is no dedicated parking space for employees. Hence, it is proposed to construct the basements for staff parking. Basements will also be used for providing utility services like Electrical substation, AC unit etc., required for the building. Figure 40: Planned location of Airport Management Corporate Office building (labeled 3-1) Authority’s examination regarding construction of Airport Management Corporate Office Building 6.3.175 The Authority notes the need for MIAL to consolidate its operations in a centralized Corporate Office, particularly in light of the upcoming demolition of the T1-B building (where the staff are currently seated). The Authority has reviewed MIAL’s space allocation and staff growth projections. The Authority notes that the proposed allocation per staff appears excessive. MIAL was asked to submit the current area being used as office space. MIAL has submitted as follows “Current area used for office space in T1 building is. 10,000 Sq.m. approx of which 7,000 Sq.m. area is being used by MIAL employees and balance by CISF. It is to be noted that MIAL employees also sit at other airport locations like Terminal 2, Apron control building, fire station, which will be another 5000 sqm. ” 6.3.176 After reviewing MIAL's submission on current office space usage, and considering the operational requirements of the airport, the Authority deems it sufficient to consider 25,370 sqm (approximately) of office space. i.e., G+2 floors and terrace. This takes into account that not all employees require dedicated office space, as many staff are stationed at the terminal building or at the airside, and some work on a shift basis. This proposed space allocation is expected to accommodate MIAL staff, along with other critical operations. Any future vertical expansion requirements may be considered in future based on demonstrated operational needs. 6.3.177 The Authority notes that MIAL has indicated, due to the absence of dedicated parking facilities, employees currently park vehicles in the MLCP. Additionally, the basement is expected to house critical utility services such as the electrical substation and AC units. In view of this, the Authority proposes to consider Consultation Paper No. 08/2024-25 Page 216 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD the entire basement area of 50,130 sqm for staff parking and utilities. This structured approach provides ample space for current needs while allowing for future expansion of office area. Table 185: Area proposed by the Authority for Airport Management Corporate Office Building Proposed by MIAL Proposed by Authority Particulars Reasons for Variance (area in sqm) (area in sqm) Basement 3 17,593 17,593 Basement 2 17,360 17,360 Basement 1 15,177 15,177 Total basement area (A) 50,130 50,130 Ground Floor 8,600 8,600 Only G+2 floors of office 1st Floor 7,758 7,758 space considered based on 2nd Floor 8,290 8,290 estimated requirement for 3rd Floor 8,882 - office space, along with 4th Floor 8,612 - entire basement. 5th Floor 9,075 - 6th Floor 8,793 - 7th Floor 9,342 - Terrace 720 720 Total office area (B) 70,006 25,370 Total built up area (C = 1,20,203 75,500 A + B) 6.3.178 MIAL's cost estimate for the building is based on PAR rates and market rates, calculated at Rs. 99,600 per sqm for 1,20,203 sqm, amounting to Rs 1,197.22 Crores, along with site circulation of Rs. 9.27 Crores, cost for construction of temporary roads, temporary barricading, signages, etc of Rs. 12.06 Crores along with Rs. 10.81 Crores for demolition of existing structures. The Authority has reviewed the project cost submitted by MIAL, which is based on PAR and market rates, and notes the following observations: (i) In this estimate, MIAL has included superior interior finishes / façade items at a cost of Rs. 43,000/sqm amounting to Rs. 341.33 Crores. After reviewing the costs, the Authority adjusted the estimate for superior interior finishes / façade items to Rs. 20,000/sqm based on prevailing market rates. (ii) MIAL has included a 10% mark-up on costs for working in airside areas amounting to Rs. 107.63 Crores. The Authority is of the view that the office building is proposed to be outside of the operational area except for a small corridor which is likely to be connected to the reconstructed Terminal 1. Accordingly, the Authority proposes not to consider any cost for working restraints in airside area. (iii) MIAL has proposed 1% of the overall cost of project for temporary road for diversion of traffic and others which appears to be on higher side. The Authority proposes to instead include a lumpsum amount as detailed in para 6.3.10(ii) on BOQ items. (iv) MIAL has included the demolition cost of existing structures as an enabling cost. The authority proposes not to consider this cost in the cost estimate as detailed in para 6.3.10(iv) on the BOQ items. 6.3.179 Based on the above discussions, the cost proposed by the Authority is as given in the table below: Consultation Paper No. 08/2024-25 Page 217 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Table 186: Cost proposed by the Authority for Construction of Airport Management Corporate Office Building Description Ref Proposed by MIAL Proposed by Authority Remarks of Item Qty in Amt in Qty in Amt Rate Rate Sqm Crs Sqm in Crs Demolition cost is Demolition A 4,500 24,017 10.81 - - - not considered Works necessary. New Construction- Structure Reduced cost of superior finishes from 43,000 to Corporate 20,000 per sqm and Office B 99,600 1,20,203 1,197.22 60,600 75,500 457.52 10% working Building restraints. Area considered as per Table 185. Site Rationalized cost of C 4,600 20,160 9.27 4,300 20,160 8.67 Circulation drain Construction of temporary roads for diversion of traffic, Lumpsum amount temporary D 1.00% 12.06 - - 2.00 considered barricading, Signages, Diversion of Existing utilities etc E = TOTAL 1,229.36 468.19 SUM(A:D) 6.3.180 The Authority, through its Independent Consultant / Aviation Expert, has checked the BOQ and found that the estimate considered is as per CPWD DSR, PAR and market rates, considering it to be appropriate and reasonable. E2 Construction of NAD Colony (Rs. 282.65 Crores) MIAL’s submission 6.3.181 MIAL submits the redevelopment plan for NAD Colony as a carry-forward project from the Third Control Period. Initially approved by the Authority at Rs. 107 Crores in the First Control Period, the project cost was revised and enhanced to Rs. 208 Crores on an incurrence basis during the Third Control Period. However, this could not be executed in the Third Control Period due to delays caused by government permissions and COVID-19. 6.3.182 The current proposal includes the construction of 488 units in seven buildings over a total area of 44,243 sqm. The land of approximately 25 acres obtained through compact redevelopment of NAD Colony is proposed to be used for various aeronautical uses and support functions / infrastructure / utilities. Consultation Paper No. 08/2024-25 Page 218 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.183 MIAL has submitted that core aeronautical functions such as the Airport Maintenance Compound, P&T Sorting Office, Aviation Training Centre, and parking are planned in this area. MIAL also notes that 1 acre of land has been provided to MMRDA for the construction of Metro Line-7. Authority’s examination regarding construction of NAD Colony 6.3.184 The Authority has reviewed various submissions made by MIAL and the Supplementary Lease Deed was executed between AAI and MIAL on 15th May 2009. As per Clause C of this deed, the lease is taken pursuant to clause Section 2.6.3 of the OMDA which states: “…With respect to land underlying the Carved Out Assets, the Parties further agree that if, at any time during the Term, the JVC requires the said land for providing any Aeronautical Services or developing and/or constructing any Aeronautical Assets, the Parties shall come together to negotiate in good faith the terms and conditions on which the AAI shall lease to the JVC, and the JVC shall take on lease from the AAI, the said land…” 6.3.185 The Authority further referred to the submission in the Master Plan and notes the below as per Clause 4.7.2: “…Part area of NAD Colony – 1,01,175.00 Sqm / 25 Acre - This land area is proposed to be used for aeronautical uses like Airport Maintenance Compound, P & T Sorting Office, Aviation Training Centre with Guest facilities, Simulator, Fire Station, IT & Telecom, Inter Terminal transit facility, Parking and other aeronautical uses along with required roads, drainage, and open space, etc. It may be noted that approx. close to an acre of land area has been provided as right of way to MMRDA for construction of Metro Line-7 by AAI from demised premises of MIAL. This has reduced demised premises to MIAL…” 6.3.186 The Authority has also reviewed the planned use of space out of which activities are being relocated to the densified NAD Colony. MIAL submitted that the facilities which will be shifted include Airport Maintenance Compound (currently situated at Airside and needs to be relocated to free up the space at already constrained airside), P&T Sorting Office (located on landside of T1 and relocation is required to improve the accessibility of passengers to T1). The Aviation Training Centre with Guest facilities, Simulator, Fire Station, IT & Telecom, and Inter Terminal transit facility are new facilities. 6.3.187 The Authority takes notes of MIAL’s submission that NAD Colony is designated entirely for aeronautical use, and this has been confirmed by the Master Plan and MIAL has indicated that the land will be utilized for aeronautical functions, in compliance with the Supplementary Lease Deed and AAI mandate. 6.3.188 MIAL has submitted that the work is being carried out in a phased manner and has awarded the contract for 4 out of 7 buildings. The Authority notes that this award is a part of EPC contract which has various other works. The NAD colony is awarded at a cost of approximately Rs. 74,879 per sqm. After reviewing the approved drawings, verifying the awarded contract, and considering the additional works involved (like lift, firefighting, fire alarm works etc,), the Authority considers the cost estimates to be reasonable. 6.3.189 Accordingly, the Authority proposes to consider Rs 282.65 Crores as the cost of construction of NAD Colony. Consultation Paper No. 08/2024-25 Page 219 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD E-3-1 Cost of 3 levels of basements for 2 metro stations and E-3-2 Additional Cost of T-1 Metro Station payable to MMRC (Rs. 216 Crores) MIAL’s submission 6.3.190 MIAL has submitted that the following 3 Stations are proposed at CSMIA as a part of the Mumbai Metro Line 3: (i) T1 Terminal Forecourt Station. (ii) T2 Terminal Forecourt Station. (iii) Sahar Road Station (considered non-aeronautical) 6.3.191 MIAL submits that as per the Memorandum of Understanding signed between Mumbai Metro Rail Corporation (MMRC) and MIAL dated 16-Sep-2015 and as amended on 31-Aug-2017, MIAL is required to bear the costs with respect to development of these metro stations. This cost has already been appropriately considered for the purposes of tariff determination in the previous control periods. 6.3.192 In the Fourth Control Period, MIAL submits that the cost to be paid to MMRC for change in design of T1 station as per BCAS directions is Rs. 75.00 Crores. MIAL also submits that it is required to construct underground basements for two stations for structural stability purposes, since the basements will act as dead load to ensure stability to the metro stations. The cost of constructing these basements is estimated to be Rs. 141.00 Crores. MIAL has also submitted as follows: “…Refer communication from MMRC … which states that construction of three basement floors is required to form a full covered box for smooth functioning of metro operations, and to provide protection against storm water ponding, flotation of the station box, health and safety, smooth access to the station, firefighting, etc….” Authority’s examination regarding cost of 3 levels of basements for 2 metro stations and additional cost of T-1 metro station payable to MMRC 6.3.193 The Authority has examined the correspondence with MMRC, and the cost estimate submitted by MIAL for the construction of basements. The Authority notes that this is necessary for the smooth operations of the metro stations. Accordingly, the Authority proposes to consider the cost of Rs 216.00 Crores towards the construction of Metro Stations and basements at CSMIA. 6.3.194 Though the Authority notes that the basement work is required for ensuring the structural stability, it is observed that the planned usage of these basements has not been provided by MIAL. In the Authority’s view, it is likely that this basement space will be used for non-aeronautical activities in the future. Accordingly, the Authority proposes to consider 50% of the basement cost as a non-aeronautical asset (refer Table 207 under the Section on Asset Allocation). E-4 Sewage Treatment Plant and associated works (“STP”) (Rs 16.41 Crores) 6.3.195 MIAL has proposed a Sewage Treatment Plant for T2 of 2MLD capacity along with Hazardous Waste Storage and Distribution network for utilities. This is a part of the masterplan and also to ensure environmental sustainability guidelines. The new STP will also cater to aircraft waste at airside. 6.3.196 The Authority, through its Independent Consultant, notes that this is necessary for the smooth operations at T2 and has also reviewed the cost considering the cost for civil infrastructure and associated equipment. Based on the estimates submitted by MIAL, the project cost appears to be reasonable and comparable with Consultation Paper No. 08/2024-25 Page 220 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD CPWD & Market rates for similar works. Accordingly, the Authority proposes to consider the entire cost Rs 16.41 Crores proposed by MIAL. E5 Development of T2 Forecourt (Rs. 124.80 Crores) MIAL’s submission 6.3.197 MIAL has proposed the development of the T2 forecourt area as part of the Fourth Control Period, with an objective to cater to passengers alighting from Metro Station Lines 3 and 7A. The proposed facility will include check-in and baggage drop facilities located at the Basement 1 level, streamlining passenger movement and reducing congestion within the terminal. MIAL has identified this project as critical for passenger convenience, particularly after the completion of the metro station, which is expected to increase footfall at T2. 6.3.198 The total project cost is estimated at Rs 124.80 Crores, based on detailed cost breakdowns provided by MIAL. The cost includes both baggage-related work and civil works. The baggage-related component is estimated at Rs. 85.00 Crores, which covers the cost for the tunnel, conveyors, hybrid self-bag drops, and screening machines. The civil works component, estimated at Rs. 39.80 Crores, includes design development, statutory building approvals, and construction costs and GST. Overall, the total area proposed for this project is 4,413 sq mts out of larger area of around 37,000 sq mts proposed for T2 forecourt. Authority’s examination regarding development of T2 forecourt 6.3.199 The Authority notes the need for the development of this facility at the metro stations once the route becomes operational. The inclusion of check-in and baggage drop facilities in the basement will ease the flow of passengers within the terminal and enhance the overall passenger experience. 6.3.200 The Authority notes that while the cost summary is provided, a detailed cost breakdown has not been provided by MIAL since the project is at the concept stage. Given the present stage project, the Authority recommends this project on an incurrence basis, subject to evaluation of efficiency and reasonableness. E6 Crew Terminal (Rs. 98.70 Crores) 6.3.201 As detailed in Table 176 in the section on Passenger Terminal Building and associated works, the Authority proposes to consider the cost of Crew Terminal at Rs 42.71 Crores based on the normative cost of passenger terminal building, as the Crew Terminal is a part of the Terminal 2. E7 Relocation of ATC Technical Block (Rs. 184.14 Crores) MIAL’s submission 6.3.202 MIAL has proposed the relocation of the existing ATC Technical block, currently situated north of Runway 14-32, as it will penetrate the obstacle limitation surface of the proposed taxiway E5-E7. The current location of the ATC Technical block would violate DGCA and ICAO clearance standards once project “A2-1 Construction of Taxiway E (segment between E5 & E7), North-East side, parallel to RWY 14-32” becomes operational. MIAL has proposed a new building with an area of approximately 15,900 sqm to be constructed on an alternative site. The total estimated project cost for this includes enabling and construction cost. MIAL submits that this project is necessary for the safe and compliant operation of the airport and awaits final approval from the AAI for execution. Consultation Paper No. 08/2024-25 Page 221 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding relocation of ATC Technical Block 6.3.203 The Authority notes the need for the relocation of the ATC Technical block to comply with the DGCA/ICAO clearance standards. It observes that the relocation is mandatory for the approval of the E5- E7 taxiway expansion. However, this project has been under discussion with AAI for many years, and a final decision on the location for the new technical block is still awaited. Therefore, the Authority recommends approving the project on an incurrence basis, subject to evaluation of efficiency and reasonableness and subject to final approval from AAI. 6.3.204 Based on the above discussions, the cost estimate proposed to be considered by the Authority for Ancillary Building Development Works is given in the table below: Table 187: Cost proposed by the Authority for Ancillary Building Development Works (Rs. in Crores) Base Cost as per S. No Project Variance Remarks MIAL Authority E-1 Construction of Airport Estimate of extra cost over approved Management Corporate rates for working in operational area Office Building rationalized to 5%, cost of diversion of utilities rationalized, cost of superior 1,229.36 468.19 761.18 finishes rationalized to reflect market rates and demolition of building not considered. Area considered only for G+2 floors with basement. E-2 Construction of NAD Checked with awarded cost of Colony 282.65 282.65 - building and CPWD PAR rates and found the estimate to be reasonable. E-3-1 Cost of 3 levels of Estimate found reasonable as per basements for 2 metro 141.00 141.00 - CPWD PAR and DSR rates stations E-3-2 Additional Cost of T-1 Estimate found reasonable as per the Metro Station payable to 75.00 75.00 - estimate provided. MMRC E-4-1 Sewage Treatment Plant Estimate found reasonable as per 12.00 12.00 - for new Terminal T2 market quotation/rates. E-4-2 Hazardous Waste Estimate found reasonable as per 1.13 1.13 - Storage market quotation/rates. E-4-3 Distribution network for Estimate found reasonable as per 3.28 3.28 - Utilities market quotation/rates. E-5 Development of T2 To be considered on an incurrence 124.80 - 124.80 forecourt (Metro Station) basis. E-6 Crew Terminal Cost considered based on inflation 98.70 42.71 55.99 adjusted normative cost of Passenger Terminal Building. E-7 Relocation of ATC To be considered on an actual Technical block 184.14 - 184.14 incurrence basis, subject to due approvals. Total 2,152.06 1025.97 1,126.10 2 - Operational Capex Proposals (Rs 3,109.48 Crores) 6.3.205 MIAL has submitted a cost of Rs. 3,109.48 Crores for enhancing operational efficiency, and at the same time, ensuring safety of passengers and providing convenient and hygienic facilities. Several Operational Capex projects / works are proposed in the Fourth Control Period, with the overall aim of the following: Consultation Paper No. 08/2024-25 Page 222 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (i) To comply with the directions / circulars of regulatory agencies such as BCAS for improving security of passengers and/or improving the overall security clearance process such as introducing CT Handbag X-Ray Machines, Full Body Scanners, etc. (ii) To ensure operational readiness, such as equipping the airport with suitable Aircraft Rescue and Response operations by replacing old end-of-life Crash Fire Tenders (iii) To ensure passenger hygiene by upgrading washrooms (iv) To enhance airside safety and improve operational efficiency through innovative technology solutions such as “Follow the Greens” (v) To improve existing passenger processing with smart solutions such as Self Bag Drops (vi) To overall upgrade and enhance the airport facilities 6.3.206 The Authority has reviewed the necessity of these projects, the proposed quantities, and has reviewed the associated costs based on quotations / purchase orders / budgetary offers / contracts / cost estimates as submitted by MIAL, and as per competitive market rates, comparative rates in other Airports and past procurements. 6.3.207 The Authority has also reviewed the tentative project completion timelines and independently assessed the current stage of each project to determine whether the timelines are achievable. For certain projects, the Authority has recommended a phased implementation approach. In the case of certain discretionary expenditures, the Authority has deferred a part of the projects, while for projects of non-aeronautical nature, the Authority has excluded them from the Regulatory Asset Base. 6.3.208 For proposals above Rs. 50 Crores, the Authority has conducted a project wise analysis which is given below. 6.3.209 Projects below Rs. 50 Crores have been further categorized based on their nature - such as security, safety, environment, electrical and mechanical, IT, etc., and the Authority has provided an analysis for each such category. Operational Capex proposals above Rs 50 Crores 2A - CT Handbag X-ray (Rs. 320.00 Crores): MIAL’s submission 6.3.210 MIAL has submitted a proposal for the procurement and installation of 40 CT Handbag X-ray Machines at various Pre-embarkation Security Checkpoints (PESC) across the airport. The implementation is expected to span from FY 2024-25 to FY 2026-27, with 38 machines proposed to be installed at T2, and 1 machine each at the CISF Training Centre and the General Aviation Terminal. 6.3.211 MIAL has justified the need for these machines, stating that the current dual-view and single-view X-ray Baggage Inspection Systems (XBIS) in operation at the PESC points generate only 2D images, which necessitates the removal of electronic devices, liquids, and gels from passenger hand baggage. This process slows down the screening procedure, increases the number of trays required for security checks, and decreases passenger throughput. MIAL proposes to replace these systems with CT Handbag X-ray Machines, which utilize rotating gantry technology to generate high-quality 3D images, thereby eliminating the need for passengers to remove electronic devices and liquids from their hand baggage, and Consultation Paper No. 08/2024-25 Page 223 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD help streamline the screening process, enhance security, improve operational efficiency, and provide a better customer experience. 6.3.212 MIAL further submits that the installation of CT machines is mandated by the Bureau of Civil Aviation Security (BCAS) for airports handling more than 5 million passengers per annum. Authority’s examination regarding CT Handbag X-ray 6.3.213 The Authority has reviewed MIAL’s submission and notes the necessity of upgrading CT Handbag X-ray Machines to comply with BCAS directives and improve security standards. The Authority notes that this technology will streamline the screening process, enhance operational efficiency, and increase passenger throughput by reducing the time spent at security checkpoints. 6.3.214 However, with regard to the proposed number of machines, the Authority considers MIAL's plan to install 40 machines and notes that a phased implementation would be more appropriate, particularly given the traffic forecasts for the Fourth Control Period. The Authority proposes to consider the installation of 50% of the machines, i.e., 20 machines, for the purpose of tariff determination, with the remaining machines to be considered on an incurrence basis. Additionally, the Authority notes that the machine proposed for the GA Terminal is to be considered non-aeronautical as per OMDA, and the cost of this 1 machine is proposed to be excluded from the RAB. 6.3.215 MIAL has proposed a cost of Rs. 8 crores per machine, including installation and civil works. After examining the quotations provided, the Authority, through its Independent Consultant, finds the cost proposed by MIAL is not fully substantiated. Based on market rates and further analysis, the Authority proposes to consider a cost of Rs. 6 Crores per machine, inclusive of installation costs and inclusive of 10% for enabling works such as cabling and realignment of the Automated Tray Retrieval System. 6.3.216 The Authority, through its independent consultant and based on similar procurement cost at other airports in and around India, proposes to consider a cost of Rs. 6 Crores per machine for 20 machines at Rs.120 Crores. The cost for the balance 19 machines, if put to use in the Fourth Control Period, will be considered based on incurrence at the time of true up, subject to evaluation of efficiency and reasonableness. 2B - Full Body Scanner (Rs. 69 Crores) MIAL’s submission 6.3.217 MIAL has proposed the installation of 23 Full Body Scanners (FBS) across various PESC, with the project expected to be undertaken between FY 2024-25 and FY 2027-28. The is proposed on account of the current challenges in detecting non-metallic weapons and explosives by Walk-Through Metal Detectors (WTMD) and Hand-Held Metal Detectors (HHMD). MIAL submits that when a person carrying metallic objects passes through a WTMD, an audio alarm is triggered, but CISF personnel are unable to ascertain the exact location of the metal, requiring further manual frisking with HHMDs. 6.3.218 MIAL submits that FBS, by contrast, can detect both metallic and non-metallic objects, including weapons, explosives, and other prohibited items concealed under clothing or over the skin, thus significantly reducing frisking time. Further, BCAS has directed hypersensitive airports handling over 10 MPPA to install Full Body Scanners. MIAL proposes replacing all existing WTMDs with 23 FBS, 1 of which is designated for the General Aviation Terminal. Consultation Paper No. 08/2024-25 Page 224 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding Full Body Scanners 6.3.219 The Authority has reviewed MIAL’s proposal and notes the need for Full Body Scanners in line with BCAS directives and for operational and security needs. 6.3.220 The Authority notes that 1 of the 23 proposed FBS machines is designated for the GA Terminal, which is non-aeronautical as per the provisions of OMDA. Therefore, the cost associated with this 1 machine is proposed to be excluded from RAB. 6.3.221 Further, the Authority proposes a phased implementation, with 50% of the Full Body Scanners, i.e., 11 units, to be installed during the Fourth Control Period, allowing for further assessment of operational requirements. 6.3.222 On the cost, MIAL has proposed Rs. 3 Crores per FBS unit, including Annual Maintenance Contracts (AMC) and Comprehensive Maintenance Contracts (CMC). After reviewing market rates and supplier quotations, the Authority, through its independent consultant and based on market survey, proposes to consider Rs 1.85 Crores per FBS unit along with 10% for enabling works such as installation and realignment, bringing the cost to Rs 2 Crores per FBS unit. 6.3.223 Accordingly, the Authority proposes a revised total cost of Rs. 2 Crores per FBS unit, resulting in a total cost of Rs. 22 Crores for the 11 FBS units to be installed in the Fourth Control Period. The cost for the balance 11 machines, if put to use in the Fourth Control Period, will be considered based on incurrence at the time of true up, subject to evaluation of efficiency and reasonableness. The maintenance cost of Rs. 0.51 crores per unit proposed by MIAL is to be considered as part of operating and maintenance expenditure. 2C - Crash Fire Tender (Rs. 50 Crores) MIAL’s submission 6.3.224 MIAL has proposed the procurement of four new Crash Fire Tenders (CFTs) to replace the aging fleet currently in operation. Of the seven CFTs available at the CSMIA, four are due for replacement. MIAL has already placed a purchase order for two conventional CFTs and proposes to procure the remaining two as electric vehicle (EV) models, aligning with its goal of achieving net zero emissions. Authority’s examination regarding Crash Fire Tender 6.3.225 The Authority has reviewed MIAL’s proposal and notes the importance of replacing aging Crash Fire Tenders for effective Aircraft Rescue and Fire Fighting (ARFF) services and for responding to emergency situations, such as aircraft accidents or fire incidents, and ensuring airport safety. 6.3.226 While the Authority concurs with the need to replace the four CFTs, it has reservations regarding MIAL’s proposal to procure two of them as EV models. The Authority’s analysis indicates that while EV CFTs align with environmental goals, they carry higher initial costs and, given their low frequency of use, offer limited benefits in terms of emission reductions. Further, the technology for EV CFTs is relatively untested for heavy-duty, safety-critical operations like emergency response at airports. Concerns also arise regarding the limited range, charging requirements, and potential performance issues, such as reduced agility and power due to the additional weight of the batteries. In emergency situations, the proven reliability of conventional fuel-based CFTs makes them a safer and more dependable option. 6.3.227 The Authority, through its independent consultant and based on the above analysis, proposes the procurement of four conventional CFTs rather than adopting EV models at this stage. Consultation Paper No. 08/2024-25 Page 225 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.228 The Authority finds the estimated cost of Rs 8.55 Crores per conventional CFT reasonable, based on the PO already placed for two CFTs. Therefore, the Authority proposes to consider a cost of Rs 34.20 Crores at Rs 8.55 Crores per CFT for four conventional CFTs during the Fourth Control Period. 2D – Refurbishment of Washrooms at Terminal 2 (Rs. 189 Crores): MIAL’s submission 6.3.229 MIAL has proposed the refurbishment of staff, passenger and public washrooms at T2, citing the need for extensive renovation due to heavy usage and aging of facilities. MIAL highlights that the washrooms have been in use for over a decade, serving approximately 1.5 lakh passengers daily. The refurbishment aims to demolish and redevelop the washrooms with upgraded fittings and fixtures to enhance hygiene, create a touchless experience, and improve resource efficiency in terms of water and power consumption. Authority’s examination regarding Refurbishment of Washrooms at Terminal 2 6.3.230 The Authority has reviewed MIAL’s proposal and agrees that there is heavy passenger traffic in certain zones of T2 and notes that the proposed refurbishment aligns with the airport’s broader objective of maintaining hygiene and improving resource efficiency. 6.3.231 During site visits conducted by the consultants appointed by the Authority, it was observed that public washrooms, particularly the ones near the forecourt, require full-scale renovation due to broken fixtures and water-seepage issues. While the condition of staff washrooms generally appeared better, the Authority identified areas where soft refurbishment may be required, such as the replacement of urinals and WC units. The Authority also notes that most passenger washrooms appear to be in good condition and may only require regular repair and maintenance. 6.3.232 In terms of cost, MIAL’s proposal is based on market rates for estimated quantities, including contingency provision of 10% on overall cost. 6.3.233 The Authority’s analysis is given for category-wise as detailed below: Public Washrooms 6.3.234 MIAL proposes a refurbishment cost of Rs. 0.89 Crores per set for 14 sets of public washrooms, amounting to a total of Rs 12.46 Crores. The Authority recommends a cost per set to Rs. 0.81 crores after excluding contingency, resulting in a revised cost of Rs 11.37 Crores for 14 sets. Staff Washrooms 6.3.235 MIAL proposes a refurbishment cost of Rs. 1.81 Crores per set for 36 sets of staff washrooms, totaling Rs. 65.16 Crores. The Authority notes that while staff washrooms require refurbishment, the level of wear and tear observed was not as severe as that seen in public washrooms. Hence, the Authority recommends refurbishment at 50% of the proposed cost after excluding contingency, at Rs. 0.82 Crores per set, resulting in a total cost of Rs. 29.69 crores for 36 sets of staff washrooms. Passenger Washrooms 6.3.236 MIAL proposes a refurbishment of all passenger washrooms at a cost of Rs. 2.54 Crores per set for 41 sets, totaling Rs. 104.14 Crores. Based on the site visit, the Authority recommends a phased approach, focusing initially on high-priority areas such as arrival zones where passenger footfall is the highest, while deferring other zones to later phases. Accordingly, the Authority recommends a soft refurbishment of 14 sets in the Consultation Paper No. 08/2024-25 Page 226 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD arrival zone at 50% of the proposed cost after excluding contingency, resulting in a revised cost of Rs. 1.15 Crores per set for 14 sets at a total cost of Rs 16.17 Crores. BBA/BMA Washrooms 6.3.237 For BBA/BMA washrooms, MIAL proposes a cost of Rs. 0.45 crores per set for 18 sets, totaling Rs. 7.31 Crores. The Authority, through its Independent Consultant / Aviation Expert, finds the cost reasonable based on similar works / market rates, and proposes allowing the cost after excluding contingency, resulting in a revised cost of Rs. 0.41 Crores per set for 18 sets at a total cost of Rs 7.31 Crores. The table below summarizes the Authority’s recommended costs for the refurbishment of various categories of washrooms at T2: Table 188: Cost proposed by the Authority for Refurbishment of Washrooms at Terminal 2 (Rs. in crores) Category Cost / Unit Number Base Cost Proposed by the Authority Public Washroom 0.81 14 11.37 Staff Washroom 0.83 36 29.69 Passenger Washroom 1.15 14 16.17 BBA/BMA Washroom 0.41 18 7.31 Cost recommended 64.54 2E - Transfer Hub Initiatives at Baggage Handling System at T2 (Rs. 190 Crores) MIAL’s submission 6.3.238 As part of its effort to enhance its operations as an international hub, MIAL has proposed several initiatives aimed at improving the Baggage Handling System (BHS) at T2 aimed at streamlining the handling of passenger baggage and minimizing operational bottlenecks. These initiatives include the Auto Sortation of Inbound Bags for International-to-Domestic (I-D) Transfers and the Enhancement of Early Bag Store (EBS) Capacity and Process. 6.3.239 MIAL’s proposal for Auto Sortation of Inbound Bags is to address a key operational challenge. Currently, I-D transfer passengers are required to manually collect their baggage, clear customs, and re-drop the bags for onward domestic connections. This results in delays and increases Minimum Connect Time (MCT) for passengers. MIAL proposes the installation of an Auto Sortation System at a total cost of Rs. 100 Crores, which will automatically sort bags for I-D passengers and transfer them directly to the departure system after customs clearance. The system is expected to reduce MCT, enhance passenger convenience, and mitigate baggage mishandling risks, thereby improving the overall transfer experience. 6.3.240 MIAL has also proposed the enhancement of EBS capacity, which involves expanding the storage capacity at T2 from 715 bags to 2,500 bags. The current semi-automated process is unable to handle peak loads efficiently, especially during high traffic periods, where an average of 800-900 bags per hour are processed, and the maximum baggage load was recorded at 2,940 bags per day. The new fully automated EBS will facilitate the seamless storage, retrieval, and dispatch of bags, eliminating human errors and allowing for smoother operations, particularly for transfer passengers. The total cost for the EBS enhancement is estimated at Rs. 90 Crores. Authority’s examination regarding transfer hub initiatives at baggage handling system at T2 6.3.241 The Authority, through its Independent Consultant / Aviation Expert notes the need to improve the baggage handling process at T2. The Auto Sortation system will benefit passengers by eliminating the manual Consultation Paper No. 08/2024-25 Page 227 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD intervention required at multiple stages. The direct transfer of cleared baggage to the departure system enhances passenger experience and reduces potential baggage handling errors. The Authority notes that the project involves the installation of 18 conveyor belts, and after reviewing market quotations, notes that the cost per belt is approximately Rs. 5.6 Crores based on similar works at other airports, which brings the total project cost to Rs. 100 Crores. 6.3.242 Similarly, the EBS Enhancement project is expected to significantly improve operational efficiency by increasing capacity to handle up to 2,500 bags. MIAL has submitted that the current load on the semi- automated system often exceeds capacity, and the highest ever load was noted in July 2023 with 2,940 bags. The proposed automation will allow smoother handling of early bags and will support transfer operations at T2. On reviewing the cost, which includes civil works, conveyor systems, and integration with the BHS, the Authority finds the proposed cost of Rs. 90 Crores reasonable and justified based on market rates / quotations obtained. 6.3.243 Accordingly, the Authority proposes to consider the entire cost of Rs. 190 Crores for Transfer Hub Initiatives as discussed above. 2F - Follow the Green (Rs. 200 Crores) MIAL’s submission 6.3.244 MIAL has proposed the “Follow the Greens” initiative, an advanced AI-based platform aimed at enhancing airside operational efficiency and safety by guiding aircraft along the taxiway using green lights on the centerline. This system is designed to provide real-time, intelligent guidance to pilots and Air Traffic Controllers, identifying the most optimal and conflict-free route for aircraft to take between the runway and the terminal. 6.3.245 MIAL has highlighted that this system, already in use at major international airports, will reduce human errors, enhance airside safety—particularly during adverse weather conditions like monsoons—and optimize runway and taxiway utilization. By minimizing potential conflicts and hazards, the system aims to significantly increase Aircraft Movement efficiency, targeting over 50+ ATMs during peak hours. Additionally, the system is expected to reduce the workload on ATC personnel by automating multiple processes. Authority’s examination regarding Follow The Green 6.3.246 While the Authority supports new technology initiatives aimed at improving airside safety and efficiency, the Authority notes that this system is the first of its kind in India. The Follow the Greens system requires extensive integration with the existing infrastructure controlled by ATC, and MIAL has only held preliminary discussions with the AAI regarding the project. Given the complexity of the project, the need for regulatory approvals from the DGCA and concurrence from AAI, the Authority proposes not to consider the capitalization at this stage, as part of additions to RAB for the Fourth Control Period. If the project is commissioned and put to use in the Fourth Control Period, the same will be considered based on incurrence, at the time of true up, subject to evaluation of efficiency and reasonableness. 2G Self-Bag Drop (Rs. 222 Crores): MIAL’s submission 6.3.247 MIAL has proposed the installation of Self-Bag Drop (SBD) counters at T2 with conversion of all 201 conventional check-in counters into hybrid SBDs. This is to address challenges with conventional check- Consultation Paper No. 08/2024-25 Page 228 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD in counters, such as dependency on airline staff, inefficiencies, and congestion during peak hours. MIAL states that SBD counters will enhance flexibility and improve overall check-in efficiency by reducing manual interventions and errors, particularly during periods of high passenger load. 6.3.248 MIAL submits that SBD implementation is expected to improve passenger throughput, reduce congestion, and upgrade the related baggage handling and IT infrastructure for seamless operations. However, MIAL has not provided a detailed cost-benefit analysis to substantiate its proposal. Authority’s examination regarding self-bag drops 6.3.249 The Authority has reviewed MIAL's submission and recognizes that the implementation of SBD counters aligns with the goal of improving passenger experience and efficiency at T2. However, during a site inspection and based on review of usage logs, it was observed that the current usage of the SBDs is relatively low, with passengers continuing to use traditional bag-drop counters. 6.3.250 The Authority also reviewed the cost estimation for the project. MIAL has obtained a quotation in the Third Control Period (in October 2023) for the supply of 25 SBDs at a cost of Rs. 0.84 Crores per unit. Based on review of the Fixed Asset Register as of 31st March 2024, the Authority notes that these SBDs were capitalized at a cost of Rs. 1 Crores per unit in FY 2023-24. In the Fourth Control Period, MIAL proposed a cost of Rs. 0.90 Crores per SBD for 201 machines, totaling Rs. 180 Crores, with an additional Rs. 21 Crores proposed for the modification of the existing baggage handling system and Rs. 20 Crores for IT network upgrades. The blended rate proposed in the Fourth Control Period comes to Rs 1.1 Crores. 6.3.251 Based on market assessments and recent installations, the Authority finds the quoted cost for SBD units to be reasonable. However, the Authority recommends a phased implementation approach, starting with 50 SBDs in this control period. This initial implementation will allow for testing and assessment of performance before scaling the deployment. Further deployment will be considered after reviewing the detailed usage logs and operational efficiency. 6.3.252 The Authority proposes the initial phase at a cost of Rs. 55 Crores for the installation of 50 SBD units, subject to further review upon completion of the initial phase. 2H - CT EDS (Rs.78 Crores) MIAL’s submission 6.3.253 MIAL proposes the replacement of existing EDT system to CT EDS to comply with the directives of BCAS vide Circular 11/2017. 6.3.254 MIAL has stated that the new system will be capable of generating 3D and sliced image of each bag scanned, threat alarms can be resolved one by one, image clearance will be issued only after all threats are cleared, automatic detection of explosives of all types by category such as Military, Commercial, Sheet & Density alert would be ensured and these CT-EDS machines will have TSA/ ECAC Standard-3 certified algorithm. 6.3.255 MIAL further stated that PO has already been placed for these items. Authority’s examination regarding CT-EDS 6.3.256 This Authority notes that this project was approved in the Third Control Period for an amount of Rs.153.04 Crores and MIAL has spent Rs.63.56 Crores and installed 6 machines against total requirement of 12 Consultation Paper No. 08/2024-25 Page 229 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD machines. MIAL has carried forward this project to the Fourth Control Period and proposed a cost of Rs.78 Crores for balance 6 machines. 6.3.257 The Authority noted the need for this period and observes that MIAL has capitalized certain CT-EDS Machines in FY 2023-24 at a cost of Rs 10.53 / machine. Accordingly, the Authority proposes to consider a cost of Rs 10.53 / machine for 6 machines, resulting in a total cost of Rs. 64 crores for 6 CT EDS machines in this control period. 2I - OPERATIONAL CAPEX PROPOSALS - PROJECTS LESS THAN RS. 50 CR (Rs 1,791.48 Crores) 6.3.258 MIAL has submitted various operational capex items below Rs. 50 Crores as per Table 189, aimed at improving the overall functionality and efficiency of the airport. These items have been categorized into Airside Operations, Baggage Handling Systems (BHS), Electrical & Mechanical (E&M), Environment, Facilities, Horticulture, Information Technology (IT), Joint Control Centre (JCC), Landside operations, Safety, Security and Terminal Operations. Table 189: Category wise operational capex proposed by MIAL for the Fourth Control Period for projects costing less than Rs. 50 Crores (Rs. in crores) S. Category Cost Proposed by MIAL Number of Projects No. 1 Safety 183.10 22 2 IT 422.56 39 3 E & M 565.35 75 4 BHS 137.64 12 5 Airside operations 124.60 20 6 Environment 48.70 12 7 Facilities 58.30 4 8 Security 112.45 20 9 Terminal operations 108.87 21 Others – JCC, Horticulture and 10 29.90 17 Landside Operations Total 1,791.48 242 Table 190: Operational Capex proposed by MIAL for the Fourth Control Period (for projects costing less than Rs. 50 crores) (Rs in Crores) Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL SITC of Windshear Detection & Warning 1 2I-7 - 30.00 10.00 - - 40.00 Safety System for RWY 09-27 & RWY 14-32 Installation of Autonomous Runway 2 2I-17 Incursion Warning 5.00 5.00 5.00 5.00 5.00 25.00 Safety System for RWY 09-27 & RWY 14-32 Consultation Paper No. 08/2024-25 Page 230 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Installation of 3 2I-18 configuration - B RWY 3.00 3.00 3.00 3.00 3.00 15.00 Safety Guard Lights Development of ERP & Primary Aerodrome 4 2I-54 - 15.00 - - - 15.00 Safety Emergency Control Center Construction of alternate 5 2I-45 Aerodrome Emergency - 10.00 - - - 10.00 Safety Control Center Development of Miscellaneous Software 6 2I-47 2.00 2.00 2.00 2.00 2.00 10.00 Safety for Digital Transformation Installation of Digital Bollards at Airside & 7 2I-50 - 2.00 5.00 3.00 - 10.00 Safety Landside for enhancement of Safety Establishment of Safety 8 2I-63 3.00 1.00 1.00 1.00 1.00 7.00 Safety Library & Safety Park SITC of Runway Condition Reporting 9 2I-65 Tool for (Software & 3.00 1.00 1.00 1.00 1.00 7.00 Safety Hardware) for RWY 14- 32 GPS & IoT Based Vehicle and Equipment 10 2I-67 - 3.60 3.00 - - 6.60 Safety Tracking System at Airside Development of Safety 11 2I-87 Videos and Safety 1.00 1.00 1.00 1.00 1.00 5.00 Safety Training Modules Development of VR (Virtual Reality) / AR (Augmented Reality) 12 2I-88 - 3.00 2.00 - - 5.00 Safety Training Center for Runway Incursion Awareness & Prevention. SITC of LIDAR based Vehicle Speed Tracking & Warning System with 13 2I-94 2.00 3.00 - - - 5.00 Safety Cameras & Display Screen in Airside and Landside Development of 2I- Emergency Management 14 3.00 1.50 - - - 4.50 Safety 101 Solution (Software & Hardware) Installation of Runway 2I- 15 Threshold Identification 1.00 1.00 1.00 1.00 - 4.00 Safety 110 Lights Consultation Paper No. 08/2024-25 Page 231 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Procurement of Go-Kits 2I- 16 for Emergency Response 1.00 1.00 1.00 1.00 - 4.00 Safety 112 Team 2I- Software for Safety 17 3.00 - - - - 3.00 Safety 130 Management System Development of 2I- Software for BA Test 18 2.50 - - - - 2.50 Safety 141 Scheduling Monitoring and Reporting Procurement of Safety 2I- and Miscellaneous 19 0.50 0.50 0.50 0.50 0.50 2.50 Safety 146 Equipment for Safety Department SITC of Lightning 2I- 20 Warning System at 1.00 - - - - 1.00 Safety 211 CSMIA SITC of Automatic 2I- Weather Monitoring 21 0.50 - - - - 0.50 Safety 225 Stations for RWY 09 & RWY 32 SITC of Vehicle 2I- mounted mobile RWY 22 0.50 - - - - 0.50 Safety 226 Water Depth Measuring Tool Safety 183.10 23 2I-2 5G Implementation 49.80 - - - - 49.80 IT Tech Refresh and new - 24 2I-3 35.00 14.00 - - - 49.00 IT Access Layer Switches 25 2I-4 Digi Yatra 40.00 1.00 1.00 1.00 1.00 44.00 IT Video Walls and Tensa 2I- Top Displays for JCC, 26 40.00 - - - - 40.00 IT 232 arrivals area and security check 27 2I-10 Laptop/Desktops 9.40 7.00 6.90 7.00 6.00 36.30 IT 2 new Networking zones 28 2I-15 - Core & Distribution 24.00 3.00 - - - 27.00 IT Layer switches Situational awareness for 29 2I-22 Airside & Terminal- 20.00 - - - - 20.00 IT APOC Contribution to Digi 30 2I-28 3.15 3.15 3.15 3.15 3.15 15.75 IT Yatra Foundation 31 2I-42 Smart Airport Platform 10.50 1.50 - - - 12.00 IT Airside Duct bank strengthening and 32 2I-38 6.00 2.00 2.00 1.20 - 11.20 IT secondary route for ATC. 33 2I-30 Video Analytics 2.10 2.10 2.10 2.10 2.10 10.50 IT 34 2I-43 Digital Twin 2.00 4.00 4.00 - - 10.00 IT Data center facility for 35 2I-46 8.00 2.00 - - - 10.00 IT hosting 5G backend Consultation Paper No. 08/2024-25 Page 232 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL equipment including 2G,3G & 4G Passenger Flow 36 2I-51 6.00 4.00 - - - 10.00 IT Management system Tech Refresh- New 37 2I-57 - 4.00 4.00 - - 8.00 IT Optical Fibre network Data Center for hosting 38 2I-62 5.00 2.00 - - - 7.00 IT Edge platforms Tech Refresh - Firewalls 39 2I-73 6.00 - - - - 6.00 IT and router Web app frameworks 40 2I-78 3.30 2.20 - - - 5.50 IT with basic capabilities 41 2I-95 Software License 1.00 1.00 1.00 1.00 1.00 5.00 IT Tech Refresh LED 42 2I-96 2.00 2.00 1.00 - - 5.00 IT screen Telecom Hub room 43 2I-97 1.00 4.00 - - - 5.00 IT revamp 2I- 44 IB Upgrade 4.00 - - - - 4.00 IT 108 2I- IIOT+ Platform with Self 45 3.00 1.00 - - - 4.00 IT 109 service capability 2I- 46 Unified Communication 3.70 - - - - 3.70 IT 117 2I- Existing Data Centre 47 1.00 1.00 1.00 - - 3.00 IT 126 Hardware Upgrade 48 2I-12 e-Passport Integration 0.50 0.50 0.50 0.50 0.50 2.50 IT 2I- 49 Data Analytics 2.50 - - - - 2.50 IT 140 2I- Tech Refresh of 50 2.50 - - - - 2.50 IT 143 Ceremonial Lounge 2I- Additional FIDS in 51 0.40 0.40 0.40 0.40 0.40 2.00 IT 158 Passenger Areas 2I- Additional Phones-AED, 52 2.00 - - - - 2.00 IT 159 Emergency and Help Digital Transformation using IoT/AI enabled 2I- 53 devices-SW/HW 0.50 0.50 0.50 0.50 - 2.00 IT 162 Licenses, Cloud, networking. 2I- Mobility solution for 54 2.00 - - - - 2.00 IT 231 staff 2I- 55 Data Storage 1.20 - - - - 1.20 IT 192 2I- ASMGCS Interface 56 1.20 - - - - 1.20 IT 193 development 2I- Additional VoIP phones 57 0.50 0.50 - - - 1.00 IT 197 for Airlines and staff 2I- Outdoor Wi-Fi Tech 58 0.50 0.50 - - - 1.00 IT 204 Extension for Passengers 2I- Tech Refresh - Fiber 59 0.44 - - - - 0.44 IT 228 backbone and passive Consultation Paper No. 08/2024-25 Page 233 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Infrastructure for Network Tech Refresh - Video 2I- 60 wall screens in SOCC, 0.30 - - - - 0.30 IT 229 BHS PM Wani (Prime 2I- 61 Minister's Wireless 0.18 - - - - 0.18 IT 242 Access Network) IT 422.56 Miscellaneous works - 62 2I-1 18.00 18.00 18.00 18.00 18.00 90.00 E&M E&M E&M-4_Replacement of 63 2I-8 40.00 - - - - 40.00 E&M 129 AVDGS Replacement of chillers 64 2I-9 2.75 - 5.68 30.00 - 38.43 E&M and cooling towers Rubber & Paint removal 65 2I-13 15.00 15.00 - - - 30.00 E&M machine SITC of CCTV's for PBB safety and smooth 66 2I-14 29.00 - - - - 29.00 E&M operations control at CSMIA Conversion of conventional fuel 67 2I-16 - - 5.00 10.00 10.00 25.00 E&M vehicles/equipment into EVs Refurbishment of sliding 68 2I-21 4.00 4.00 4.00 4.00 4.00 20.00 E&M doors 2I- ACDM [Training & 69 10.00 10.00 - - - 20.00 E&M 233 Purchase of Software] Project Olakh 2I- 70 Implementation at T2 20.00 - - - - 20.00 E&M 234 PESC- Phase I Out of life replacement of HT/LT panels, UPS 71 2I-29 batteries, ATS, circuit 3.00 3.00 3.00 3.00 3.00 15.00 E&M breakers and other accessories Digitalization and 72 2I-48 provision of asset 3.00 3.00 2.00 5.00 2.00 15.00 E&M management system Out of life replacement and installation of 73 2I-35 2.40 2.40 2.40 2.40 2.40 12.00 E&M additional lights & fixtures at CSMIA SITC of AHU for FLB at 74 2I-36 2.40 2.40 2.40 2.40 2.40 12.00 E&M T2, CSMIA. Modification and building of new office 75 2I-55 1.80 1.80 1.80 1.80 1.80 9.00 E&M spaces along with ancillary works Airside Pavement 76 2I-56 - 2.00 2.00 2.00 2.00 8.00 E&M Analysis Consultation Paper No. 08/2024-25 Page 234 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL 77 2I-58 Casualty Center 8.00 - - - - 8.00 E&M PBB (TKS make) canopy 78 2I-59 replacement-32 no's to 1.50 1.60 1.71 1.83 1.12 7.76 E&M enhance life Retrofit of Cooling Tower fan & gearbox 79 2I-60 with direct driven EC fan - 5.50 2.00 - - 7.50 E&M in chiller plant, Utility complex, CSMIA. Upgrade and Retrofit of primary, secondary and 80 2I-66 condenser pumps in 3.00 - 4.00 - - 7.00 E&M chiller plant, Utility complex, T2, CSMIA. Retrofit of EC fan phase- 81 2I-68 IV for AHU at Terminal- 6.50 - - - - 6.50 E&M 2, CSMIA. Installation of Prepaid 82 2I-70 0.30 1.50 1.50 1.50 1.50 6.30 E&M energy meter Refurbishment of roof at 83 2I-72 1.20 1.20 1.20 1.20 1.20 6.00 E&M CSMIA PBB (Shinmaywa make) 84 2I-76 canopy replacement-25 0.97 1.05 1.12 1.20 1.28 5.62 E&M no’s to enhance life SITC of UF & RO 85 2I-82 1.24 - - - 3.92 5.16 E&M membrane Construction of PSS at 86 2I-86 5.00 - - - - 5.00 E&M airside Energy Saving and ESG 87 2I-89 1.00 1.00 1.00 1.00 1.00 5.00 E&M projects Upgradation of flooring 88 2I-98 1.00 1.00 1.00 1.00 1.00 5.00 E&M within terminal 2I- T2 Ground level landside 89 5.00 - - - - 5.00 E&M 236 works Out of life replacement 2I- 90 of all pumps at STP & 1.50 1.00 1.00 1.00 - 4.50 E&M 102 T2 pumping system. 2I- Replacement of airside 91 - 2.00 2.00 - - 4.00 E&M 113 LT cables Upgradation of water 2I- 92 feature and submersible - - 2.00 1.00 1.00 4.00 E&M 114 pumps and motors Replacement of VESDA 2I- 93 Controller 0.80 0.53 1.07 1.43 - 3.83 E&M 116 (ELEX/FAS/02) Installation of additional 2I- 94 UF plant in STP - - - 3.50 - 3.50 E&M 119 (For ZLD purposed) 2I- Replacement of DG sets 95 - - 1.60 1.60 - 3.20 E&M 121 at airside Consultation Paper No. 08/2024-25 Page 235 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Out of life replacement - 2I- 96 Automatic Rescue 1.40 1.61 - - - 3.01 E&M 123 Device 2I- Civil Strengthening 97 1.50 1.50 - - - 3.00 E&M 124 works of T1A 2I- Civil Strengthening 98 1.50 1.50 - - - 3.00 E&M 125 works of T1B Upgradation of 2I- 99 Automatic Rescue 1.00 1.00 1.00 - - 3.00 E&M 132 Device 2I- Waterproofing works at 100 3.00 - - - - 3.00 E&M 237 T2 2I- Purchase of new AWP 101 - 1.25 1.60 - - 2.85 E&M 133 machine Installation of 2I- 102 Regenerative based 0.65 1.30 0.84 - - 2.79 E&M 135 drives in place of VFDs Out of life replacement 2I- 103 of streetlight poles, 0.45 0.45 0.56 0.56 0.63 2.65 E&M 137 fittings and feeder pillars Implementation of Cyber 2I- Security Compliance for 104 1.00 1.50 - - - 2.50 E&M 142 SCADA/BMS/Chiller System New Transformer Pits, 2I- replacing old 105 - 1.00 1.50 - - 2.50 E&M 145 Transformer Pit covers, Cable trays. 2I- Replacement of 106 - - - 1.00 1.50 2.50 E&M 147 transformers Structural repairs of 2I- 107 Buildings in utility 1.00 1.50 - - - 2.50 E&M 148 complex Supply and installation of F 900 grade FRP 2I- 108 covers in place of old 2.50 - - - - 2.50 E&M 149 Gatic covers- 90 Nos in the Phase II DFMD Replacement 2I- 109 with Networking OEM 2.50 - - - - 2.50 E&M 238 [NS 13-Sep] Provision of Additional VHF and Airband Base 2I- 110 station, Handheld R/T as 0.80 0.50 0.50 0.50 - 2.30 E&M 153 per operational requirement Provision of Public 2I- Health Engineering 111 0.45 0.45 0.45 0.45 0.45 2.25 E&M 154 (PHE) and drainage modification works 2I- IOT based lighting 112 - - - 0.60 1.50 2.10 E&M 155 system Consultation Paper No. 08/2024-25 Page 236 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Implementation of IOT 2I- at Airside (AAMS) 113 2.00 - - - - 2.00 E&M 164 including geo tagging of assets 2I- Refurbishment of 114 2.00 - - - - 2.00 E&M 166 flexible pavement Replacement of 1000 2I- KVA DG set with 1500 115 2.00 - - - - 2.00 E&M 167 KVA DG set & AMF panel at T1Cpower house 2I- Replacement of Coarse 116 1.00 1.00 - - - 2.00 E&M 168 & Fine Screen Retrofitting of Emission Control Device (RECD) 2I- 117 in DG sets at Airside as 1.00 1.00 - - - 2.00 E&M 169 per MPCB compliance at Airside. Upgradation of 2I- 118 photometric equipment - 1.00 - - 1.00 2.00 E&M 171 and workshop at CCR Replacement of 1010 2I- KVA DG set with 1500 119 1.75 - - - - 1.75 E&M 176 KVA DG set & AMF panel at T1Cpower house Replacement of 625 2I- KVA DG set with 1500 120 1.75 - - - - 1.75 E&M 177 KVA DG set & AMF panel at T1Cpower house Out of life replacement 2I- 121 of high mast lights and - 0.40 0.40 0.40 0.40 1.60 E&M 179 other light fixtures Civil Strengthening 2I- 122 works near bus boarding 1.50 - - - - 1.50 E&M 184 gate T1 Replacement of Air 2I- 123 compressors of STP 1.40 - - - - 1.40 E&M 186 plant Replacement of Door 2I- 124 Panels in passenger & 1.00 0.10 0.10 0.10 - 1.30 E&M 187 trolley elevators Provision of 2I- 125 polycarbonate sheet at 1.30 - - - - 1.30 E&M 188 various locations at T2 Provision of Sequential 2I- 126 Flashing Light on RWY 1.30 - - - - 1.30 E&M 189 09 2I- PLC system upgradation 127 0.30 0.90 - - - 1.20 E&M 194 of STP plant 2I- Augmentation of the 128 1.00 - - - - 1.00 E&M 198 Essential panel at T1C CCR Workshop 2I- 129 upgradation with all 1.00 - - - - 1.00 E&M 199 equipment Consultation Paper No. 08/2024-25 Page 237 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL 2I- Install IOT base LCMS 130 0.50 0.50 - - - 1.00 E&M 200 system Reconstruction of critical 2I- 131 junction from flexible to 1.00 - - - - 1.00 E&M 207 rigid pavement 2I- Replacement of AC units 132 0.20 0.20 0.20 0.20 0.20 1.00 E&M 208 at CSMIA Replacement of old 2I- 133 panels, circuit breakers - - - 0.50 0.50 1.00 E&M 209 and other accessories 2I- Replacement of UPS 134 - - 0.50 0.50 - 1.00 E&M 210 batteries Upgradation of CCR 2I- 135 software’s - ILCMS, - 0.50 - - 0.50 1.00 E&M 213 ALCMS etc. 2I- Upgradation of MT 136 0.25 - 0.25 0.25 0.25 1.00 E&M 214 workshop equipment E&M 565.35 Refurbishment of BHS mechanical, Electrical, 137 2I-6 5.00 5.00 10.00 10.00 10.00 40.00 BHS Controls - EOL, wear & tear Energy management and predictive maintenance 138 2I-20 4.50 4.50 4.50 4.50 4.50 22.50 BHS initiatives & redundancy building System/ Process 139 2I-24 5.00 5.00 5.00 2.00 2.00 19.00 BHS improvements of BHS BHS-6_Creation of additional build up belts 140 2I-26 to enhance the make-up 17.99 - - - - 17.99 BHS capacity to support additional flights BHS- IT: EOL replacements, 141 2I-34 Integrations with third 1.50 - 0.50 10.00 - 12.00 BHS party, Patch updates , Cyber requirements, etc Civil works in Baggage Hall (Concrete Panel 142 2I-44 Replacement, Fabric 2.00 2.00 2.00 2.00 2.00 10.00 BHS canopy , Refurbishment of screener's room) Integration with third 143 2I-90 party systems & 1.00 1.00 1.00 1.00 1.00 5.00 BHS digitization BHS-242-Ventilation in 2I- Baggage Make up hall- 144 3.30 - - - - 3.30 BHS 120 Exhaust and fresh air system 2I- QHSE requirements for 145 2.00 0.50 0.20 0.20 0.20 3.10 BHS 122 BHS T2 Consultation Paper No. 08/2024-25 Page 238 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Baggage Tubs (Baggage 2I- Tubs including 146 0.50 0.50 0.50 0.50 0.50 2.50 BHS 138 modification’s & handling accessories) BHS-32_To modify BHS to integrate the new 2I- 147 CTEDS machines when 1.50 - - - - 1.50 BHS 182 replaced as per BCAS compliance Refurbishment of 2I- 148 centralized screening 0.75 - - - - 0.75 BHS 220 room of Customs BHS 137.64 Airside 149 2I-11 ULD racking system - 33.70 - - - 33.70 Operations Airside 150 2I-23 Flexi barrier for airside 20.00 - - - - 20.00 Operations Bird detection and Airside 151 2I-32 12.75 - - - - 12.75 deterrence system Operations Airside Video Airside 152 2I-39 11.00 - - - - 11.00 Surveillance Operations Airside 153 2I-52 Simulator for ARFF 10.00 - - - - 10.00 Operations Airside 154 2I-79 Canteen facility 5.40 - - - - 5.40 Operations Airside 155 2I-84 ARFF control center - 5.00 - - - 5.00 Operations Airside Operations Airside 156 2I-99 1.00 1.00 1.00 1.00 1.00 5.00 Equipment Operations 2I- Runway painting Airside 157 3.00 - - - - 3.00 128 machine Operations 2I- Runway sweeping Airside 158 3.00 - - - - 3.00 129 machine Operations 2I- Airside 159 Forward command post 2.50 - - - - 2.50 195 Operations 2I- Runway sweeping Airside 160 2.45 - - - - 2.45 151 machine Operations Airport Surface 2I- Airside 161 Movement Application 2.00 - - - - 2.00 160 Operations (ASMA) Phase 3 2I- Runway surface friction Airside 162 - 2.00 - - - 2.00 170 testing machine Operations 2I- Airside 163 Stand cleaning machine 1.50 - - - - 1.50 185 Operations 2I- Airside 164 Runway friction tester 1.25 - - - - 1.25 191 Operations 2I- Procurement of Fire Airside 165 0.35 0.25 0.15 0.15 0.15 1.05 196 Hoses Operations 2I- Procurement of 02 Small Airside 166 - 1.00 - - - 1.00 206 Fire Tenders Operations 2I- Airside Video Airside 167 1.00 - - - - 1.00 215 Surveillance (Phase 2) Operations Consultation Paper No. 08/2024-25 Page 239 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL SITC of Internal 2I- Airside 168 Modification of Follow 1.00 - - - - 1.00 216 Operations Me vehicles Airside Operations 124.60 Zero Liquid Discharge 169 2I-19 25.00 - - - - 25.00 Environment on STP water 170 2I-31 Noise Monitoring Station 5.70 - - - - 5.70 Environment 2I- Roof top Solar on 171 4.20 - - - - 4.20 Environment 103 CSMIA Electric Vehicle 2I- 172 Charging Stations (air - 1.00 1.00 1.00 1.00 4.00 Environment 107 side) Conversion of ACs and Water Coolers (R22 to 2I- R32, R134A and R410 173 1.00 0.25 0.25 0.25 0.25 2.00 Environment 157 A) to lower GWP (Global Warming Potential) version 2I- Bus - BDDS & DOG 174 - 2.00 - - - 2.00 Environment 161 SQUAD Climate Risk Assessment 2I- Adaptation (Adaptation 175 0.10 0.50 0.50 0.50 - 1.60 Environment 178 of Identified risk and opportunity) Biodiversity impact 2I- assessment adaptation 176 0.05 0.50 0.50 0.50 - 1.55 Environment 180 (Adaptation of Identified risk and opportunity) 2I- SUV - QRT/Security 177 - 1.00 - - - 1.00 Environment 212 (Bullet-proof) Water Conservation measures 2I- 178 (Water harvesting, 0.05 0.15 0.35 0.10 0.20 0.85 Environment 217 Optimization of fittings and fixtures etc.) 2I- 179 Truck - Highlift 909 - 0.60 - - - 0.60 Environment 222 Waste management 2I- certification and 180 0.05 0.05 0.05 0.05 - 0.20 Environment 230 initiative (Waste management initiative.) Environment 48.70 Replacement of Carpet 181 2I-5 and Ceiling panels in T 2 14.10 14.10 14.10 - - 42.30 Facilities Arrival corridor. Refurbishment of 182 2I-75 flooring in Departure - 2.00 2.00 2.00 - 6.00 Facilities level High Rise cleaning 183 2I-83 1.00 1.00 1.00 1.00 1.00 5.00 Facilities Machines Cleaning Machines 184 2I-85 1.00 1.00 1.00 1.00 1.00 5.00 Facilities replacement Consultation Paper No. 08/2024-25 Page 240 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Facilities 58.30 QRT Equipments As per AvSec Circular 04/2023 - 18 Nos of special QRT Equipment - Approx 15 Cr.FY25 Bullet proof jacket 362 nos. - 1.41 Cr. FY28 185 2I-25 Bullet proof helmets 362 15.60 0.60 - 1.92 - 18.12 Security nos. - 0.31 Cr. FY28 Bullet proof jacket cover-Additional 362 nos. - 0.20 Cr. FY28 BR shield Morcha - 1.20 Cr. (0.60 Cr. considered in FY25 & FY26) CISF and Operational requirement Mobile phone, Air conditioners, Mess utensils, RO plants, Refrigerator, Television, Chairs / Furniture, Metal Barricades, Metal Sign boards, Chairs/Furniture, Projector with screen & speakers, Waterfilled 186 2I-33 2.50 2.50 2.50 2.50 2.50 12.50 Security Plastic Barricades, Hot & Cold water dispenser, Cement barricades, Furniture & Fixtures, Carpeting of Floor, ATRs Trays, Almirah, Staff Lockers, Fans (ceiling, cabin, pedestrian & exhaust, tubelights), Garden Umbrella, SRI Box, etc. Bollard / Barrier / Tyre killer Tyre killer per unit - 0.40 187 2I-40 3.18 2.12 1.06 3.18 1.06 10.60 Security Cr. Bollard per unit - 0.60 Cr. Barrier per unit -0.03 Cr 188 2I-53 CCTV Cameras 9.34 - - - - 9.34 Security Refurbishment of SOCC 189 2I-64 (Security Operations 2.33 2.33 2.33 - - 7.00 Security Control Centre) Dual View XBIS 190 2I-71 2.00 - 2.00 - 2.00 6.00 Security (4 No of Machines per Consultation Paper No. 08/2024-25 Page 241 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL alternate year-per unit 0.50 Cr. ) PIDS - Razor Mesh for 191 2I-74 6.00 - - - - 6.00 Security Perimeter 192 2I-77 ATRS Trays 5.50 - - - - 5.50 Security 193 2I-80 Relocation of ASTI 2.68 2.68 - - - 5.36 Security 194 2I-81 Miscellaneous 1.25 1.00 1.00 1.00 1.00 5.25 Security Security Equipment's (Explosive Trace Detector, Door Frame 2I- 195 Metal Detector, Hand 1.33 0.45 1.00 0.55 1.43 4.75 Security 100 Held Metal Detector, Combined Test Piece & Operational Test Piece) 2I- 196 Access Control System 4.20 - - - - 4.20 Security 240 2I- Refurbishment & 197 4.01 - - - - 4.01 Security 104 Digitalization of ILBHS Furniture & Fixtures_ 2I- CISF Duty Post, Security 198 0.51 0.51 0.56 0.56 0.62 2.77 Security 136 Hold Area & Secondary Ladder Point Check, etc Security Infrastructure - Single storey duty post (20 Nos - 2.00 Cr), Bunker for storing explosives (0.20 cr) Washroom facility with water pipeline for airside 2I- 199 gates & ghumti (40 Nos - 0.46 0.65 0.53 0.46 0.20 2.31 Security 152 1.00 Cr). Refurbishment of Anti Hijacking Control Room, PortaCabin (40x10) 06 Nos & (10x10) - 02 Nos, Replacement of Morcha - 07 Nos. BDDS Equipment Fiber Optics Surveillance Device (FOSD) - 01 No - 0.08 cr. FY25. Bomb Suit - 01 No. - 0.32 cr (FY26). NLJD - 01 No. - 0.10 cr 2I- 200 (FY27). 1.20 0.32 0.53 - - 2.05 Security 156 RTVS - 01 No.- 0.43 cr. (FY27). GSM & Frequency Jammer - 0.76 Cr (FY25) Recoiless Water Jet Distruptor - 0.36 (FY25) Consultation Paper No. 08/2024-25 Page 242 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL ROIP-Radio over 2I- internet protocol to 201 2.00 - - - - 2.00 Security 241 replace existing TMRS set up Automation - RLCC using AI Module, 2I- 202 Genetec licences,ISMS, 1.90 - - - - 1.90 Security 172 MANTRA (VMS), ACPL 2I- Expansion of T2 AEP 203 - 1.80 - - - 1.80 Security 174 Section 2I- Network installation at 204 1.00 - - - - 1.00 Security 203 CISF offices (Wifi) Security 112.45 Terminal 205 2I-27 Signage Modification 10.00 7.00 - - - 17.00 Operations Customs Requirement- To detect Contraband stuff/Artificial Intelligence: 1) Full Body Scanner (2 Nos) 2) Millimeter Wave Body Sanner (2) Terminal 206 2I-37 3)Narcotics Drugs Trace - 5.00 5.00 1.40 - 11.40 Operations Detector (2) 4)Gold Spactrometer Device (2) 5) Artificial intelligence application/Soft Ware (motion sensor) 6) Artificial narcotics scent kit Terminal 207 2I-41 Replacement of Trolleys 5.25 5.25 - - - 10.50 Operations Furniture and Fixtures, Terminal 208 2I-49 for Customs & 2.00 2.00 2.00 2.00 2.00 10.00 Operations Immigration & Terminal RFID Tag Reader - Terminal 209 2I-61 Trolleys (Trolley - 3.70 3.70 - - 7.40 Operations management system) Boarding Gate passenger Terminal 210 2I-69 6.50 - - - - 6.50 seating Operations Interior works for Terminal 211 2I-91 1.00 1.00 1.00 1.00 1.00 5.00 Reserve Lounges Operations Miscellaneous- Terminal 212 2I-92 1.00 1.00 1.00 1.00 1.00 5.00 Refurbishment Operations 2I- Mesh (Additional Terminal 213 5.00 - - - - 5.00 235 Works) Operations 2I- CT X Ray Machines of Terminal 214 4.00 - - - - 4.00 105 Customs Green Channel Operations Consultation Paper No. 08/2024-25 Page 243 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL Customs Green Channel 2I- Terminal 215 Screening area 4.00 - - - - 4.00 106 Operations (Expansion) Terminal Operations 2I- Terminal 216 (Equipment and 0.80 0.80 0.80 0.80 0.80 4.00 115 Operations Miscellaneous Capex) 2I- New Reserved lounges Terminal 217 3.70 - - - - 3.70 118 for Departing Pax Operations 2I- Terminal 218 Digital Standee 1.50 1.50 - - - 3.00 127 Operations Civil and Electrical work 2I- Terminal 219 in existing spaces and 0.50 0.50 0.50 0.50 0.50 2.50 139 Operations new creation of spaces 2I- Terminal 220 Hand baggage Trolleys 1.00 1.00 - - - 2.00 163 Operations 2I- Goodness Café Terminal 221 1.82 - - - - 1.82 173 2.0/Airline cafeteria Operations 2I- Vestibule Carpet mats Terminal 222 - - - - 1.80 1.80 175 (35 nos) (Replacement) Operations 2I- Terminal 223 Chairs (Slumber) - - 1.50 - - 1.50 183 Operations 2I- Terminal 224 Vestibule carpet 1.50 - - - - 1.50 239 Operations 2I- Terminal 225 Golf Carts - 0.35 - 0.60 0.30 1.25 190 Operations Terminal Operations 108.87 New planters and landscape elements, 2I- horticulture material Others - 226 0.50 0.50 1.00 1.00 1.00 4.00 111 supply & its installations Horticulture for CSMIA at various location. Unique plants/ Accent 2I- plants/ plant supply for Others - 227 0.50 0.50 0.50 0.70 0.80 3.00 131 various locations of Horticulture CSMIA. 2I- Others - 228 Tree plantation drive. 0.50 0.50 0.50 0.50 0.50 2.50 150 Horticulture Irrigation material, 2I- sensors & irrigation Others - 229 0.30 0.30 0.30 0.30 0.80 2.00 165 software & Mobile APP Horticulture etc with installations. Consultancy services & 2I- execution of Road Others - 230 1.00 0.50 - - - 1.50 181 network & infrastructure Horticulture within plant nursery. Portable green walls/ Hanging planters/ 2I- Others - 231 floating planters for - 0.20 0.50 0.30 - 1.00 205 Horticulture commercial activities/ special event. Consultation Paper No. 08/2024-25 Page 244 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Base Cost S. Ref. Project /Item Name FY25 FY26 FY27 FY28 FY29 Proposed Category No. by MIAL New nursery office 2I- Others - 232 container with interior - - 0.75 - - 0.75 219 Horticulture and storage provision. Greenwall structure for 2I- Others - 233 backup at nursery for T2 0.20 0.30 - - - 0.50 223 Horticulture & GA terminal. Hydraulic hand pallet 2I- Others - 234 trolley/rack/ nursery 0.20 0.30 - - - 0.50 224 Horticulture benches. 2I- Solar Unit installations at Others - 235 0.50 - - - - 0.50 227 nursery Horticulture Others - Horticulture 16.25 Replicating JCC for 236 2I-93 - 5.00 - - - 5.00 Others - JCC business continuity Installation of video 2I- 237 phones as Help Phones 1.00 - - - - 1.00 Others - JCC 201 (about 40 help phones) Others - JCC 6.00 Others - 2I- SITC & Upgradation of 238 2.80 - - - - 2.80 Landside 134 UVSS (07 nos) Operations Miscellaneous expenses - Landside (Seater benches, Heavy Duty Garden Umbrella, Others - 2I- 239 Mobile phones for shift 0.50 0.50 0.50 0.50 0.50 2.50 Landside 144 Duty, Replacement of Operations Light Fittings, Refurbishment of Porta Cabin) Major repair of Wall Others - 2I- from Gate no. 9 to 240 1.00 - - - - 1.00 Landside 202 Airport Exit (Rs. Operations 60,000/- for 166 mt) Metal Barricades Others - 2I- 241 (collapsible & fixed - 0.23 - 0.25 0.27 0.75 Landside 218 structure)- 150 nos each Operations Development of new green fence including Others - 2I- 242 irrigation, civil & 0.60 - - - - 0.60 Landside 221 electrical work at T1 & Operations T2 Others - Landside 7.65 Operations 6.3.259 The Authority has reviewed MIAL’s submission on the need and cost for these projects. The Authority notes the importance of these projects, particularly in areas that ensure the continued safety and security of the airport’s operations. The Authority also fully supports the environmental and technological initiatives and with MIAL’s ambition to align with global standards. 6.3.260 However, after a review of the necessity, timing, and the scale of proposed capital expenditure, the Authority notes that MIAL’s capex proposals appear to be higher than anticipated requirements. Consultation Paper No. 08/2024-25 Page 245 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Considering that T1 is going under reconstruction in this control period, and considering Terminal 2 is only about 10 years old, the need for certain proposed projects is deemed less critical. The Authority is mindful of the substantial financial implications of these proposals and believes that MIAL’s capital expenditure needs to be managed efficiently without compromising the airport’s operations or passenger experience. 6.3.261 In this context, while the Authority supports the critical projects, it recommends that a phased approach be adopted. Projects linked to safety, security, and environmental compliance, which are of utmost importance, should be prioritized and completed without delay. Other projects, particularly those involving upgrades or enhancements that do not present immediate operational needs, can be deferred for later implementation in the next control periods. 6.3.262 The Authority has undertaken a review of the projects submitted by MIAL in each category. After careful consideration of the justifications provided, the Authority has identified certain projects that are either proposed to be deferred or proposed not considered for this Control Period. These projects are analyzed in detail in the respective sections of this Consultation Paper. 6.3.263 For the remaining projects within each category, the Authority proposes approving a percentage of the cost based on its assessment of the project's need and cost. The Authority has ensured that all approved projects are proportionately phased within the Control Period to ensure a balanced and efficient capital expenditure program. 6.3.264 The Authority directs MIAL to submit a work-item wise comparison between the operational capex submitted by MIAL as part of the MYTP of the Fourth Control Period and the actual operational capex incurred in the Fourth Control Period in its MYTP submission of the Fifth Control Period. Operational Capex - Safety (Rs 183.10 Crores) 6.3.265 In the following table, the Authority highlights specific observations regarding the proposed projects under the category “Safety”: Table 191: Authority’s evaluation of certain projects proposed under the category “Safety” (Rs. in crores) S. Project Base MIAL' Submission Authority's Analysis No. Name Cost The installation of an Autonomous Runway The Authority has reviewed the proposal Incursion Warning System for and recognizes the importance of Runway 09-27 and Runway Installation enhancing runway safety. However, it 14-32 is imperative to of notes that the current manual systems in enhance runway safety. This Autonomous place are deemed adequate for managing project aims to mitigate the Runway runway incursions at this time. risk of runway incursions, to Incursion Furthermore, the cost-benefit analysis 2I-17 25.00 minimize the number of Warning provided by MIAL does not sufficiently RWY Incursion at CSMIA System for justify the immediate need for an and ensuring proactive RWY 09-27 automated system. detection and warning & RWY 14- While the Authority notes the potential mechanisms, thereby 32 benefits of an autonomous system, it safeguarding runway proposes considering this project in the operations and reducing the next control period. potential for aircraft incident / accidents. Consultation Paper No. 08/2024-25 Page 246 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD S. Project Base MIAL' Submission Authority's Analysis No. Name Cost The construction of an The Authority notes the importance of Alternate Aerodrome ensuring robust emergency response Emergency Control Center is mechanisms. However, the Authority imperative to enhance notes that the primary AECC proposed by emergency response and MIAL is sufficient for handling current business resilience by Construction and foreseeable emergency requirements providing a back-up AECC in of alternate at the airport. Additionally, mobile setups case of emergent Aerodrome could provide a more flexible and cost- 2I-45 10.00 requirements. This project Emergency effective alternative to serve as a backup ensures continuous and Control AECC without the need for significant reliable emergency response Center additional investment at this time. Given capabilities, mitigates risks the adequacy of the existing infrastructure associated with unforeseen and the availability of alternative events, and strengthens the solutions, the Authority proposes overall preparedness of the considering this project to the next control aerodrome, safeguarding both period. personnel and assets. The installation of Digital Bollards at both airside and The Authority notes the need for safety landside areas is essential for enhancement to strengthen access control elevating safety standards. and vehicle movement in critical areas. These smart bollards enhance Digital technology integration could security by integrating digital potentially improve security monitoring technology to monitor and and prevent unauthorized access, control access / conflict particularly in sensitive zones. However, points. They contribute to the Authority notes that MIAL has not airside safety by preventing provided a detailed cost breakdown for Aircraft / Vehicle collisions this project. Additionally, given the Installation on the apron areas. On the existing physical barriers and surveillance of Digital landside, they manage systems, the immediate need for digital Bollards at vehicular and pedestrian bollards is not fully justified. The 2I-50 Airside & 10.00 traffic efficiently, reducing Authority proposes that MIAL conduct a Landside for the risk of accidents. The thorough review of the current security enhancement digital aspect allows for real- measures to determine whether the of Safety time monitoring, alerts, and installation of these bollards is a critical responsive control measures, need at this point in time. fostering a proactive safety Based on these considerations, the environment. This project Authority proposes considering the ensures a comprehensive project on an incurrence basis subject to safety infrastructure, evaluation of efficiency and mitigating potential risks and reasonableness, while encouraging ensuring the well-coordinated further evaluation to ensure the movement of personnel and investment aligns with the airport’s vehicles in and around the current and future security requirements. airport. 6.3.266 Accordingly, the above projects are not proposed to be considered for the purpose of tariff determination of the Fourth Control Period. 6.3.267 Based on the Authority’s review of MIAL’s past trends, current infrastructure, and the immediate operational requirements, it recommends the approval of 75% of the remaining capex in this category. This ensures support for necessary and urgent projects, while ensuring that capital is allocated prudently. The recommended allocation ensures that operational efficiency is maintained while avoiding an excessive Consultation Paper No. 08/2024-25 Page 247 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD financial burden in the short term. The phased implementation will allow MIAL to continue advancing critical projects while managing costs effectively over the control period. Table 192: Capital Expenditure proposed by the Authority for operational capex under category "Safety" (Rs. in crores) Particulars Ref Base Cost Proposed by the Authority Cost proposed by MIAL A 183.10 Less: Reduction in cost as per Table 191 B 45.00 Cost proposed by MIAL for the remaining projects C = A - B 138.10 Cost proposed by the Authority @ 75% of above D = C * 75% 103.58 Operational Capex - Information Technology (Rs. 422.56 Crores) 6.3.268 In the following table, the Authority notes specific observations regarding the proposed projects under the category “Information Technology”: Table 193: Authority’s evaluation of certain projects proposed under the category “Information Technology” S. Base Project Name MIAL' Submission Authority's Analysis No. Cost Currently, internet infrastructure like 2G, 3G being managed by The Authority recognizes the need for Telecom Companies. To enable better internet facility to passengers. With 5G services, back-end the VNO license, MIAL can offer mobile infrastructure like Master Unit, network services, potentially leasing the BTS (base trans receiver), POI 5G infrastructure to telecom companies. This (point of interface) etc., required 2I-2 Implementation 49.80 to be installed in airport. creates a revenue opportunity from & & data Center telecoms. Premium connectivity services facility for MIAL also proposes a separate can also be provided to passengers and 2I- hosting 5G Data center facility for hosting businesses at the airport. 46 backend 10.00 5G backend equipment Equipment including 2G,3G & 4G. However, such revenues would be non- aeronautical in nature. Accordingly, the MIAL stated that they have Authority considers this as Non- obtained a virtual network aeronautical asset and proposes not to operator license in August 2024. consider this cost for RAB. Considering the Contribution to Digi Yatra Foundation is a recurring MIAL also proposed a Contribution to expenditure, the Authority proposes to contribution of Rs.3.15 crores 2I-28 Digi Yatra 15.75 consider this expenditure as OPEX as per year for Digi Yatra Foundation outlined in : Foundation. Table 274. 6.3.269 Based on the Authority’s further review of MIAL’s proposal in this category and considering the operational requirements, it recommends the approval of 75% of the remaining capex in this category. This phased implementation will allow MIAL to continue advancing critical projects while managing costs effectively over the control period. Consultation Paper No. 08/2024-25 Page 248 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Table 194: Capital Expenditure proposed by the Authority for operational capex under category "Information Technology" (Rs. in crores) Particulars Ref Base Cost Proposed by the Authority Cost proposed by MIAL A 422.56 Less: Reduction in cost as per Table 193 B 75.55 Cost proposed by MIAL for the remaining projects C = A - B 347.01 Cost proposed by Authority @ 75% of above D = C * 75% 260.26 Operational Capex - Engineering & Maintenance (Rs. 565.35 Crores) 6.3.270 The Authority has reviewed the submissions made by MIAL and has the following observations: (i) In some instances, the cost estimate workings do not match with the cost proposed (eg: Replacement of 129 AVDGS of Rs 40 Crores) (ii) In some instances, MIAL has factored a contingency and indexation factor in the cost estimate workings (e.g.: Replacement of chillers and cooling Towers of Rs 38.40 Crores) (iii) In some instances, the cost proposed by MIAL is almost twice the cost incurred by it in the previous control period (Rubber & paint removal machine Rs 30 Crores) 6.3.271 Based on the Authority’s further review of MIAL’s proposal in this category and considering the operational requirements, it is proposed to consider 50% of the capex in this category. The phased implementation will allow MIAL to continue advancing critical projects while managing costs effectively over the control period. Table 195: Capital Expenditure proposed by the Authority for operational capex under category "E&M" (Rs. in crores) Particulars Ref Base Cost Proposed by the Authority Cost proposed by MIAL A 565.35 Cost proposed by the Authority at 50% of above B = A * 50% 282.68 Operational Capex - Security, Environmental initiatives and Facilities (Rs. 219.45 Crores) 6.3.272 MIAL has proposed operational capex for Security (Rs. 112.45 Crs), Environmental initiatives (Rs. 48.70 Crores) and Facilities (Rs. 58.30 Crores). The Authority, after careful review of the works and considering the necessity, operational safety, proposes to allow entire cost of Rs. 219.45 Crores proposed by MIAL. Operational Capex - BHS, Airside operations and Terminal operations (Rs. 371.11 Crores) 6.3.273 MIAL has proposed operational capex for BHS (Rs.137.64 Crores), Airside operations (Rs.124.60 Crores) and Terminal operations (Rs.108.87 Crores). The Authority, after careful review of these works and considering the requirement/necessity, proposes to consider these works at 50% of cost based on a phased implementation by MIAL. This phased implementation will allow MIAL to continue advancing critical projects while managing costs effectively over the control period. Table 196: Capital Expenditure proposed by the Authority for operational capex under category "BHS, Airside operations and Terminal operations" (Rs. in crores) Particulars Ref Base Cost Proposed by the Authority Cost proposed by MIAL A 371.11 Cost proposed by the Authority at 50% of above B = A * 50% 185.56 Consultation Paper No. 08/2024-25 Page 249 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Operational Capex – Others being JCC, Horticulture and Landside Operations (Rs. 29.90 Crores) 6.3.274 MIAL has proposed operational capex for JCC (Rs.6.00 Crores), Horticulture (Rs.16.25 Crores) and Landside operations (Rs.7.65 Crores). The Authority, through its independent consultant / aviation expert, after careful review of these works and considering the immediate requirement/necessity, proposes to allow the entire cost of Rs 29.90 Crores. 6.3.275 Based on the discussions above, the cost proposed by the Authority for operational CAPEX under Rs. 50 Crores are as follows: Table 197: Capital Expenditure proposed by the Authority for operational capex under Rs. 50 Crores (Rs. in crores) Base Cost Proposed by the S. No. Category Base Cost Proposed by MIAL Authority 1 Safety 183.10 103.58 2 IT 422.56 260.26 3 E & M 565.35 282.68 4 BHS 137.64 68.82 5 Airside operations 124.60 62.30 6 Environment 48.70 48.70 7 Facilities 58.30 58.30 8 Security 112.45 112.45 9 Terminal operations 108.87 54.44 Others – JCC, Horticulture and 10 29.90 29.90 Landside Operations Total 1,791.48 1081.42 6.3.276 Based on the above, the Authority, through its Independent Consultant, proposes the cost for operational capex for the Fourth Control Period as per the table below: Table 198: Cost proposed by the Authority for Operational Capex (Rs. in crores) Sl. Base Cost as per (in Rs.) Projects Variance Remarks No. MIAL Authority 2 OPERATIONAL CAPEX PROPOSALS CT Handbag Based on quotation and proposed phasing of A 320.00 120.00 200.00 X-Ray quantities. Full Body Based on quotation and proposed phasing of B 69.00 22.00 47.00 Scanner quantities. Crash Fire Considered based on conventional CFTs C 50.00 34.20 15.80 Tender over EV CFTs proposed by MIAL. Refurbishment Adjusted for cost, contingency and D of Washrooms 189.00 64.54 124.46 proposed phasing of washrooms based on at T2 site inspection. Transfer Hub Initiatives at Estimate considered reasonable based on E Baggage 190.00 190.00 - quotation obtained / market rates Handling Systems at T2 Follow the To be considered on incurrence basis, F 200.00 - 200.00 Greens subject to approvals Self-Bag Based on quotation and proposed phasing of G 222.00 55.00 167.00 Drops at T2 quantities. Consultation Paper No. 08/2024-25 Page 250 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Base Cost as per (in Rs.) Projects Variance Remarks No. MIAL Authority Based on the actual expenditure incurred in H CT-EDS 78.00 64.00 14.00 FY 24 for similar item. Considering the number of projects and cost Operational involved in projects, it is proposed to Capex consider a portion of cost submitted by I projects less 1,791.48 1,081.42 710.06 MIAL based on the need and essential than Rs. 50 requirement for maintaining safe and Crores smooth operations. Refer Table 197 GRAND 3109.48 1,631.16 1,478.32 TOTAL 3 - Cost claimed towards indexation, technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses and interest during construction (“Soft Cost”) 6.3.277 The Authority observes that MIAL has claimed Rs. 5,153.85 Crores as soft cost as given in the table below: Table 199: Cost proposed by MIAL towards indexation, technical consultancies, contingencies, pre- operative cost, design cost, PMC, preliminary expenses and interest during construction (Rs. in Crores) S. No Particulars Amount (in Rs.) 3A Indexation 1,703.07 Technical consultancies, contingencies, pre-operative cost, design cost, PMC, 3B 2,238.17 preliminary expenses 3C Interest During Construction (IDC) 1,212.61 TOTAL 5,153.85 Indexation 6.3.278 The Authority notes that MIAL has submitted the expenditure on various projects proposed in the Fourth Control Period by considering the cost of FY 2023-24 as the base. Based on the year-wise cashflow, MIAL had adjusted the expenditure to account for inflation in the years beyond FY 2023-24. MIAL had considered inflation at 5% and had computed indexation cost as Rs. 1,703.07 crores. 6.3.279 The Authority notes that for the following projects, the cost is already finalized / is inclusive of indexation and accordingly proposes not to separately consider indexation: Table 200: Projects for which the Authority proposes not to consider indexation (Rs. in Crores) S. No Project /Item Name Base Cost Reason for not providing indexation A9-7 Construction of RET E6 34.86 Based on awarded cost A9-8 Construction of RET W3 31.72 Based on awarded cost A9-12 Replacement of ILS RWY 14 5.05 Based on awarded cost A9-26 Enabling cost of NW Pier, Additional Aircraft Parking Stands in the Southern 23.40 Based on actual cost side of RWY 09-27 and Taxiway West to RWY 14-32 B1 New Construction of Terminal T1 2,422.75 Based on inflation adjusted normative cost E-2 Construction of NAD Colony 282.65 Based on awarded cost E-3-1 Cost of 3 levels of basements for 2 metro 141.00 Based on awarded cost stations E-3-2 Additional Cost of T-1 Metro Station 75.00 Based on actual cost payable to MMRC Consultation Paper No. 08/2024-25 Page 251 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.280 For the rest of the projects, the Authority proposes to revise the indexation cost based on the rate of inflation proposed by it for the projects allowed for the Fourth Control Period (Refer Table 229: Inflation rates proposed by the Authority for the Fourth Control Period). Based on the above, the Authority has arrived at an Indexation cost of Rs. 366.90 Crores as against Rs 1,703.07 Crores claimed by MIAL. Technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses as proposed by MIAL 6.3.281 MIAL has submitted that the inclusion of technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses for the projects under the Fourth Control Period is based on established practices followed by both domestic and international airports. These proposed include components such as planning consultancy, project management consultancy, and other technical services, which are necessary for the efficient execution of infrastructure projects. 6.3.282 MIAL submits that, as per the CPWD SOP 2022 (dated 13.07.2022), the applicable technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses cost components for various projects are as follows: (i) Planning Consultancy: 4% (ii) Project Management Consultancy (PMC): 5% (iii) Other Technical Services: 7-24%, depending on the complexity and scale of the project (iv) Contingency Costs: 3% as a standard provision (v) ESI & EPF Contributions: Estimated at 2% 6.3.283 MIAL further states that as per accounting standards, the costs relating to the Project Team are required to be capitalized. These costs have been approved by the Authority in various orders for PPP and AAI Airports ranging between 2-3% of the project cost. The same is recognized by the Authority in its Guidelines. The overall costs based on the above is a minimum of 18-20%. 6.3.284 MIAL further submits that as per “Airport Capital Improvements: A Business Planning and Decision- Making Approach” study conducted by Airport Cooperative Research Program (ACRP), Transport Research Board (sponsored by US Government’s Federal Aviation Administration), these costs range between 10% to 30%. 6.3.285 MIAL cites the Tariff Order No. 27/2023-24 for Manohar International Airport (GOX), where the Authority approved costs ranging between 13% and 16% for design consultancy, PMC, and other pre- operative expenses. Similarly, in MIAL’s case, a blended cost of 16% has been proposed, which is in line with both domestic and international standards and with actual cost being incurred by Airport Operators. 6.3.286 The Authority has taken note on MIAL’s submission and observes the following: (i) Many of the CAPEX allowed to the AO are bought out items like crash fire tenders, SBDs, CT X- ray machines etc, wherein quotations are obtained / orders are placed on Supply, installation, Testing & Commissioning (SITC) basis. Hence, soft costs such as PMC, Design etc. are not required to be incurred on such items. (ii) The proposed CAPEX for the Fourth Control Period includes works on the airside. On air side works such as Apron, Taxiway etc., Design / PMC charges are normally only in the range of 1% to 3%. Consultation Paper No. 08/2024-25 Page 252 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD (iii) There are many projects like refurbishment of toilets etc. for which only a nominal consultant fee is required. (iv) Technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses claimed by the AO includes contingencies also, which do not come as a separate line item while capitalizing the assets and is not to be claimed without any contingent activity. Hence, taking an overall view, cost for technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses @ an average 8% of total capital expenditure is reasonable and justified. Interest During Construction (IDC) 6.3.287 IDC is calculated based on construction phasing, cash flows and proposed capitalization dates. The amount is calculated considering debt portion of 70% with actual cost of debt of ~11.9%. 6.3.288 The Authority has considered IDC to be provided on the debt portion of the value of average CWIP derived on the basis of revised Capitalization Schedule proposed by the Authority. Further, the Authority proposes to consider the ratio proposed by MIAL (debt-equity ratio of 70:30) subject to true-up on actuals, and cost of debt @ 10.15% (refer Table 227) for the Fourth Control Period for calculating the IDC. Based on the same, the Authority has derived an amount of Rs. 499.68 Crores and is inclined to allow the same as against Rs. 1,212.61 Crores claimed by the MIAL for the Fourth Control Period. 6.3.289 Based on the analysis detailed above, the Authority proposes the total Capital Expenditure for the Fourth Control Period as per the table below: Table 201: Capital Expenditure proposed by the Authority for the Fourth Control Period (Rs. in Crores) Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority A Airside Projects 3,188.79 1,059.34 2,129.45 Runway A1 Improvement Works Considered as part of Recarpeting of Operation & A1-1 148.71 - 148.71 RWY 09-27 Maintenance Expenses (Refer Para 6.3.25) Taxiway A2 Improvement Works Construction of Taxiway E (segment To be considered on between E5 & E7), incurrence basis, subject A2-1 73.59 - 73.59 North-East side, to relocation of facilities parallel to RWY 14- (Refer Para 6.3.30) 32 To be considered on Construction of actual incurrence basis, Taxiway M A2-2 60.99 - 60.99 subject to relocation of Extension (East facilities (Refer Para side) 6.3.34) Estimate of extra cost Construction of over approved rates for TWY W (North- A2-3 Table 159 161.65 113.78 47.87 working in operational West side, parallel area reduced to 5%, to RWY 14-32) provision of AGL Consultation Paper No. 08/2024-25 Page 253 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority reduced to 10%, demolition of building not considered. Apron Improvement A3 Works Estimate of extra cost over approved rates for working in operational Construction of area reduced to 5%, cost Additional Aircraft A3-1 Table 160 113.26 98.40 14.86 of diversion of utilities Parking Stands reduced, compound wall (V1+V2) cost not considered, and demolition of building not considered. Estimate of extra cost over approved rates for working in operational Reconstruction of area reduced to 5%, A3-2 Apron C (Tier1) and Table 161 53.16 39.25 13.91 provision of AGL Taxiway W6 reduced to 10%, cost of miscellaneous works and diversion of utilities not considered. Estimate of extra cost over approved rates for Reconstruction of working in operational Additional Aircraft area reduced to 5%, A3-3 Parking Stands in 53.12 41.95 11.17 Table 162 provision of AGL the Southern side of reduced to 10%, cost of RWY 09-27 demolition of buildings not considered. Estimate of extra cost over approved rates for working in operational Reconstruction of area reduced to 5%. A4 Table 163 202.50 75.03 127.47 Perimeter Road Provision of only 40% of length of road considered. (Refer Para 6.3.71) Will be considered on Construction of actual incurrence basis, A5 894.23 - 894.23 Airside Tunnel subject to due approvals (Refer Para 6.3.79) Only 20% of drain considered for reconstruction in this Reconstruction of control period based A6 Table 164 498.80 93.84 404.96 Airside Drain after site inspection by the Independent Consultant (Refer Para 6.3.82). Aircraft Revision of costs for A7 Maintenance Table 165 92.76 66.68 26.08 working in operational Hangar areas from 10% to 5%, Consultation Paper No. 08/2024-25 Page 254 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority demolition of structures not considered, reduction in quantity of structural steel from 170kg/sqm to 100kg/sqm, Diversion of existing utilities & infrastructure not considered, and demolition of structures not considered. Not considered currently. Will be considered on actual Parking Stands at A8 120.00 - 120.00 incurrence basis, subject NEC Hangar to agreement/MoU with AIESL. (Refer Para 6.3.96) Airside Table 166 improvement works A9 Table 167 716.02 530.41 185.61 less than Rs. 50 As per tables referred. Table 168 Crores Passenger Terminal B 3,496.11 2,556.18 939.93 Improvement & Associated Works Terminal Building of area 1.89 lakh sqm inflation adjusted normative cost, rationalized for envelope, interior Reconstruction of finishes and passenger B1 Table 174 3,129.23 2,422.75 706.48 T1 processing / security equipment only for 10 MPPA considered, against area of 2.01 lakhs sqm for processing 20 MPPA proposed by MIAL. Estimate of extra cost over approved rates for working in operational Terminal 2 B2 Table 175 141.88 133.43 8.44 area reduced to 5%, cost Expansion Project of dismantling & diversion of utilities not considered. As per OMDA GA GA Terminal Terminal is considered a B3 225.00 - 225.00 Expansion Non-Aero asset. (Refer Para 6.3.141) Kerbside C Improvement 280.21 149.98 130.23 Projects Consultation Paper No. 08/2024-25 Page 255 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority New T1 Access Estimate considered Road (At-Grade) reasonable based on C1-1 including 27.80 27.80 - CPWD DSR and demolition of MoRTH rates. existing pavement New T1 Access Revision of costs for Road (Elevated C1-2 102.48 102.21 0.27 working in operational Departure Driveway areas from 10% to 5%. for T1) At-Grade Road To be considered on an development over incurrence basis, subject C2 81.80 - 81.80 existing nallah in to due approvals. (Refer front of T2 MLCP Para 6.3.152) Estimate cost of hard External Landscape scaping like Granite, & Horticulture with Vitrified tile flooring Irrigation system and paver block etc., not C3-1 including new trees, Table 179 49.00 6.00 43.00 considered, 50% of soft transplantation of scaping proposed in this trees and removal of control period. (Refer trees Para 6.3.156) At-Grade Road Estimate cost of widening for dismantling of C3-2 19.13 13.97 5.16 International Table 180 pavements not Airport Road considered. External Will be considered on Connectivity actual incurrence basis, D 58.87 - 58.87 Improvement subject to due approvals Project (Refer para 6.3.167) Ancillary Building E Development 2,152.06 1,025.97 1,126.10 Works Estimate of extra cost over approved rates for working in operational area reduced to 5%, cost of diversion of utilities Construction of rationalized, cost of Airport superior finishes E1 Management Table 186 1,229.36 468.19 761.17 adjusted to reflect Corporate Office market rates and Building demolition of building not considered. Proposed area restricted to G+2 floors with entire basement. Estimate considered Construction of E2 282.65 282.65 - reasonable based on NAD Colony awarded cost. Mumbai Metro Line Only 50% of the cost of 3: Construction of 3 basements proposed to E3 216.00 216.00 - Metro Stations at be considered as Aero CSMIA (Refer Para 6.3.194) Consultation Paper No. 08/2024-25 Page 256 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority Sewage Treatment Estimate considered E4 Plant and associated 16.41 16.41 - reasonable based on works quotation / market rates. Will be considered on Development of T2 E5 124.80 - 124.80 actual incurrence basis. Forecourt (Refer Para 6.3.200) Cost considered based on inflation adjusted E6 Crew Terminal Table 176 98.70 42.72 55.98 normative cost of Passenger Terminal Building. To be considered on Relocation of ATC actual incurrence basis, E7 184.14 - 184.14 Technical Block subject to due approvals. (Refer Para 6.3.203) TOTAL (Project 9,176.04 4,791.48 4,384.57 Capex A to E) Operational Capex 2 3,109.48 1,631.16 1,478.32 Proposal Cost adjusted based on 2A CT Handbag X-ray Table 198 320.00 120.00 200.00 quotation and proposed phasing of quantities Cost adjusted based on 2B Full Body Scanner Table 198 69.00 22.00 47.00 quotation and proposed phasing of quantities Considered based on conventional CFTs over 2C Crash Fire Tender Table 198 50.00 34.20 15.80 EV CFTs proposed by MIAL. Cost adjusted for contingency and Refurbishment of 2D Table 188 189.00 64.54 124.46 proposed phasing of Washrooms at T2 washrooms based on site inspection. Transfer Hub Estimate considered Initiatives at reasonable based on 2E Table 198 190.00 190.00 - Baggage Handling quotations / market Systems at T2 rates. To be considered on 2F Follow the Green Table 198 200.00 - 200.00 incurrence basis. Cost adjusted based on 2G Self-Bag Drop at T2 Table 198 222.00 55.00 167.00 quotation and proposed phasing of quantities Based on spend in FY 24 2H CT EDS Table 198 78.00 64.00 14.00 for similar item. Considering the number and cost involved in Operational Capex projects, a portion of 2I Projects less than 50 Table 198 1,791.48 1,081.42 710.06 cost submitted by MIAL Crores is considered based on review of need. Indexation, 3 Technical 5,153.85 1,409.74 3,744.10 consultancies, Cost Consultation Paper No. 08/2024-25 Page 257 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Sl. Table Base Cost as per Projects Variance Remarks No. Reference MIAL Authority and Interest During Construction 3A Indexation 1,703.07 366.90 1,336.17 Refer Para 6.3.280 Technical 3B 2,238.17 543.16 1,695.01 Refer Para 6.3.286 consultancies Interest During 3C 1,212.61 499.68 712.92 Refer Para 6.3.288 Construction TOTAL (SUM(1: 3)) 17,439.38 7,832.38 9,607.00 6.3.290 For all the above projects, the Authority, through its Independent Consultant / Aviation Expert has checked the BOQ / cost estimate and found that estimate considered is as per normative cost, wherever applicable or as per the CPWD DSR / PAR / MoRTH / Market rates (as applicable), considering it to be appropriate and reasonable. 6.3.291 Based on the above discussions, the Authority proposes the following capital additions on an incurrence basis, subject to evaluation of reasonableness and efficiency at the time of determination of tariff for the next Control Period: Table 202: Capital Expenditure proposed by the Authority on an incurrence basis, subject to cost efficiency and reasonableness, for the Fourth Control Period: (Rs. in Crores) S. Cost Proposed Project /Item Name Project Category No by MIAL Construction of Eastern Taxiway (between E5 & E7) Airside Improvement 73.59 A2-1 parallel to RWY 14-32 Works Taxiway M Extension East Side including Taxiway Airside Improvement 60.99 A2-2 bridge over Mithi river Works Airside Improvement Construction of Airside Tunnel 894.23 A5 Works At-Grade Road development over existing nallah in Kerbside Improvements 81.80 C2 front of T2 MLCP External Connectivity Construction of Overpass including roadway ramps 17.39 D-1 Improvements Construction of Underpass below WEH at T2 elevated External Connectivity 41.48 D-2 road Improvements Ancillary Building Development of T2 forecourt (Metro Station) 124.80 E-5 Development Works Ancillary Building Relocation of ATC Technical block 184.14 E-7 Development Works Airside Improvement Parking Stands at NEC Hangar (AIESL) 120.00 A8 Works Conversion of conventional lamps to LEDs - follow the Sustaining / Minor 200.00 2F green Capex Works 2I- Installation of Digital Bollards at Airside & Landside Sustaining / Minor 10.00 50 for enhancement of Safety Capex Works Total 1,808.42 Note: Further, 19 CTiX for Hand baggage’s (Refer Project 2A) and 11 Full Body Scanners (Refer Project 2B) are proposed to be allowed on incurrence basis. 6.3.292 The Authority observed that in the past, the Airport Operator got the CAPEX approved but not executed within the timelines. Thereby, the Authority proposes to reduce (adjust) 1% of the uncapitalized project Consultation Paper No. 08/2024-25 Page 258 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD cost from the ARR / target revenue as re-adjustment in case any particular capital project is not completed/ capitalized as per the approved capitalization schedule. It is further proposed that if the delay in completion of the project is beyond the timeline given in the capitalization schedule, due to any reason beyond the control of the MIAL or its contracting agency and is properly justified, the same would be considered by the Authority while truing up the actual cost at the time of determination of tariff for the next Control Period. The re-adjustment in the ARR/ Target Revenue is to protect the interest of the stakeholders who are paying for services provided by the AO and is also encouragement for the AO to commission/ capitalize the proposed assets as per the approved CAPEX plan/ schedule. 6.3.293 The Authority notes that MIAL would be eligible to claim GST Input Tax Credits (“ITC”) on procurement of certain movable items. Accordingly, the Authority had requested MIAL to submit details of the eligible GST ITC included in the proposed CAPEX for the Fourth Control Period. 6.3.294 In response, MIAL submitted the following: “…Section 17(5)(d) of The Central Goods and Service Tax, 2017 states that input tax credit shall not be available in respect of goods or services, or both received by taxable person for construction of “immovable property”. Most of the Project Capex proposed by MIAL in Fourth Control Period for various categories Airside Development, Passenger Terminal Building, Ancillary Building and External Connectivity Project would fall under the definition of “immovable property”. However, there are certain works under the above projects that would not fall under the category of immovable property and hence eligible for ITC claim . In our assessment contracts like Airport Systems like PBB, VHT, BHS, Security Screening equipment etc. for Terminal Building and Finishes for Corporate Office Building with total contract value of ~Rs 750 Cr are eligible for ITC of Rs ~115 Cr. Computed ITC is ~2.6% of projects worth Rs. 4,300 Crs i.e. (Project Cost of Terminal Building Rs 3,100 Cr and Corporate Office (Rs 1,200 Cr). Please note that above numbers will change in case of adjustment in the cost of the Projects (if any) is done by the Authority as part of ongoing tariff determination exercise…” 6.3.295 Upon review, the Authority notes that MIAL’s submission does not account for certain eligible items, such as furniture and fixtures, HVAC systems, and electrical fittings, where ITC can be availed. Consequently, the Authority has recalculated the eligible Input Tax Credit from the CAPEX proposed by it for the Fourth Control Period, as detailed in the table below: Table 203: GST Input Tax Credit proposed by the Authority for the Fourth Control Period: (Rs. in Crores) GST Input Base cost Tax Credit proposed S. No Project /Item Name Project Categorization computed by the by the Authority Authority Passenger Terminal & Associated B1 New Construction of Terminal T1 2,422.75 125.44 works Construction of Airport Ancillary Building Development E-1 Management Corporate Office 468.19 20.67 Works Building Total 146.11 Consultation Paper No. 08/2024-25 Page 259 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.3.296 The Authority proposes adjusting this from the CAPEX from the figures reflected in Table 201. After this, the CAPEX proposed by the Authority is as follows: Table 204: Capital Expenditure proposed by the Authority for the Fourth Control Period after adjusting GST Input Tax Credit: (Rs. in Crores) Particulars Ref Cost CAPEX proposed by the Authority before adjusting Input Tax Credit - as A 7,832.38 per Table 201 Less: Input Tax Credit as per Table 203 B 146.11 Less: Consequential adjustment in Indexation, Technical consultancies, Cost and Interest During Construction C 34.63 Final CAPEX proposed by the Authority D = A - (B+C) 7,651.63 6.3.297 The Authority will consider the statutory payments relating to GST amount on Capex (including CWIP) for the Fourth Control Period, on actual incurrence basis against these indicative estimates, at the time of true up of the Fourth Control Period, while determining tariff for the Fifth Control Period. 6.3.298 Further, the Authority expects that MIAL would properly account for such credits in its submissions in accordance with Chapter V of The Central Goods and Services Tax Act, 2017 at the time of true up of the RAB. The Authority may examine the accounting of input tax credits and make necessary adjustments in this regard at the time of determination of tariffs for the Fifth Control Period. 6.3.299 The asset category wise CAPEX proposed by the Authority for the Fourth Control Period is as per the table below post allocation of the indexation, technical consultancies, contingencies, pre-operative cost, design cost, PMC, preliminary expenses and IDC to each project on a straight proportional basis: Table 205: Asset category-wise total Capital Expenditure Cash Flow Phasing proposed by the Authority for the Fourth Control Period (Rs in Crores) Asset Category FY 25 FY 26 FY 27 FY 28 FY 29 Total Runway, Taxiway and Apron 150.01 106.70 224.94 330.08 20.83 832.56 Terminal Building 290.19 626.88 955.81 879.56 335.22 3,087.65 Other Buildings 646.50 586.41 360.39 34.83 55.22 1,683.35 Boundary Wall 5.37 11.11 17.98 19.56 6.37 60.39 Access Road 20.50 40.27 93.69 111.70 32.26 298.43 Plant and Machinery 363.07 316.10 137.59 63.32 26.92 907.00 Electrical Installation and Equipment’s 122.61 39.57 44.36 53.97 31.62 292.12 IT equipment 169.15 54.44 25.65 16.47 15.15 280.85 Furniture & fixtures 39.63 25.76 27.57 9.97 10.82 113.74 Vehicles 1.41 2.36 3.08 6.42 6.70 19.97 Computers - Servers & Networks 60.08 10.75 2.77 0.96 1.01 75.57 Total 1,868.50 1,820.35 1,893.81 1,526.84 542.13 7,651.63 6.3.300 The Authority proposes considering the CAPEX of MIAL for the Fourth Control Period as Rs. 7,651.63 Crores as per Table 205. 6.3.301 The Authority, based on its examination of the MYTP and review of the supporting documents relating to Capital Expenditure submitted by the MIAL from time to time, has rationalized the Capital Expenditure as detailed above. In this regard, the Authority expects quality input from all the Stakeholders on the proposals regarding CAPEX laid down in this Consultation Paper. Consultation Paper No. 08/2024-25 Page 260 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.4 ASSET ALLOCATION OF CAPEX FOR THE FOURTH CONTROL PERIOD MIAL’S SUBMISSION 6.4.1 In its MYTP submission, MIAL has considered the asset allocation ratio for the assets proposed for the Fourth Control Period as per the table below: Table 206: Broad basis for Asset Allocation ratios considered by MIAL for the Fourth Control Period Asset Category Allocation Ratio Remarks Aeronautical Assets like Airside Works, 100% Access Roads, BHS, etc. Generally accepted Ratio of 90% Aero as used by the Authority in the recent orders of various Airports is applied for projection Common Assets like Terminal, Office 90% perspective. The ratio based on Building (New) actual usage area is subject to true-up at the time of determination of tariff for next control period. T1 - 86.84% Common Assets like Terminal, Office T2 - 89.93% Based on IRCLASS Report Building (Old) Overall – 87.43% Common Assets like GA Business As per aeronautical area 95.30% Centre allocation of existing GA terminal Non-Aeronautical Assets like Aircraft 0% Maintenance Hangar AUTHORITY’S EXAMINATION OF ALLOCATION OF ASSET BETWEEN AERONAUTICAL AND NON-AERONAUTICAL 6.4.2 In reviewing the allocation of assets, Authority has taken into consideration multiple factors including nature of asset, intended location and use, revenues derived etc. 6.4.3 The Authority notes that the asset allocation submitted by MIAL for the CAPEX proposed in the Fourth Control Period is based on the methodology adopted in the asset allocation study report conducted in the Third Control Period Order. Assets are allocated based on their proposed functional use, proportional to the space and services they support. 6.4.4 The Authority has reviewed the asset allocation ratio submitted by MIAL and finds it largely consistent with the asset allocation study report. However, the Authority notes the following deviations in the asset allocation used by MIAL: Table 207: Changes to asset allocation proposed by the Authority Allocation Ratio S. No Project /Item Name Remarks MIAL Authority As per Part 1 of Schedule 6 of OMDA, General aviation services (other than those used for B3 GA Terminal Expansion 95.30% 0.00% commercial air transport services ferrying passengers or cargo or a combination of both) are non-aeronautical. MIAL submitted, vide email dated 23-Sep- Aircraft Maintenance A7 Hangar 0.00% 100.00% 2024, that: Consultation Paper No. 08/2024-25 Page 261 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Allocation Ratio S. No Project /Item Name Remarks MIAL Authority “…Aircraft Maintenance Hangar allocation of 0% is typo error in financial model. Same needs to be corrected to 100%. Hangar to be considered aeronautical asset as same will be used for long term parking of aircrafts...” The same has been corrected by the Authority. New Construction of It was observed that MIAL has considered the B1 90.00% 89.93% Terminal T1 aeronautical terminal building ratio in both the B2-1 New Terminal 2 NW Pier 90.00% 86.84% reconstructed T1 and the planned expansions to New Terminal 2 NW Pier T2 in the ratio of 90:10. The Authority notes B2-2 BUS BOARDING GATE 90.00% 86.84% that the Terminal Building Area is planned in an (V3) airport considering the facilities to be provided for Aeronautical activities and provision of space for certain Non-Aeronautical activities such as Food & Beverage, Duty Free etc. In the case of PPP airports, the focus on Non- Aeronautical activities is expected to be more as these would generate revenues and a part of the same would also cross subsidize the Aeronautical charges. The Authority also noted that in other PPP airports such as DIAL, BIAL etc. and in MIAL’s existing T1 and T2, the area allocated for Non-Aeronautical activities are over 10%. IMG norms inter alia provides for non-aeronautical area to be between 8% and TERMINAL T-2 B2-3 90.00% 86.84% EXTENSION 12%, with the range being up to 20% in bigger airports. Based on these considerations, the Authority proposes to adopt the same terminal building ratio currently applicable to the existing T1 and T2, for the reconstructed T1 and expansions to T2, respectively. This allocation will be trued up in the next control period based on actual utilization. Given the additional space available in the reconstructed T1 compared to the existing T1, the Authority encourages MIAL to allocate a higher proportion of space for non- aeronautical initiatives. As per the Asset Allocation Study Report, the Construction of Airport administrative office is to be allocated based on E-1 Management Corporate 90.00% 87.43% the Proportion of the Weighted Average Office Building Terminal Space. Consultation Paper No. 08/2024-25 Page 262 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Allocation Ratio S. No Project /Item Name Remarks MIAL Authority As explained in Para 6.3.194, since the planned usage of “E-3-1 - Cost of 3 levels of basements for 2 metro stations” has not yet been confirmed Cost of 3 levels of and since it is likely that this basement space E-3-1 basements for 2 metro 100.00% 50.00% will be used for non-aeronautical activities in stations the future, the Authority proposes to consider 50% of the basement cost as a non-aeronautical asset. 6.4.5 Considering the above ratios and principles for classification of assets, the aeronautical capital expenditure proposed by the Authority for the Fourth Control Period, after allocating the Indexation, Technical consultancies, and Interest During Construction to the project cost, is given in the table below: Table 208: Aeronautical capital expenditure proposed by the Authority for the Fourth Control Period (Rs. in crores) Total S. No Project /Item Name Aero% Aero Capitalization Cost FY25 FY26 FY27 FY28 FY29 Total Airside Improvement Works Recarpeting of RWY 9- A1-1 - 100.00% - - - - - - 27 Construction of Eastern Taxiway (between E5 & A2-1 - 100.00% - - - - - - E7) parallel to RWY 14- 32 Taxiway M Extension East Side including A2-2 - 100.00% - - - - - - Taxiway bridge over Mithi river Construction of A3-1 Additional Aircraft 130.97 100.00% - - - 130.97 - 130.97 Parking Stand (V1+V2) Reconstruction of Apron A3-2 45.08 100.00% 45.08 - - - - 45.08 C (Tier1) & Taxiway W6 Reconstruction of Additional Aircraft A3-3 Parking Stands in the 53.58 100.00% - - 53.58 - - 53.58 Southern side of RWY 09-27 Reconstruction of A4 92.47 100.00% 16.94 17.68 18.46 19.27 20.12 92.47 Perimeter Road Construction of Airside A5 - 100.00% - - - - - - Tunnel Reconstruction of Airside A6 116.6 100.00% 10.59 22.11 34.63 24.1 25.16 116.6 drain Aircraft Maintenance A7 84.85 100.00% - - 84.85 - - 84.85 Hangar Parking Stands at NEC A8 - 100.00% - - - - - - Hangar (AIESL) Taxiway M Extension A9-1 19.83 100.00% 19.83 - - - - 19.83 West Side A9-2 Taxiway M 48.79 100.00% - - 48.79 - - 48.79 A9-3 Taxiway N1 26.97 100.00% 26.97 - - - - 26.97 A9-4 Taxiway N7 21.96 100.00% 21.96 - - - - 21.96 Re-Construction of A9-5 22.07 100.00% - 22.07 - - - 22.07 Taxiway U Consultation Paper No. 08/2024-25 Page 263 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Total S. No Project /Item Name Aero% Aero Capitalization Cost FY25 FY26 FY27 FY28 FY29 Total Taxiway W1 Parallel A9-6 Taxiway to RWY14-32 51.18 100.00% - - - 51.18 - 51.18 West Taxiway West to RWY A2-3 151.74 100.00% - - - 151.74 - 151.74 14-32 A9-7 Construction of RET E6 38.32 100.00% - - - 38.32 - 38.32 A9-8 Construction of RET W3 34.86 100.00% - - - 34.86 - 34.86 Construction of Taxiway A9-9 48.17 100.00% - 48.17 - - - 48.17 S Recarpeting of balance A9-10 - 100.00% - - - - - - portion of RWY 14-32 A9-11 CBR for RWY 09-27 58.13 100.00% - - - - 58.13 58.13 Replacement of ILS A9-12 5.49 100.00% 5.49 - - - - 5.49 RWY 14 Runway intersection A9-13 - 100.00% - - - - - - overlay works Construction of New Fire A9-14 44.86 100.00% - 44.86 - - - 44.86 Station Construction of New Fire A9-15 14.39 100.00% - 14.39 - - - 14.39 Sub Station Airport Boundary Wall (New Construction) A9-16 24.47 100.00% 4.48 4.68 4.88 5.1 5.32 24.47 including demolition of existing wall A9-17 CISF Staff Quarters 35.68 100.00% - 35.68 - - - 35.68 New Retaining Wall A9-18 including demolition of 31.09 100.00% - - - 31.09 - 31.09 existing retaining wall Airside CISF Watch A9-19 Tower (14 Nos.) & 3.46 100.00% 3.46 - - - - 3.46 Goomties (30 Nos.) A9-20 Refurbishment of Gate 8 4.21 100.00% - 4.21 - - - 4.21 Additional Aircraft A9-21 Parking stand adjacent to 26.76 100.00% - - - 26.76 - 26.76 Apron J Reconstruction of drain A9-22 29.69 100.00% 29.69 - - - - 29.69 along TWY K1 Relocation of existing A9-23 8.89 100.00% - 8.89 - - - 8.89 Airside Fire Tank Construction of A9-24 13.68 100.00% - - 13.68 - - 13.68 Emergency Service Road Perimeter Intrusion A9-25 4.83 100.00% 0.88 0.92 0.96 1.01 1.05 4.83 Detection System (PIDS) Enabling cost of NW Pier, Additional Aircraft Parking Stands in the A9-26 31.56 100.00% - - - 31.56 - 31.56 Southern side of RWY 09-27 and Taxiway West to RWY 14-32 Passenger Terminal & Associated works New Construction of B1 2,820.67 89.93% - - - - 2,536.63 2,536.63 Terminal T1 B2-1 New Terminal 2 NW Pier 27.63 86.84% - - 23.99 - - 23.99 New Terminal 2 NW Pier B2-2 5.32 86.84% - 4.62 - - - 4.62 Bus Boarding Gate (V3) TERMINAL T-2 B2-3 137.91 86.84% - - 119.76 - - 119.76 EXTENSION B3 GA Terminal Expansion - - - - - - - - Consultation Paper No. 08/2024-25 Page 264 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Total S. No Project /Item Name Aero% Aero Capitalization Cost FY25 FY26 FY27 FY28 FY29 Total Kerbside Improvements New T1 Access Road (At-Grade) including C1-1 34.81 100.00% - - 34.81 - - 34.81 demolition of existing pavement New T1 Access Road C1-2 (Elevated Departure 136.31 100.00% - - - 136.31 - 136.31 Driveway for T1) At-Grade Road development over C2 - 100.00% - - - - - - existing nallah in front of T2 MLCP External Landscape & Horticulture with Irrigation system C3-1 7.39 90.00% 1.22 1.27 1.33 1.39 1.45 6.65 including new trees, transplantation of trees and removal of trees C3-2 At-Grade Road widening 19.44 100.00% - - - - 19.44 19.44 for International Airport Road External Connectivity Improvements Construction of Overpass D-1 - 100.00% - - - - - - including roadway ramps Construction of D-2 Underpass below WEH at - 100.00% - - - - - - T2 elevated road Ancillary Building Development Works Construction of Airport E-1 Management Corporate 87.43% - - - 578.57 505.85 - 505.85 Office Building Construction of NAD E-2 326.95 100.00% 158.05 168.90 - - - 326.95 Colony Cost of 3 levels of E-3-1 basements for 2 metro 152.28 50.00% 76.14 - - - - 76.14 stations Additional Cost of T-1 E-3-2 Metro Station payable to 81 100.00% 81.00 - - - - 81.00 MMRC Sewage Treatment Plant E-4-1 16.61 100.00% - - - - 16.61 16.61 for new Terminal T2 E-4-2 Hazardous Waste Storage 1.56 100.00% - - - - 1.56 1.56 Distribution network for E-4-3 4.54 100.00% - - - - 4.54 4.54 Utilities Development of T2 E-5 - 100.00% - - - - - - forecourt (Metro Station) E-6 Crew Terminal 52.76 100.00% - - 52.76 - - 52.76 Relocation of ATC E-7 - 100.00% - - - - - - Technical block Operational Capex Works CTiX for Hand baggage's 2A 140.68 100.00% 33.86 88.37 18.45 - - 140.68 (40 nos.) Full Body Scanner (23 2B 26.44 100.00% 6.48 6.76 7.06 6.14 - 26.44 no's) Procurement of Crash 2C 39.45 100.00% 19.3 20.15 - - - 39.45 Fire Tender - 04 Nos. Refurbishment of 2D 76.09 86.84% 21.08 22.01 22.98 - - 66.08 Washrooms at T2 Consultation Paper No. 08/2024-25 Page 265 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Total S. No Project /Item Name Aero% Aero Capitalization Cost FY25 FY26 FY27 FY28 FY29 Total Transfer hub initiatives 2.E- e.g. I-D Auto sortation for 115.09 100.00% 62.07 53.02 - - - 115.09 01 inbound bags 2.E- Early Bag Store capacity 106.88 100.00% 28.22 29.46 49.2 - - 106.88 02 & process enhancement Conversion of 2F conventional lamps to - 100.00% - - - - - - LEDs - follow the green Provision of Self Bag 2G 67.7 100.00% - 21.6 22.55 23.54 - 67.70 Drops at T2 2H CT-EDS 72.23 100.00% 72.23 - - - - 72.23 Operational Capex 2I* Projects less than Rs. 50 1,278.69 96.72%* 580.68 267.87 154.78 133.64 99.84 1,236.81 Crores Total 7,651.63 1,325.70 907.69 1,273.36 846.98 2,789.87 7,143.61 *These projects contain multiple assets which have been allocated based on the ratios defined in the above paragraphs. The Aero % shown is the average aeronautical percentage of all the assets in the respective projects. 6.4.6 Accordingly, the Authority proposes to allow Aeronautical CAPEX of Rs. 7,143.61 Crores against Rs. 16,509.93 Crores proposed by MIAL. 6.4.7 The Authority directs MIAL to submit the current status of the works/capex proposed to be capitalized in FY 2025, i.e., 1st tariff year of the Fourth Control Period as a part of Stakeholder Consultation Process. The Authority proposes that capitalization schedule as per Table 208 may undergo changes based on updated status of works/capex to be submitted by MIAL at the time of issuance of the tariff order for the Fourth Control Period. 6.5 DEPRECIATION FOR THE FOURTH CONTROL PERIOD MIAL SUBMISSION REGARDING DEPRECIATION FOR THE FOURTH CONTROL PERIOD 6.5.1 MIAL, in the MYTP, has taken cognizance of the rates of depreciation approved by the Authority in Order No. 35 and Amendment No. 01 to Order No. 35 on ‘Determination of Useful Life on Airport Assets’. Accordingly, the rates of depreciation approved by the Authority have been applied by MIAL from FY 2018-19 onwards. Depreciation has been computed separately on opening block of assets and on the proposed additions. 6.5.2 The depreciation amount proposed for the Fourth Control Period has been given in the table below: Table 209: Depreciation submitted by MIAL for CSMIA for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Aero Allocation Ratio for 83.40% 83.40% 83.40% 83.40% 83.40% Depreciation Terminal Building 156.48 161.63 167.14 171.32 245.06 901.63 Runway, Taxiway and Apron 117.71 105.63 108.23 125.55 129.59 586.71 Cargo Building - - - - - - Cargo Equipment - - - - - - Boundary Wall 1.13 3.44 5.86 12.01 18.28 40.71 IT equipment 64.77 126.71 139.93 126.52 26.53 484.46 Security equipment - - - - - - Plant and Machinery 73.73 112.56 140.84 154.51 161.57 643.21 Other Buildings 25.11 47.23 97.54 139.82 167.99 477.68 Consultation Paper No. 08/2024-25 Page 266 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Access Road 35.81 39.55 52.71 80.08 90.14 298.28 Fuel - - - - - - Electrical Installation and 35.03 42.74 44.99 56.28 63.83 242.87 Equipment’s Bridges 11.42 11.42 11.42 11.42 11.42 57.08 Computers - Servers & Networks 22.31 30.61 32.48 32.76 30.94 149.10 Office equipment 1.83 1.72 1.64 1.11 0.32 6.62 Furniture & fixtures 7.07 12.56 16.35 18.70 20.61 75.29 Vehicles 3.20 3.54 4.02 5.10 6.62 22.49 Total 555.59 699.35 823.13 935.17 972.87 3,986.11 Aeronautical Depreciation as per 443.99 410.70 385.40 372.95 338.29 1,951.32 FAR Add: Aeronautical Depreciation on 111.60 288.65 437.74 562.23 634.58 2,034.79 New Additions Total 555.59 699.35 823.13 935.17 972.87 3,986.11 Less: Runway recarpeting amortize 29.52 6.54 6.54 6.54 6.54 55.69 separately as O&M Less: Depreciation on disallowed 3.74 4.24 4.06 4.16 3.28 19.48 projects Depreciation on RAB (a) 522.34 688.56 812.53 924.47 963.05 3,910.94 Depreciation on HRAB (b) 39.44 44.80 42.88 43.93 34.59 205.63 Total Depreciation (a+b) 561.77 733.36 855.41 968.40 997.64 4,116.57 Treatment of assets identified in the Self-Contained Note of AIA: 6.5.3 In compliance to para 12 of SCN dated 30.08.2023 referred at para 3.1.6, the Authority, through its Independent Consultant, has computed and accordingly adjusted the impact on account of the excess amount of tariff resulting from Return on RAB and Depreciation as reflected in Table 306. AUTHORITY’S EXAMINATION OF DEPRECIATION FOR THE FOURTH CONTROL PERIOD 6.5.4 The Authority has reviewed the depreciation rates submitted by MIAL for the Fourth Control Period and compared them with the rates prescribed in Order 35. It was observed that MIAL calculated depreciation on capital expenditure proposed for the Fourth Control Period based on the useful life of assets as per the mentioned order. However, for the assets capitalized up to the Third Control Period, MIAL has computed depreciation based on useful life as assessed by technical experts. 6.5.5 For additions made in the Third Control Period, the Authority has compared useful life considered by MIAL vis-à-vis the useful life as per Order 35 and asset category wise comparison is given in below table. Table 210: Comparison of technical useful life assessment by the valuer vis-a-vis that as per Order 35/2017-18 (Rs. in crores) Depreciation Depreciation Rate Category Rate as per Category as per Order 35/2017-18 as per Order MIAL (years) 35/2017-18 (years) Terminal Building (Including VIP Terminal Building 10 Terminal, Bus Terminal, Hajj 30/60 Terminal) Runway, Taxiway and Apron 3/7/20 Runway, Taxiway, Apron 5/30 Cargo Building 10 Building In Operational Area 30/60 Consultation Paper No. 08/2024-25 Page 267 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Depreciation Depreciation Rate Category Rate as per Category as per Order 35/2017-18 as per Order MIAL (years) 35/2017-18 (years) Main Access Roads, Roads in Boundary Wall 5 Operational Area, Boundary wall, 5/10 Security fencing IT equipment 3 Computers - End User Devices 3 X-Ray Machine, RT Set, DFMD, Security equipment 7.5 15 HHMD, Security Equipment Plant and Machinery 7.5 Plant & Machinery 15 Other Buildings 10 Building In Operational Area 30/60 Electrical Installation and Electrical Installation and Equipment’s - Electrical fittings, 5 10 Equipment’s including Runway lighting system Gen-Set / Power Equipment Computers - Servers & 6 Computers - Servers and Networks 6 Networks Office equipment 2 Office Equipment 5 Furniture & Fixtures - Other than Furniture & fixtures 3/5 7 trolleys 6.5.6 The Authority has identified discrepancies in 614-line items where higher depreciation is considered by MIAL. The Authority proposes to adjust the depreciation based on useful life determined in Order 35. 6.5.7 The Authority, through its Independent Consultant, is complying with the directions of the Authorized Investigation Agency as explained in para 6.5.3. 6.5.8 The Authority, through its Independent Consultant has computed the depreciation assets specified in the SCN as mentioned in para 6.5.3 as below: Table 211: Aeronautical Depreciation as computed by the Authority for the Fourth Control Period on the assets identified in the SCN (Rs. in crores) Second Control Period - Depreciation Total Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Depreciation Aeronautical 7.12 7.07 7.01 7.01 7.01 35.22 Depreciation 6.5.9 Based on changes in the asset allocation of opening gross block of assets, proposed capital expenditure, and reallocation of cost incurred on runway recarpeting of runway 9/27 and 14/32 submitted as Capital Expenditure by MIAL to Operating and Maintenance Expenditure, the Authority proposes the following depreciation for the Fourth Control Period: Table 212: Depreciation proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Aero Allocation Ratio for 83.38% 83.38% 83.38% 83.38% 83.38% Depreciation Terminal Building 155.51 159.08 162.47 165.37 208.16 850.60 Runway, Taxiway and Apron 114.48 98.51 99.24 108.54 101.78 522.56 Cargo Building - - - - - - Cargo Equipment - - - - - - Boundary Wall 0.54 1.63 2.78 7.08 11.44 23.47 IT equipment 40.26 72.98 79.03 53.77 23.71 269.75 Security equipment - - - - - - Consultation Paper No. 08/2024-25 Page 268 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Plant and Machinery 65.56 84.27 94.82 98.37 99.84 442.86 Other Buildings 21.07 30.95 47.93 59.81 57.21 216.97 Access Road 34.18 34.59 35.80 45.91 46.44 196.92 Fuel - - - - - - Electrical Installation and 30.41 29.65 23.93 26.40 28.16 138.55 Equipment’s Bridges 11.41 11.41 11.41 11.41 11.41 57.06 Computers - Servers & Networks 20.23 25.69 26.70 26.84 24.94 124.39 Office equipment 1.83 1.72 1.64 1.11 0.32 6.62 Furniture & fixtures 5.96 9.96 12.91 14.55 15.83 59.21 Vehicles 3.10 3.32 3.59 4.05 4.71 18.78 Total 504.55 563.79 602.26 623.23 633.96 2,927.79 Aeronautical Depreciation as per 443.69 410.44 385.14 372.69 338.09 1,950.05 FAR Add: Aeronautical Depreciation 60.86 153.35 217.12 250.54 295.87 977.74 on New Additions Total 504.55 563.79 602.26 623.23 633.96 2,927.79 Less: Runway recarpeting 56.57 30.37 34.01 33.88 32.98 187.81 amortize separately as O&M Less: Depreciation on disallowed 3.19 3.57 3.46 3.41 2.93 16.57 projects Less: Higher depreciation in books as compared to the 17.69 17.53 17.51 13.81 13.34 79.88 Authority (614-line items) Less: Aeronautical Depreciation 7.12 7.07 7.01 7.01 7.01 35.22 on the assets as per SCN Aeronautical Depreciation on 419.98 505.25 540.26 565.13 577.70 2,608.31 RAB (a) Average Depreciation Rate 3.59% 4.01% 3.89% 3.83% 3.29% Aeronautical Depreciation on 25.76 28.76 27.93 27.49 19.74 129.68 HRAB (b) – Refer Table 216 Total Aeronautical 445.73 534.01 568.19 592.62 597.44 2,737.99 Depreciation (a+b) 6.6 HRAB FOR THE FOURTH CONTROL PERIOD BACKGROUND 6.6.1 MIAL commenced operations in CSMIA as a brownfield airport. However, assets of AAI pertaining to Mumbai airport while were put in custody of the AO but were not transferred to MIAL's books of accounts at the time of commencement of operations. 6.6.2 Schedule I of SSA defined the computation of regulatory base for the first year of the First Control Period as follows: "RB for the first regulatory period would be sum of (i) the Book Value of the Aeronautical Assets in the books of the JVC and (ii) the hypothetical regulatory base computed using the then prevailing tariff and the revenues, operation and maintenance cost, corporate tax pertaining to Aeronautical Services at the Airport, during the financial year preceding the date of such computation." Consultation Paper No. 08/2024-25 Page 269 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.6.3 Hence. Hypothetical Regulatory Asset Base (HRAB) was required to be determined and added to the Regulatory Asset Base and return has to be provided to the AO on the Regulatory Asset Base computed for TR calculation. MIAL’s SUBMISSION REGARDING HRAB FOR THE FOURTH CONTROL PERIOD 6.6.4 The Authority while determining tariff for the Third Control Period decided to remove value attributable to old T2 that was demolished from HRAB and computed impact of Rs. 258.83 crores as on 1st April 2019 on TR (refer table 232 of the Third Control Period Order). 6.6.5 TDSAT vide judgement dated 6th October 2023 has ruled that the decision of the Authority to reduce HRAB on account of demolition of old T-2 is not correct. Hence, MIAL has not considered the one-time impact of Rs. 258.83 crores computed by the Authority (Refer para 4.6.1) on account of reduction in HRAB for the purpose of calculation of true-up of the Third Control Period. 6.6.6 Based on the true-up values submitted by MIAL for the Third Control Period (Refer Table 77) MIAL has computed the HRAB for the Fourth Control Period as given in the table below: Table 213: HRAB for the Fourth Control Period as submitted by MIAL (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening HRAB 258.08 218.64 173.84 130.97 87.04 Depreciation for the year 39.44 44.80 42.88 43.93 34.59 205.63 Closing HRAB 218.64 173.84 130.97 87.04 52.45 Average HRAB 238.36 196.24 152.41 109.00 69.74 AUTHORITY'S EXAMINATION REGARDING HRAB FOR THE FOURTH CONTROL PERIOD 6.6.7 The Authority in its Third Control Period order has noted that HRAB of Rs. 966.03 crores determined in the First Control Period pertains to the value of assets that would have been in AAI’s books at the time of transfer of assets to MIAL, post privatization. The HRAB value so determined, thus included a portion of assets, attributable to the old T2 building. In the place of this old T2, a new T2 building was constructed in 2013-14. 6.6.8 In the opinion of the Authority, since the above-mentioned buildings and its related assets have already been demolished/proposed to be demolished, the operator ought not to get a return on these assets nor claim Depreciation reimbursement on the same. If both return on assets and Depreciation is continued to be allowed, then the operator gets a double benefit both on the non-existent assets and the new assets which are rebuilt. In order to ensure fairness, the Authority proposes that the cost which is attributable to old T2 which is included in the HRAB ought to be removed from the HRAB. 6.6.9 With regards to the TDSAT judgement on HRAB, the Authority based on the analysis provided in para’s from 1.9.2 to 1.9.5, the Authority is of the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court. 6.6.10 The Authority notes that the SSA does not specifically even allow for depreciation on HRAB. This is being allowed more as a practice during the period when the asset was in use. At the cost of repetition, the Authority wishes to reiterate that when the asset is demolished, it is logical and prescribed accounting practice and is also justified to remove such assets from the carrying value. Consultation Paper No. 08/2024-25 Page 270 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.6.11 In the opinion of the Authority, since the above-mentioned buildings (Terminal-1) and its related assets are being allowed to demolish, the operator ought not to get a return on these assets nor claim Depreciation reimbursement on the same. Like mentioned in the Third Control Period Order in para 4.4.10, “If both return on assets and Depreciation is continued to be allowed, then the operator gets a double benefit – both on the non-existent assets and the new assets which are rebuilt. In order to ensure fairness, the Authority proposes that the cost which is attributable to old T2 and T1B which is included in the HRAB ought to be removed from HRAB.” 6.6.12 The Authority notes that for Terminal-1 being demolished in this control period, it necessitates a corresponding reduction in the HRAB value from the time the Terminal-1 restarts functioning. 6.6.13 From the composition of assets of MIAL in 2012-13, i.e., before the capitalization of new T2 and when the entire assets of HRAB was existent, it is observed that, ‘runways, taxiways and apron’ constituted about 49% of the total asset cost. ‘Upfront Fees’ constitute about 1% of the total asset block. Hence, the balance of 50% of the remaining asset block pertained to terminal related assets. The area occupied by old T2 and T1 prior to demolishing old T2 was as follows: Table 214: Terminal area and Airside proportion in HRAB pre-demolition of T2 Terminal Area Ref Proportion (% of Total) Terminal 1 A 24.44% Terminal 2 B 25.74% GA Terminal C 0.22% Total Terminal Area D = A+B+C 50.41% Upfront Fees E 4.32% Intangible Assets F 0.84% Taxiways and Aprons G 29.26% Runways H 15.17% Total Airside and Other Assets I = E+F+G+H 49.59% Total HRAB Assets J = D+I 100.00% 6.6.14 The necessary reduction in HRAB, on account of the demolition and re-construction of Terminal 1 has been detailed below: Table 215: Computation of Closing HRAB as proposed by the Authority on account of the Terminal 1 demolition (Rs. in crores) Particulars Ref Amount Opening HRAB as on 1st April 2009 A 966.03 Percentage attributable to Terminal Area 1 B1 24.44% Percentage attributable to Terminal Area 2 B2 25.74% HRAB pertaining to T1 C1 = B1*A 236.14 HRAB pertaining to T2 C2 = B2*A 248.66 Opening HRAB of T1 as on 1st April 2009 D = C1 236.14 Depreciation rates from FY 2010 to FY 2028 based on applicable E 87.02% depreciation rates for each year Accumulated Depreciation as of 31st Mar 2028 F = D*E 205.50 Closing HRAB of T1 as on 31st March 2028 G = D-F 30.64 Depreciation rate for FY 2029 [Refer Table 212] H 3.29% Depreciation for FY 2029 I = H*D 7.78 Consultation Paper No. 08/2024-25 Page 271 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Depreciation for the first 6 months in FY 2029 J = I / 2 3.89 Closing HRAB of T1 as on 30th September 2028 K = G - J 26.75 Opening HRAB as on 1st April 2028 (Refer Closing HRAB of FY 28 L 93.09 in Table 216) M = (A-C2) * Depreciation on total HRAB for the first 6 months 11.82 H / 2 Total HRAB as on 30th September 2028 N = L - M 81.27 Total HRAB as on 30th September 2028 after adjusting T1 O = N - K 54.52 P = H * (A- Depreciation on the total HRAB for the balance 6 months 7.93 C2-D) / 2 Total Depreciation on HRAB for FY 2029 Q = M+P 19.74 Closing HRAB as on 31st March 2029 R = O - P 46.60 6.6.15 Thus, the necessary reduction has been applied to HRAB from mid-FY 2028-29 onwards as per the re- construction completion date of Terminal 1. The Authority has done the HRAB computation along with the removal of Terminal 1 in the table below: Table 216: HRAB as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening HRAB 203.03 177.27 148.51 120.58 93.09 Depreciation for the year 25.76 28.76 27.93 27.49 19.74 129.68 Closing HRAB 177.27 148.51 120.58 93.09 46.60 Average HRAB 190.15 162.89 134.55 106.83 69.84 6.7 REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD MIAL SUBMISSION REGARDING RAB FOR THE FOURTH CONTROL PERIOD 6.7.1 MIAL submission on RAB for the Fourth Control Period for CSMIA is given in the table below: Table 217: RAB submitted by MIAL for CSMIA for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening RAB 4,587.37* 7,017.23 8,381.34 11,027.60 12,126.64 Add: Proportionate Capitalization during the 2,414.14 2,052.67 3,458.78 2,023.51 6,563.45 16,512.55 year Add: Brought Forward 538.05** - - - - 538.05 Balance (Refer Table 57) Less: Depreciation 522.33 688.56 812.53 924.47 963.05 3,910.94 Closing RAB 7,017.23 8,381.34 11,027.60 12,126.64 17,727.04 Average RAB 5,802.30 7,699.29 9,704.47 11,577.12 14,926.84 *Refer Table 57 for opening RAB of FY 25 **Brought Forward Balance from FY 24 AUTHORITY’S EXAMINATION REGARDING RAB FOR THE FOURTH CONTROL PERIOD 6.7.2 The Authority proposes to adopt the capitalization of Aeronautical Expenditure in accordance with Table 208 and the depreciation amounts in accordance with Table 212. Consultation Paper No. 08/2024-25 Page 272 of 349CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.7.3 Based on the above, the RAB proposed to be considered by the Authority for determination of Aeronautical tariff for the Fourth Control Period is given in the table below: Table 218: RAB proposed to be considered by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening RAB 4,436.41* 5,856.49 6,258.93 6,992.03 7,273.88 Add: Capitalization during the year (Refer 1,325.70 907.69 1,273.36 846.98 2,789.87 7,143.61 Table 208) Add: Brought Forward Balance (Refer Table 514.35** - - - - 514.35 76) Less: Aeronautical Depreciation (Refer 419.98 505.25 540.26 565.13 577.70 2,608.31 Table 212) Closing RAB 5,856.49 6,258.93 6,992.03 7,273.88 9,486.05 Average RAB 5,146.45 6,057.71 6,625.48 7,132.95 8,379.97 *Refer Table 75 for opening RAB of FY 25 **Brought Forward Balance from FY 24 Table 219: RAB and HRAB proposed to be considered by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Average RAB (Refer Table 218) 5,146.45 6,057.71 6,625.48 7,132.95 8,379.97 Average HRAB (Refer Table 216) 190.15 162.89 134.55 106.83 69.84 Total 5,336.60 6,220.60 6,760.02 7,239.79 8,449.81 6.8 AUTHORITY’S PROPOSAL REGARDING CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its examination, the Authority proposes the following with regards to CAPEX, Depreciation and RAB for the Fourth Control Period 6.8.1 To consider average RAB and average HRAB as per Table 219 for the Fourth Control Period. 6.8.2 To consider Depreciation as per Table 212 for the Fourth Control Period. 6.8.3 To reduce (adjust) 1% of the uncapitalized project cost from the TR in case any particular capital project is not completed/capitalized as per the approved capitalization schedule, as mentioned in Table 208. The same will be examined at the time of Tariff Determination for the Fifth Control Period. 6.8.4 To consider Input Tax Credit for the Fourth Control Period as per Table 203, and to examine the accounting of input tax credit in accordance with Chapter V of The Central Goods and Services Tax Act, 2017 and make necessary adjustments at the time of tariff determination for the Fifth Control Period. 6.8.5 To consider Average RAB while calculating RAB for tariff determination for the Fourth Control Period and to true-up the Aeronautical Capital expenditure, Depreciation and RAB based on actual additions to RAB on a pro-rata basis at the time of tariff determination for Fifth Control Period subject to the same being reasonable, efficient and justified. Consultation Paper No. 08/2024-25 Page 273 of 349FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD 7. FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD 7.1 MIAL SUBMISSIONS ON FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD MIAL’S SUBMISSION FOR COST OF EQUITY 7.1.1 MIAL has submitted its Cost of Equity based on factors outlined in the Cost of Equity study conducted by PwC for Adani Group's Ahmedabad Airport in March 2021. This PwC report is based on a study conducted by IIM-Bangalore on the Determinants of Cost of Capital in December 2019, for the Third Control Period for MIAL. 7.1.2 MIAL has also incorporated an additional 1% premium of risk factor due to limited traffic growth in recent past as compared to all India growth or other PPP Airports growth (10%-16%). MIAL’s market share as compared to all India traffic has been on declining trend (reduced from 21% to 13%) since last 10 years whereas for other Airports the trend is either increasing or remains stable. The same is attributable to the fact that Mumbai is an airside constrained airport. MIAL is of the view that this risk factor needs to be duly provided for while evaluating the cost of equity. This “Additional Risk Premium” due to lower growth and capacity saturation is estimated as 1% based on below calculations: - Table 220: Risk Factor as computed by MIAL Particulars Percentage MIAL Market Share in 2009-10 (A) 21% MIAL Market Share in 2014-15 (B) 19% MIAL Market Share in 2019-20 (C) 13% Annual % market share lost in 10 years (A – C) / 10 0.72% Annual % market share lost in 5 years (B – C) / 5 1.16% Risk factor considered for calculation purposes 1% 7.1.3 After considering the study and additional risk premium and incorporating Capital Asset Pricing Model (CAPM) equation, MIAL submitted the following table summarizing the sensitivity of the gearing ratio. Table 221: Cost of Equity for different gearing ratios as determined by MIAL Gearing Ratio CoE 48:52 18.11% - 18.28% 60:40 20.55% - 20.76% 65:35 22.06% - 22.29% 70:30 24.07% - 24.34% 7.1.4 Accordingly, in view of the above, and given that the Authority has been considering gearing ratio of 48:52, MIAL submits that CoE should be allowed at 18.30%. MIAL’S SUBMISSION FOR COST OF DEBT 7.1.5 As of date, MIAL has two outstanding loans and the same is also reflected in the Financial Statements. 7.1.6 External Commercial Borrowing- In April 2022, MIAL raised USD 750 million (~Rs 5,500 crores) through 7.25-year USD Notes/Bonds through US Private Placement (USPP). Funds raised through Private placement along with additional borrowings from Adani Airport Holdings Limited (AAHL) have been used for refinancing of existing short term bridge loan of Rs. 7,250 crores as of 31 March 2022. It is to be noted that only ~75% of existing debt was refinanced from USD notes and balance was refinanced by Consultation Paper No. 08/2024-25 Page 274 of 349FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD inter-company loan from AAHL. USD Notes are repayable in 7.25 years on the last day of Tenor (Bullet Repayment on last date of Tenor). As per the existing loan agreements, the effective interest rate is ~11.5% (7.25% effective coupon rate + 3.8% hedging cost + 6% TDS on coupon payments) Table 222: External Commercial Borrowing and cost of its debt for the Fourth Control Period (Rs. in crores) Particulars FY25 FY26 FY27 FY28 FY29 Opening Debt Outstanding 6,339 6,339 6,339 6,339 6,339 Closing Debt Outstanding 6,339 6,339 6,339 6,339 6,339 Cost of Debt 11.50% 11.50% 11.50% 11.50% 11.50% 7.1.7 The intercompany loan from Adani Airport Holdings Limited is unsecured and subordinated to the senior debt. It carries an interest of 12.5% per annum. Table 223: Intercompany loan and cost of its debt for the Fourth Control Period (Rs. in crores) Particulars FY25 FY26 FY27 FY28 FY29 Opening Debt Outstanding 2,584 2,928 3,318 3,760 4,260 Closing Debt Outstanding 2,928 3,318 3,760 4,260 4,827 Cost of Debt 12.50% 12.50% 12.50% 12.50% 12.50% 7.1.8 MIAL has estimated the average cost of debt to be 11.93% per annum for the Fourth Control Period as below: Table 224: MIAL’s Calculation of Weighted Average Cost of Debt for the Fourth Control Period (Rs. in crores) Particulars FY25 FY26 FY27 FY28 FY29 Opening Debt Outstanding 8,743 12,622 15,415 18,760 21,741 Closing Debt Outstanding 12,622 15,415 18,760 21,741 23,374 Average Debt 10,683 14,018 17,088 20,251 22,557 Interest Cost 1,274 1,666 2,036 2,418 2,697 Cost of Debt 11.93% 11.88% 11.91% 11.94% 11.96% Weighted Avg. Cost of Debt 11.93% 7.1.9 MIAL, for availing a higher cost of debt has stated that the interest rates surged sharply post December 2020. Thus, continuing with the existing debt facility would have increased the interest rate by 1.25% for FY 2022-23 and 2.50% for FY 2023-24 and have provided the following computation to support this position: Table 225: Computation of weighted average cost of debt by MIAL if it had continued with existing debt facility throughout the Third Control Period (Rs. in crores) Particulars FY 20 FY 21 FY 22 FY 23 FY 24 Opening Debt (a) 6,273.60 6,138.40 6,075.64 7,183.00 8,114.04 Closing Debt (b) 6,138.40 6,075.64 7,183.00 8,114.04 8,743.10 Average Debt (c = (a+b)/2) 6,206.00 6,107.02 6,629.32 7,648.52 8,428.57 Cost of Debt (%) (d) 10.30% 10.30% 10.30% 11.55% 12.80% Weighted Average Cost of Debt 11.17% 7.1.10 As per MIAL, the weighted average cost of debt would have touched 11.17% if the same debt facility had continued throughout the Third Control Period. Consultation Paper No. 08/2024-25 Page 275 of 349FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD MIAL’S SUBMISSION FOR GEARING RATIO 7.1.11 For calculating the Fair Rate of Return (FRoR), MIAL has assumed the same debt-equity ratio of 48%:52% as the Third Control Period, which is consistent with debt-equity ratio considered by the Authority in various recent tariff orders. MIAL’S SUBMISSION FOR FAIR RATE OF RETURN 7.1.12 Based on the above parameters, the below table summarizes the FRoR for the Fourth Control Period as submitted by MIAL: Table 226: FRoR as submitted by MIAL Particulars FY25 FY26 FY27 FY28 FY29 Cost of Debt 11.93% 11.88% 11.91% 11.94% 11.96% Cost of Equity 18.30% 18.30% 18.30% 18.30% 18.30% D/E Ratio 0.48:0.52 0.48:0.52 0.48:0.52 0.48:0.52 0.48:0.52 FRoR 15.24% 7.2 AUTHORITY’S EXAMINATION RELATING TO FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD AUTHORITY’S EXAMINATION OF COST OF EQUITY 7.2.1 The Authority notes that MIAL has proposed 18.30% as cost of equity in MYTP based on the study conducted by PwC for Adani Group’s Ahmedabad Airport. 7.2.2 The Authority in the Third Control Period had commissioned an independent study by IIM Bangalore on the determinants of Cost of Capital pertaining to Mumbai Airport. Vide this study, the Cost of Equity was determined to be 15.13% for MIAL, using the CAPM methodology. 7.2.3 The Authority proposes to consider the same cost of equity as decided in the Third Control Period i.e., 15.13% for the Fourth Control Period as against the cost of equity submitted by MIAL. 7.2.4 The Authority finds that the traffic has already reached pre-Covid levels at CSMIA, and also notes that all the potential and constraints of CSMIA was known to MIAL since the beginning of the concession. No new developments or anticipated events have arisen that would result in additional risk beyond the levels that have existed since the beginning, and which MIAL has taken into account while accepting the concession. Further the COE has been determined on an objective basis through an expert study (IIM Bangalore) which has taken into account all risks both favorable and unfavorable that MIAL faces. Therefore, the Authority is not inclined to accept MIAL’s claim for a 1% upward risk adjustment in COE. AUTHORITY’S EXAMINATION OF COST OF DEBT 7.2.5 The Authority noted that MIAL has estimated the weighted average cost of debt at 11.93% for the Fourth Control Period based on the two outstanding loans in its financial statements, which includes ECB loan @11.50% and Inter Company Loan from Adani Airport Holdings Limited @ 12.50%. 7.2.6 The Authority has re-worked the Cost of Debt that would have prevailed if MIAL had continued with the existing loan arrangement as at the start of the Third Control Period. (i) The old loan arrangement with SBI was based on an RBI mandated MCLR (8.50%) + Spread Rate (1.80%). Thus, continuing the same would have resulted in a lower interest rate for MIAL from March 2019 to May 2022, in which period the MCLR fell from 8.50% to 7.00%. (ii) From May 2022, there was a gradual increase in the MCLR, which touched 8.65% by March 2024. Consultation Paper No. 08/2024-25 Page 276 of 349FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD 7.2.7 Recomputing the CoD based on the para above, the Authority notes that the rate would have been lower had MIAL continued with the original loan arrangement. 7.2.8 Therefore, the Authority has proposed not to consider MIAL’s submission regarding the cost of debt for the Fourth Control Period. Instead, it has determined the cost of debt based on the State Bank of India’s Marginal Cost of Funds-based Lending Rate (MCLR) as of March 2024, which is 8.65%. 7.2.9 The Authority has examined the spread relevant to MIAL’s credit rating based on data taken from Fixed Income Money Market Derivatives Association (FIMMDA), as of April 2024. Basis this, the spread applicable to MIAL’s credit rating of AA- is 150 basis points as shown in Figure 41. 7.2.10 Considering a spread of 150 basis points as per Para 7.2.9 and the MCLR as per Para 7.2.8, the total Cost of Debt for the Fourth Control Period is recalculated as follows: 8.65% (MCLR) + 1.50% (Spread for AA- ) = 10.15%. Figure 41: 5-year Corporate Bond Spread – Data Source: FIMMDA 7.2.11 Accordingly, the Authority proposes to consider the Cost of Debt at 10.15% for the Fourth Control Period. However, the Cost of Debt shall be trued up based on actual (or) SBI average 1-year MCLR plus 150 bps (whichever is lower) at the time of determination of tariff for the 5th Control Period. AUTHORITY’S EXAMINATION REGARDING THE GEARING RATIO 7.2.12 The Authority has considered to accept MIAL’s submission of the debt-to-equity ratio as considered in the Third Control Period Order i.e., 48%:52%, which is in line with gearing ratio considered in the independent study of IIM Bangalore. As gearing of 48:52 (Debt:Equity) is efficient gearing, it will not be trued up. FAIR RATE OF RETURN 7.2.13 Based on the revised CoD and CoE, the authority proposes to consider the following FRoR for the Fourth Control Period. Table 227: Authority's proposal for FRoR for the Fourth Control Period Authority’s Proposal for Fourth Control Particulars Period Efficient Cost of Debt 10.15% Cost of Equity 15.13% D/E Ratio 0.48:0.52 FRoR 12.74% Consultation Paper No. 08/2024-25 Page 277 of 349FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD 7.3 AUTHORITY’S PROPOSALS RELATING TO FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD Based on the materials before it and its analysis, the Authority proposes the following with respect to FRoR for the Fourth Control Period. 7.3.1 To consider Cost of Equity, efficient Cost of Debt, Notional Debt Equity Ratio and FRoR for the Fourth Control Period as per Table 227. 7.3.2 To true up the Cost of Debt for the Fourth Control Period based on actuals (or) SBI average 1-year MCLR plus 150 bps (whichever is lower) at the time of tariff determination for the Fifth Control Period. Consultation Paper No. 08/2024-25 Page 278 of 349INFLATION FOR THE FOURTH CONTROL PERIOD 8. INFLATION FOR THE FOURTH CONTROL PERIOD 8.1 BACKGROUND 8.1.1 The Authority adopted CPI “mean” inflation indices while determining tariffs for all the three previous control periods. This was based on the Operation, Management and Development Agreement (OMDA) entered in between Airports Authority of India and Mumbai International Private Limited for Mumbai Airport on 4th April 2006. 8.1.2 The CPI indices used for the First, Second and Third Control Periods are given in the below table: Table 228: CPI index used for Control Periods Period Basis CPI Index First Control Period Average of quarterly median of CPI-IW for FY13 9.40% First Control Period Average of quarterly median of CPI-IW for FY14 7.80% Second Control Period Mean of annual average % change over next five years 5.00% Third Control Period Mean of annual average % change for FY25 4.50% 8.2 MIAL’S SUBMISSIONS REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD 8.2.1 MIAL has submitted the following on CPI (as per OMDA) inflation rates for the Third Control Period: Referring to the “Results of the survey of professional forecasters on macroeconomic indicators – Round 87”, MIAL has considered median CPI inflation of 4.60 % p.a. (Rounding it off to 5.00%) for Q4 of FY 2023-24 in financial projections for the Third Control Period. 8.3 AUTHORITY’S EXAMINATION REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD 8.3.1 The Authority has reviewed MIAL’s submission regarding the CPI (as per OMDA) inflation. The Authority notes that CPI has been used by MIAL in forecasting revenue / cost where relevant. 8.3.2 The Authority proposes to consider the recent “Results of the Survey of Professional Forecasters on Macroeconomic Indicators – Round 90th released on 9th Oct 2024 published by the Reserve Bank of India (RBI). Considering this, the Authority proposes to consider the Mean of CPI inflation forecasts (All Commodities) for FY 2024-25 till FY 2028-29. Table 229: Inflation rates proposed by the Authority for the Fourth Control Period Particular FY25 FY26 FY27 FY28 FY29 Inflation 4.50% 4.40% 4.40% 4.40% 4.40% 8.4 AUTHORITY’S PROPOSAL REGARDING INFLATION FOR THE FOURTH CONTROL PERIOD Based on the material before it and its analysis, the Authority proposes the following regarding Inflation for the Fourth Control Period: 8.4.1 To consider the Mean CPI Inflation (as per the provisions of OMDA) for the Fourth Control Period for MIAL based on the 90th RBI Forecasters Survey as detailed in Table 229. Consultation Paper No. 08/2024-25 Page 279 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9. OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.1 MIAL’S SUBMISSION REGARDING OPERATING AND MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.1.1 MIAL has projected operating expenses for the Fourth Control Period based on the following assumptions in their MYTP. (i) Renovation of Terminal 1: MIAL is planning to demolish Terminal 1 in FY 2025-26 for reconstruction, and the new T1 is expected to be completed by Sep 2028. This re-construction will increase the total Terminal area from 5,51,563 sqm to 6,49,506 sqm. Table 230: Terminal Area Details Terminal’s Existing (FY24) FY26 FY29 T1 1,03,131 - 2,01,074 T2 4,48,432 4,48,432 4,48,432 Total 5,51,563 4,48,432 6,49,506 (ii) MIAL has accounted for the impact in change (%) in the terminal area due to T1 demolition while forecasting operating expenses for the Fourth Control Period. Table 231: Area to be used for Cost Computation FY 24 Terminal Area Ref FY 25 FY 26 FY 27 FY 28 FY 29 (Actual) T1 (SQM) A 1,03,131 1,03,131 1,03,131 - - 2,01,074 No. of months B 12 12 6 - - 6 usage T1 (SQM) – Area proportionated for C = A*(B/12) 1,03,131 1,03,131 51,566 - - 1,00,537 the period of usage T2 (SQM) D 4,48,432 4,48,432 4,48,432 4,48,432 4,48,432 4,48,432 Total (SQM) E = C+D 5,51,563 5,51,563 4,99,998 4,48,432 4,48,432 5,48,969 F = (1- (Current Change in year’s ‘E’/ Terminal Area 0.00% (9.35%) (10.31%) 0.00% 22.42% Previous year’s (%) ‘E’)) * 100 (iii) Base Year: FY 2023-24 has been considered as the base year for all the expense heads, and the relevant growth percentages were applied to this base. (iv) Inflationary increase: MIAL has considered inflation as per the 87th round of RBI Forecasters Survey (4.60%) dated 5th April 2024 and rounded it off to 5% for all the expenses. (v) Additional Increase: Besides the inflationary increase, MIAL has also factored in an increase of an additional 5% for certain expense heads. (vi) Adjustment to O&M due to Terminal Area reduction – As per Table 231. 9.1.2 Total Operating Expense submitted by MIAL in MYTP for the Fourth Control Period is as follows: Table 232: Total Operating and Maintenance (O&M) expenditure submitted by MIAL for the Fourth Control Period (Rs. in crores) Sl. No. Particulars FY25 FY26 FY27 FY28 FY29 Total 1 Employee Costs 190.38 209.42 230.36 253.39 325.19 1,208.74 Consultation Paper No. 08/2024-25 Page 280 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Sl. No. Particulars FY25 FY26 FY27 FY28 FY29 Total 2 Utilities Expenses (net) 164.07 171.89 178.22 205.58 289.12 1,008.87 3 Repair & Maintenance Expenses 198.93 206.49 229.18 254.22 281.85 1,170.68 4 Rents, Rates & Taxes 72.04 73.28 74.65 78.20 79.86 378.04 5 Advertisement Expense 3.94 4.33 4.76 5.24 5.77 24.04 6 Administrative Expenses 65.8 72.38 79.61 87.58 96.33 401.70 7 Insurance Expenses 20.46 23.27 27.45 29.69 37.45 138.33 8 Consumable Stores 19.22 21.14 23.25 25.58 28.14 117.32 9 Operating Costs 214.13 222.11 228.59 256.7 340.11 1,261.65 10 Working Capital Interest 54.03 133.8 152.99 151.32 168 660.14 11 Financing Charges 70.91 58.15 67.22 62.41 42.75 301.44 12 Collection Charges over DF 5.76 - - - - 5.76 13 Runway Re-carpeting 0.09 0.09 - - - 0.19 Carrying Cost on Runway Re- 14 0.02 0.01 - - - 0.03 carpeting 15 Digitalization Cost 138.00 119.00 128.00 135.00 139.00 659.00 16 Corporate Cost Allocation 94.00 103.40 113.74 125.11 137.63 573.88 Total 1,311.78 1,418.76 1,538.04 1,670.03 1,971.19 7,909.79 9.1.3 The summary of MIAL’s estimation, rationale year on year growth factored and resultant CAGR for the control period is as follows: Table 233: MIAL’s estimation, rationale and growth on Operating Expenses for the Fourth Control Period Y-o-Y Resultant Cost Head Estimation Rationale Growth CAGR MIAL has observed high attrition due to new upcoming airports and expansion works in other Rate increase big airports in the country. MIAL has considered 10.00% an increase of 10% YoY in average cost per Employee employee. 15.33% Cost • 2024-25 -- 95 new employees in the first FY of 2024-25 & Headcount >+95 hiring 200 new employees in the last FY of 28- increase • 2028-29 -- 29 once the new Terminal 1 start's functioning. >+200 Electricity cost per unit is based on FY25 tariffs fixed as per the order of MERC & thereafter Rate increase 10.00% Utilities projected to increase by 10% YoY based on Expenses - increase in rates for last 3 years. 16.18% Power MIAL is expecting that gross consumption of Consumption units will increase by 5% per annum during the 5.00% increase Fourth Control Period. Utilities Rate increase Based on historical trend 7.00% Expenses - Consumption 24.18% Based on historical trend 5.00% Water increase Repairs and Maintenance cost for MIAL have Repairs & 5-Year CAGR increased at CAGR of 10.34% for 5 years (from Maintenance (FY15– 10.34% 9.35% FY15 to FY20) and trend is expected to remain Expense FY20) the same in the future. Rents, rates Based on rental agreements entered and tax in force 10.00% 6.88% & taxes Advertiseme Advertisement costs are expected to increase by Rate increase 10.00% 10.00% nt expenses 10%, i.e., CPI+5% YoY Administrati Administrative costs are expected to increase by Rate increase 10.00% 10.00% ve expenses 10%, i.e., CPI+5% YoY Consultation Paper No. 08/2024-25 Page 281 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Y-o-Y Resultant Cost Head Estimation Rationale Growth CAGR Insurance Insurance expenses are projected as % of Gross Varies each Rate increase 16.00% Expenses Block Assets year Consumable Consumable Stores Expenses are expected to Rate increase 10.00% 10.00% Stores increase by 10% i.e. CPI+5% YoY Operating CAGR of total Operating cost from FY15 to Rate increase 12.30% 14.25% Cost FY20 Corporate Corporate Cost Allocation are expected to Rate increase 10.00% 12.61% Cost increase by 10%, i.e., CPI+5% Y-o-Y Fixed + • Fixed Cost to Digital Service Provider Digitalizatio Onboarding + • Onboarding Cost of Passengers - 0.18% n Cost Loyalty Costs • Loyalty Program Cost Financing • Upfront fee of 1.5% to be paid on future debts - 9.01% Charges • Bank Processing Fees 9.1.4 MIAL has stated that it has segregated Operating Expenses in accordance with the earlier methodology adopted by the Authority, between aeronautical and non-aeronautical services in the following manner: (i) Identification of directly attributable cost to aeronautical services, non-aeronautical services and common cost for each cost head (ii) Segregation of directly attributable cost based on its incurrence; and (iii) Allocation of common cost based on a specific methodology for each cost head. 9.1.5 Expenses allocation ratio and the resultant aeronautical expense on application of these ratios to the total estimated expenses as submitted by MIAL in MYTP as follows: Table 234: Aeronautical O&M expenses submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Aero% FY25 FY26 FY27 FY28 FY29 Total Employee Costs 93.00% 177.05 194.76 214.23 235.66 302.34 1,124.04 Utilities Expenses 98.70% 161.94 169.66 175.91 202.92 285.37 995.80 Repair & Maintenance 94.93% 188.84 196.02 217.56 241.33 267.56 1,111.32 Expenses Rents, Rates & Taxes 88.33% 63.63 64.73 65.94 69.08 70.54 333.91 Advertisement Expenses 89.78% 3.54 3.89 4.28 4.71 5.18 21.58 Administrative Expenses 80.61% 53.04 58.35 64.18 70.6 77.66 323.82 Insurance Expenses 83.40% 17.06 19.41 22.9 24.76 31.24 115.36 Consumable Stores 91.38% 17.56 19.32 21.25 23.37 25.71 107.21 Operating Costs 89.43% 191.5 198.64 204.43 229.56 304.16 1,128.28 Working Capital Interest 83.40% 45.06 111.59 127.59 126.2 140.11 550.56 Financing Charges 83.40% 59.14 48.5 56.06 52.05 35.66 251.41 Runway Recarpeting 100.00% 0.09 0.09 - - - 0.19 Carrying Cost on Runway 100.00% 0.02 0.01 - - - 0.03 Recarpeting Digitalization Costs 90.00% 124.2 107.1 115.2 121.5 125.1 593.1 Corporate Cost Allocation 93.00% 87.42 96.16 105.78 116.36 127.99 533.71 Total 1,190.10 1,288.21 1,395.31 1,518.09 1,798.69 7,190.41 Consultation Paper No. 08/2024-25 Page 282 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2 AUTHORITY’S EXAMINATION REGARDING O&M EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2.1 The Authority has carefully examined MIAL’s submissions on Operation and Maintenance (O&M) Expenses for the Fourth Control Period taking into account the tariff setting principles to ensure that only the efficient, justified and reasonable expenses are allowed on projection basis. 9.2.2 The Authority has reviewed the O&M Expenses and proposes to adopt the following broad methodology for determining the O&M expenses for the Fourth Control Period.: (i) Base Year: In order to form a basis of forecasting expense for the Fourth Control Period, the Authority has considered the O&M expense of FY 2024 as base year and applied growth percentage over it. (ii) Adjustment to O&M due to Terminal Area reduction (Refer para 6.3.120). (iii) Inflationary increase: MIAL has considered an inflationary increase towards expenses. The CPI (as per OMDA) inflation rate is considered based on the results of the 90th round of RBI Professional Forecasters Survey as mentioned in Section 8.3, except in the case of: a) Employee costs and corporate costs, where inflation of 6% has been considered. b) Repair and Maintenance cost, which is forecasted at a CAR rate and, c) Digitalization Cost is considered at the cost submitted by MIAL. (iv) Re-allocation of the expenses into aeronautical, non-aeronautical and common as explained in Section 10.3. Where there are variations to the methodology referred in Section 10.3, (in case of certain operating expenditure heads viz., Employee Costs, Corporate Cost, Digitalization Cost, Working Capital Interest and Financing Charges), the rationale for allocation is explained under the analysis of respective operating expenditure in the subsequent paragraphs of that Section. (v) Gross Fixed Asset Ratio: The FY 24 gross fixed asset ratio of 83.38% (Refer Table 73) is taken as a base and used for projections for the fourth control period wherever applicable. 9.2.3 To understand the trend of the O&M expenses and estimation accuracy, the Authority has: (i) Reviewed the trend lines for the last 15 years on growth of O&M expense and, (ii) Reviewed MIAL’s efficiency in estimation of Third Control Period with actuals Consultation Paper No. 08/2024-25 Page 283 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Figure 42: Trendline depicting growth in major cost heads in the last 15 years Trendline depicting major cost heads (in Rs. crs) CAGR of total expenditure: 5.77% 250.00 200.00 150.00 100.00 50.00 - Employee cost Utilities expenses (net) Repair & maintenance expense Administrative expenses Operating Expenditure Figure 43: MIAL’s estimation vis-à-vis actual incurrence of cost for the Third Control Period MIAL's estimation vis-a-vis actual incurrence of cost for third control period 1200 1000 800 600 400 200 0 TCP Forecast TCP Actuals 9.2.4 The Authority observes from the above analysis that MIAL’s estimation has been aggressive for employee costs, utilities expenses & other operating costs. 9.2.5 The Authority has compared the actual growth rate of expenditure in the Second and the Third Control Periods with the estimated growth rate submitted by MIAL for the Fourth Control Period in the table below: Table 235: Comparison of Actual CAGR for the Second & the Third Control Periods vis-à-vis estimated CAGR for the Fourth Control Period Estimated CAGR for Actual CAGR for the Actual CAGR for the Cost Head the Fourth Control Second Control Period Third Control Period Period Employee Costs 8.50% (7.50%) 14.32% Consultation Paper No. 08/2024-25 Page 284 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Estimated CAGR for Actual CAGR for the Actual CAGR for the Cost Head the Fourth Control Second Control Period Third Control Period Period Utilities Expenses (Net) 1.37% 2.35% 15.22% Repair & Maintenance Expenses 7.62% 0.11% 9.10% Administrative Expenses 12.53% (6.66%) 10.00% Operating Expenditure 12.54% 2.34% 12.26% Rents, Rates & Taxes 33.12% 5.64% 2.61% Advertisement Expenses 9.97% (8.78%) 2.61% AOA Fees 4.62% - - Insurance Expenses (0.99%) 18.15% 16.32% Consumable Stores 10.42% 19.28% 10.00% Financing Charges 44.87% 2.93% (11.88%) Digitalization Costs - - 0.18% Corporate Costs - - 10.00% 9.2.6 The Authority notes that the CAGR for O&M expenses in the Third Control Period is not directly comparable due to the impact of the COVID-19 pandemic on operations and traffic. 9.2.7 The Authority has analyzed MIAL’s submission regarding total operating expenses for the Fourth Control Period and has presented its examination in the subsequent paragraphs: Employee Costs: 9.2.8 MIAL has projected an increase of 90 employees in FY 25, bringing the total headcount from 1,105 employees in FY 2024 to 1,195 in FY 2025. MIAL has submitted that this increase is on account of the ongoing reconstruction of the T1 terminal. MIAL has indicated that the hiring is being undertaken proactively to facilitate employee training and enhance operational efficiency. Furthermore, upon the completion of the T1 reconstruction in Sep 2028 which will result in an additional 1 lakh sqm of operational area, MIAL estimates a further increase of 200 employees. 9.2.9 The Authority has examined MIAL’ submission and has also obtained a department wise headcount as per the below table: Table 236: Employee Count for the Fourth Control Period as submitted by MIAL Department Name Classification FY 24 FY25 FY26 FY27 FY28 FY29 Land Management and Common 4 5 5 5 5 6 Slum Rehabilitation CSD Non-Aeronautical 16 16 16 16 16 18 Project Operations Aeronautical 35 88 88 88 88 101 CEO Office Common 6 6 6 6 6 7 Operations Procurement Aeronautical 15 16 16 16 16 18 Finance and Accounts Common 34 38 38 38 38 44 Information Technology Common 12 16 16 16 16 18 Terminal Operations Aeronautical 65 67 67 67 67 87 Administration Common 6 6 6 6 6 7 Guest Relations Common 16 16 16 16 16 18 Jaya He Aeronautical 2 2 2 2 2 2 Security Aeronautical 96 96 96 96 96 110 Landside Operations Aeronautical 9 9 9 9 9 10 Commercial Non-Aeronautical 27 27 27 27 27 31 Legal Common 7 9 9 9 9 10 Human Resources Common 13 14 14 14 14 16 Aero Commercial Aeronautical 3 3 3 3 3 3 Horticulture Aeronautical 6 6 6 6 6 7 Consultation Paper No. 08/2024-25 Page 285 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Department Name Classification FY 24 FY25 FY26 FY27 FY28 FY29 Aerodrome Rescue & Fire Aeronautical 176 178 178 178 178 205 Fighting Airport Operations Aeronautical 35 38 38 38 38 44 Services Airside & Ground Aeronautical 10 10 10 10 10 12 Maintenance Airside Operations Aeronautical 3 5 5 5 5 6 Airside Safety Aeronautical 45 45 45 45 45 52 Baggage Operations Aeronautical 26 26 26 26 26 30 Engg & Maint Aeronautical 77 80 80 80 80 104 Environment Aeronautical 3 3 3 3 3 3 Facilities Common 19 19 19 19 19 22 Health &Safety Aeronautical 5 7 7 7 7 8 Joint Control Centre Aeronautical 5 7 7 7 7 8 Quality and Customer Care Aeronautical 44 46 46 46 46 53 Medical Services Aeronautical 3 3 3 3 3 3 Corporate Communication Common 4 4 4 4 4 5 Corporate Relations Common 1 1 1 1 1 1 Operations – ILHBS Aeronautical 260 266 266 266 266 306 Corporate Aviation Aeronautical 10 10 10 10 10 12 Terminal Cargo Non-Aeronautical 7 7 7 7 7 8 Total 1,105 1,195 1,195 1,195 1,195 1,395 9.2.10 The Authority has examined the major increases in headcount and notes that an increase of 53 employees in the Project Operations Department would be required in view of the proposal to reconstruct Terminal 1. Additionally, the increase of 20 employees in Terminal Operations in FY 2029 would be necessary to support operations when the reconstructed T1 becomes operational. Accordingly, the Authority proposes to consider the employee count as estimated by MIAL for the Fourth Control Period. 9.2.11 MIAL has projected Employee Salary cost at a y-o-y growth rate of 10% as stated in para 9.1.1. Table 237: Employee Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Employee Cost 190.38 209.42 230.36 253.39 325.19 1,208.74 9.2.12 The Authority analyzed this Employee salary cost growth submitted by MIAL as quite steep and instead proposes to rationalize the growth rate. 9.2.13 The Authority assessed the past CAGR of Employee expenses and found that the expenses grew at a CAGR of 8.50% during the Second Control Period. The Third Control Period’s CAGR was not considered due to a negative value as a result of the inclusion of the Corporate Costs. 9.2.14 The Authority, after analysis of the submissions as well as past trend and in line with the recent tariff orders, proposes to consider a growth rate of 6% Y-o-Y over the base year of FY 24. 9.2.15 Based on the above, the employee cost recalculated by the Authority for the Fourth Control Period is as follows: Table 238: Employee Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening No of employees (A) 1,105 1,195 1,195 1,195 1,195 Consultation Paper No. 08/2024-25 Page 286 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Additional employees required (B) 90 - - - 200 Closing employee count (C = A+B) 1,195 1,195 1,195 1,195 1,395 Average Salary Cost -increased by 6% 0.15 0.16 0.17 0.18 0.19 Y-O-Y (D) Employee Cost (E = C*D) 182.69 193.65 205.27 217.59 269.25 1,068.45 Utilities Expenses MIAL’s submission of electricity cost 9.2.16 The Authority notes that for the Fourth Control Period, MIAL has projected units of consumption and recoveries based on actual consumption of FY 2024, adjustment for O&M based on terminal area reduction along with a growth rate of 5% Y-o-Y. 9.2.17 It is observed that Maharashtra Electricity Regulatory Commission (MERC), which fixes the electricity cost per unit, has already determined the rate for FY 25 at Rs. 12.65/unit. MIAL has considered this as the base, above with a 10% y-o-y increase has been factored. 9.2.18 The table below sets out the electricity expenses estimated by MIAL: Table 239: Electricity expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gross Consumption (kwH in A 5.00% 17.25 18.11 19.02 19.97 20.97 95.33 crores) Less: Impact due to T1 B - (1.61) (3.40) (3.57) (0.07) (8.64) demolition (Refer Table 231) Adjusted Gross Consumption C=A-B 17.25 16.50 15.62 16.41 20.90 86.69 (kwH in crores) Recoveries (kwH units in crores) D 5.00% 5.69 5.98 6.27 6.59 6.92 31.45 Less: Impact due to T1 E - (0.53) (1.12) (1.18) (0.02) (2.85) demolition (Refer Table 231) Adjusted Recoveries (kwH units F=D-E 5.69 5.44 5.15 5.41 6.90 28.60 in crores) Net Consumption G=C-F 11.56 11.06 10.47 10.99 14.01 58.09 Rate per KwH H 10.00% 12.65 13.92 15.31 16.84 18.52 Net Amount I=G*H 146.24 153.87 160.26 185.10 259.44 904.92 Authority’s examination regarding MIAL’s submission for electricity cost 9.2.19 Considering the electricity consumption pattern in the previous control periods, the Authority proposes to cap the consumption (net of recoveries) as that of FY 24, in line with the decision taken in the order for the Third Control Period, while providing inflationary increase on the rate as per Para 9.2.2. 9.2.20 The Authority noted that MIAL is procuring electricity from Adani Electricity Supply Company (AESL), a Related Party Transaction, being one of the Electricity distribution company in Mumbai, the other being Tata Power Ltd. The Authority compared the per unit rate of both these providers as below: Table 240: Comparison of per unit electricity rate between Adani Electricity and Tata Power Electricity Charges UOM Adani – FY 24 Tata Power – FY 24 Energy Charge Rs. / KWH 7.74 8.60 Wheeling Charge Rs. / KWH 1.14 1.40 Green Tariff Rs. / KWH 0.66 0.66 Consultation Paper No. 08/2024-25 Page 287 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Electricity Charges UOM Adani – FY 24 Tata Power – FY 24 Total Rs. / KWH 9.54 10.66 Fixed Charge Rs. / KVA 400 400 9.2.21 Based on the above comparison done by the Independent Consultant, noting that the unit rate is regulatorily determined following the due process by the concerned sector Regulator, the Authority is proposing to use the unit rates adopted by MIAL based on its existing arrangement with AESL. 9.2.22 The Authority has also factored the impact of the demolition of Terminal 1 and proposes the following cost for electricity for the Fourth Control Period: Table 241: Electricity Cost as proposed by the Authority for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gross Consumption (kwH in A 16.43 16.43 16.43 16.43 16.43 82.15 crores) Less: Impact due to T1 demolition B - (1.54) (3.07) (3.07) (0.25) (7.93) (Refer Table 231) Adjusted Gross Consumption C=A-B 16.43 14.89 13.36 13.36 16.18 74.22 (kwH in crores) Recoveries (kwH units in crores) D 5.42 5.42 5.42 5.42 5.42 27.10 Less: Impact due to T1 demolition E - (0.51) (1.01) (1.01) (0.03) (2.56) (Refer Table 231) Adjusted Recoveries (kwH units F=D-E 5.42 4.91 4.41 4.41 5.39 24.54 in crores) Net Consumption G=C-F 11.01 9.98 8.95 8.95 10.84 49.73 Rate per KwH H 4.40% 12.65 13.21 13.79 14.39 15.03 Net Amount I=G*H 139.28 131.81 123.42 128.85 162.92 686.28 MIAL’s submission for cost of water 9.2.23 The Authority notes that MIAL has submitted a 5% increase in the number of units consumed and an escalation of 7% in rates, while recoveries have been maintained at the same level as FY 2024. 9.2.24 MIAL has also accounted for the reduction in terminal area due to the demolition of Terminal 1. 9.2.25 The Authority notes the water consumption proposed by MIAL for the Fourth Control Period is as follows: Table 242: Water expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gross Consumption (KL units A 5.00% 0.18 0.19 0.20 0.21 0.22 0.98 in Crores) Less: Impact due to T1 B - (0.02) (0.03) (0.04) (0.01) (0.09) demolition (Refer Table 231) Adjusted Gross Consumption C=A-B 0.18 0.17 0.16 0.17 0.21 0.89 (KL units in Crores) Recoveries (KL units in D 0.04 0.04 0.04 0.04 0.04 Crores) Net Consumption E=C-D 0.14 0.13 0.12 0.13 0.18 0.70 Rate per KL F 7.00% 128.23 137.21 146.81 157.09 168.08 Net Amount G=E*F 17.83 18.02 17.96 20.47 29.67 103.95 Consultation Paper No. 08/2024-25 Page 288 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding MIAL’s submission for Cost of Water 9.2.26 Considering the water consumption pattern in the previous control periods, the Authority proposes to cap the consumption (net of recoveries) as that of FY 24, in line with the decision taken in the order for the Third Control Period, while providing inflationary increase on the rate as per Para 9.2.2. 9.2.27 The Authority has also accounted for the impact of the demolition of Terminal 1 and accordingly proposes the Water Charges for the Fourth Control Period as per the table below: Table 243: Water Charges proposed by the Authority for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gross Consumption (KL units in A 0.18 0.18 0.18 0.18 0.18 0.89 Crores) Less: Impact due to T1 B - (0.02) (0.03) (0.03) (0.00) (0.09) demolition (Refer Table 231) Adjusted Gross Consumption C=A-B 0.18 0.16 0.14 0.14 0.17 0.80 (KL units in Crores) Recoveries (KL units in Crores) D 0.04 0.04 0.04 0.04 0.04 Net Consumption E=C-D 0.14 0.12 0.11 0.11 0.14 0.61 Rate per KL F 4.40% 128.23 133.87 139.76 145.91 152.33 Net Amount G=E*F 17.83 16.39 14.80 15.45 20.76 85.24 Repairs and Maintenance Expenses MIAL’s submission for Repair and Maintenance Expenses 9.2.28 The Authority notes that MIAL has estimated the R&M expenses for the Fourth Control Period by applying a Y-o-Y increase of 10.34% (pre-covid 5-year CAGR). 9.2.29 Additionally, MIAL has estimated the R&M pertaining to T1 at Rs. 13 Crores and has reduced this from the R&M expense for each year of the Fourth Control Period. Table 244: Repairs & Maintenance Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particular FY 25 FY 26 FY 27 FY 28 FY 29 Total Repairs and Maintenance @ CAGR – 10.34% 198.93 219.49 242.18 267.22 294.85 1,222.67 Less: Due to demolition of T1 0.00 13.00 13.00 13.00 13.00 52.00 Total R&M Expense 198.93 206.49 229.18 254.22 281.85 1,170.68 Authority’s examination regarding MIAL’s submission for Repair and Maintenance Expenses: 9.2.30 The Authority observes that Repair and Maintenance Costs were projected in the Third Control Period at 1.10% of the gross fixed assets for each year. The Authority notes that this rate would require a downward revision as most of the assets in the Airport are relatively new. Adopting the same rate would result in significantly higher costs. 9.2.31 Accordingly, the Authority proposes to consider the CAGR of 10.34% as submitted by MIAL, noting that this getting applied on the FY24 base year which was well within the estimate made in the Third Control Period Order. 9.2.32 The Authority notes that while the gross R&M expenses have been increased at a CAGR of 10.34%, the cost reduction due to the demolition of T1 has been considered at a constant rate, and therefore proposes to apply the same CAGR uniformly to the reduction in costs. Consultation Paper No. 08/2024-25 Page 289 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2.33 The expenditure proposed by the Authority for the Fourth Control Period is set out in the table below: Table 245: Repairs & Maintenance Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening RAB 4,436.41 5,856.49 6,258.93 6,992.03 7,273.88 6% of Opening RAB (Refer para 9.2.34) 266.18 351.39 375.54 419.52 436.43 1,849.06 Repairs and Maintenance @ CAGR – 198.93 219.49 242.18 267.22 294.85 1,222.67 10.34% Less: Due to demolition of T1 (increased 0 13.00 14.34 15.83 17.46 60.63 @ 10.34%) Total R&M Expense 198.93 206.49 227.84 251.39 277.39 1,162.04 9.2.34 The Authority also compared the computed R&M expenses with the standard estimation method, which assumes R&M expenses at 6% of Opening RAB. The comparison, as shown in the table below, revealed that the total projected R&M expenses were lower than this benchmark. Table 246: Repairs & Maintenance Expenses comparison with the standard method vs proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening RAB (A) 4,436.41 5,856.49 6,258.93 6,992.03 7,273.88 6% of Opening RAB (Refer para 9.2.34) 266.18 351.39 375.54 419.52 436.43 1,849.06 (B) R&M Expenses (From Table 245) (C) 198.93 206.49 227.84 251.39 277.39 1,162.04 Difference (D = C-B) (67.25) (144.90) (147.70) (168.13) (159.04) (687.02) 9.2.35 Therefore, based on the above, the Authority proposes to consider the R&M expenses of Rs. 1,162.04 Crores as per Table 245 for the Fourth Control Period. Rents, Rates & Taxes MIAL’s submission for Rents, Rates and Taxes 9.2.36 The Authority notes that MIAL has estimated the Rent expenses for the Fourth Control Period by applying a Y-o-Y increase of 10% (based on actual rental agreements ranging from 6% - 27%) in its submission. 9.2.37 MIAL has submitted that it has received an additional land parcel of 31,000 sqm situated at Village Sahar and Marol Andheri east near Terminal 2, consequent a legal dispute that got resolved. Of this land parcel, 7,070 sqm has already been utilized for public purposes ie exclusive connectivity for Terminal 2 for the benefit of Airport users at large, leaving the balance of 23,930 sqm to be used by MIAL in accordance with the provisions of OMDA. The Authority has gathered from the letter from AAI on proposal for demise of land admeasuring 31,000 sqm dated May 22, 2024, the offer terms of the demise of land in favor of MIAL as below: (i) “That MIAL to pay annual lease rent at the rate of 06% of Ready Reckoner rate of year 2024 for land measuring 23,930 sqm (31,000 sqm – 7,070 sqm used for elevated road) i.e. an amount of Rs.13,66,02,012/- per annum (Rupees Thirteen crores, Sixty-Six lacs, Two thousand and Twelve only) plus applicable GST/ taxes. The said amount shall be escalated @ 15% after every 03 years Consultation Paper No. 08/2024-25 Page 290 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD for the balance Term of OMDA w.e.f. FY 2024-25 onwards OR the revenue share of 38.70% generated from the said land, whichever is higher. (ii) That usage and other terms & conditions as applicable for the aforesaid land shall be as per the provisions of OMDA and this condition will, inter-alia, form the part of Supplementary Lease Deed. (iii) That MIAL to keep separate books of accounts for the revenue accrued from 23,930 sqm and is also required to share these with AAI for working out the payable amount to AAI for the respective Financial year(s). (iv) That it be recorded in Supplementary Lease Deed that the area being demised now is 31,000 sqm and also indicating therein that the 7,070 sqm has already been utilized for public purposes i.e. exclusive connectivity for Terminal-2, for benefit of Airport users at large at Mumbai Airport.” 9.2.38 The Authority has also observed that MIAL has also assumed the Property Tax & Non-Agricultural Tax at the same level of FY 24, due to uncertainty about the timing and quantum of these revisions. Table 247: Rents, Rates & Taxes as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Increase FY 25 FY 26 FY 27 FY 28 FY 29 Total Rent – Others 10% YOY 12.43 13.67 15.04 16.54 18.20 75.88 Rent - AAI land at Sahar Road and 15% after 13.66 13.66 13.66 15.71 15.71 72.40 Marol as per letter received from AAI every 3 years Property Tax 25.78 25.78 25.78 25.78 25.78 128.90 Rates and Taxes - Others - - - - - - Non-Agricultural Tax 20.17 20.17 20.17 20.17 20.17 100.85 Total Rents, Rates & Taxes 72.04 73.28 74.65 78.20 79.86 378.04 Authority’s examination regarding MIAL’s submission for Rents, Rates and Taxes: 9.2.39 The Authority notes that since rents are a component of cost-of-living index, the most applicable inflation factor would be the CPI (as per OMDA) rate. Accordingly, the Authority proposes to consider the inflation rate as per para 8.3.2. 9.2.40 The Authority further notes that AAI has given 23,930 sqm land to MIAL on lease rent of Rs. 13.66 Crores plus applicable taxes. The said amount shall be escalated at the rate of 15% after every three years. AAI has not intimated the purpose for which this land can be used. MIAL has stated that the supplementary lease deed is yet to be executed. As per MIAL, land will be used for common purpose and they have applied a ratio of 88.33% as aeronautical. However, AAI letter on this piece of land as reproduced at para 9.2.37 is not very clear on the actual usage or purpose allowed for this land, i.e., whether Aeronautical or not. The Authority would require further clarity on this issue from AAI and MIAL during the stakeholder consultation process. Hence, in the interim, the Authority tentatively proposes to apply an Aeronautical ratio of 50%, pending feedback from AAI and MIAL on the usage of the land. Accordingly, a final view on the issue will be taken at tariff order stage based on comments / views received from the stakeholders during the consultation process. 9.2.41 The Authority finds MIAL’s submission for the estimation for the cost of Property Tax and Non- Agricultural Tax reasonable and are as per actual payments in the previous years and proposes to use MIAL’s submission without any adjustment. 9.2.42 Based on the above analysis, the revised cost of Rent, Rates & Taxes is set out below: Consultation Paper No. 08/2024-25 Page 291 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 248: Rents, Rates & Taxes proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Increase FY 25 FY 26 FY 27 FY 28 FY 29 Total Rent - Others CPI Inflation Rate 11.81 12.33 12.87 13.44 14.03 64.48 Rent - AAI land at Sahar Road and 15% after every Marol as per letter received from 13.66 13.66 13.66 15.71 15.71 72.40 three years AAI* Property Tax 25.78 25.78 25.78 25.78 25.78 128.90 Rates and Taxes - Others - - - - - - Non-Agricultural Tax 20.17 20.17 20.17 20.17 20.17 100.85 Total Rents, Rates & Taxes 71.42 71.94 72.48 75.10 75.69 366.62 *As mentioned in para 9.2.40, only 50% has been applied as Aero portion on the rent pertaining to the said AAI land as the rest gets removed in the Aeronautical Allocation computation for TR. Operating Contracts: MIAL’s submission for Operating Contracts: 9.2.43 The Authority notes that MIAL has estimated the Operating Contracts at a 5-year pre-covid CAGR of 12.30% (FY15 - FY20). 9.2.44 The Authority also notes that the major Airport Operators have been directed by the Ministry of Civil Aviation (MoCA) to bear the Cost of Deployment of CISF personnel deployed at GA Terminal, Cargo & MRO. The said costs will be collected by the NASFT from the respective airport operators. The annual cost of Rs 17.94 Crores has been determined and conveyed to the airport operators for FY 2025. 9.2.45 MIAL has considered this expense as a part of the Operating Contracts Expenditure and is projecting a Y- o-Y increase at the same rate (12.30%) as that of the other contracts. Table 249: Operating Contract Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gardening Contract & Expenses A 12.30% 7.41 8.32 9.34 10.49 11.78 47.35 Cleaning Contract B CAGR 78.85 88.54 99.43 111.65 125.38 503.84 Trolley Contract C (FY 15 - 15.50 17.40 19.54 21.95 24.65 99.04 Other Operating Contracts D FY 20) 94.44 106.05 119.09 133.73 150.17 603.46 E = Total Operating Contracts sum 196.19 220.31 247.40 277.82 311.89 1,253.69 (A:D) Total Operating Contracts after the impact of T1 demolition F 196.19 201.97 205.97 231.30 311.59 1,147.02 (Refer Table 231) Cost of deployment of CISF as G 12.30% per MoCA letter dated 27th 17.94 20.14 22.62 25.40 28.52 114.63 CAGR March 2024 H = Total Operating Contracts 214.13 222.12 228.60 256.70 340.11 1,261.65 F+G Authority’s examination regarding MIAL’s submission for Operating Contracts: 9.2.46 The Authority notes that all these costs under the operating contracts are labor related and therefore proposes to consider an increase based on the CPI (as per OMDA) Inflation Rate as per para 8.3.2 instead of the CAGR rate considered by MIAL. Consultation Paper No. 08/2024-25 Page 292 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2.47 On the cost of deployment of CISF personnel, the Authority notes that the letter the Ministry of Civil Aviation clearly states the following: “In the above meeting, it was decided that expenditure towards Cost of Deployment of CISF personnel deployed at GA Terminal, Cargo and MRO to be borne by the Airport operator, and not to be charged to the ASF collected from embarking passengers under scheduled operation.” 9.2.48 The Authority notes that this additional cost is a Non-Aero expense and therefore will not form part of Aeronautical Operating Cost. The Authority has included this cost in the table below for the sake of completeness and to be consistent with other heads under which total cost is considered. The Authority, therefore proposes to apply the Aeronautical % on the row ‘F’ of the Table 250 (below) which is the total operating contracts cost excluding the cost of deployment of CISF personnel. Table 250: Operating Contract Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Y-o-Y Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total increase Gardening Contract & Expenses A 6.90 7.20 7.52 7.85 8.19 37.65 CPI Cleaning Contract B 73.37 76.60 79.97 83.49 87.17 400.61 Inflation Trolley Contract C 14.42 15.06 15.72 16.41 17.13 78.75 Rate Other Operating Contracts D 87.88 91.75 95.79 100.00 104.40 479.82 E = Total Operating Contracts sum 182.57 190.61 199.00 207.75 216.98 996.83 (A:D) Total Operating Contracts after the impact of T1 demolition (Refer Table 231) – Considered F 182.57 173.54 163.28 170.46 213.96 903.81 for Aeronautical Cost Allocation Cost of deployment of CISF as per MoCA letter dated 27th March G 6% 17.94 19.01 20.16 21.36 22.65 101.12 2024* Total Operating Contracts (given only for consistency and H = 200.51 192.55 183.43 191.83 236.60 1,004.93 completeness – not considered in F+G Aeronautical costs) * Cost of Deployment of CISF gets removed in the Aeronautical Allocation computation for TR since it is completely related to Non- Aero activities such as GA Terminal, Cargo. Administrative Expenses MIAL’s submission for Administrative Expenses: 9.2.49 The Authority notes that MIAL has estimated the Administrative Expenses considering an inflation rate of 10%. Table 251: Administrative Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Miscellaneous Expenses 7.85 8.64 9.50 10.45 11.50 47.93 Travelling and Conveyance 1.87 2.06 2.26 2.49 2.74 11.42 Communication Expenses 0.87 0.96 1.05 1.16 1.27 5.31 Director's Sitting Fees 0.39 0.43 0.48 0.52 0.58 2.40 Professional Charges 26.07 28.68 31.54 34.70 38.17 159.16 Remuneration to Auditors 1.31 1.44 1.58 1.74 1.92 7.99 Legal Expenses 27.43 30.18 33.20 36.51 40.17 167.49 Consultation Paper No. 08/2024-25 Page 293 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Total Administrative Expenses 65.80 72.38 79.61 87.58 96.33 401.70 Authority’s examination regarding MIAL’s submission for Administrative Expenses: 9.2.50 The Authority observes that in the Third Control Period, MIAL has actually incurred only Rs. 263.60 Crores (Refer Table 106) as administrative expenses against the projected cost of Rs. 389.53 Crores (Refer Table 106). But, as mentioned in para 4.9.57, MIAL submits this reduction is on account of covid and hence it is not comparable. Therefore, the Authority proposes to estimate the administrative expenses based on the standard inflation rate for the Fourth Control Period. 9.2.51 The Authority also observes that Legal expenses incurred are not predominantly related to the airport operations. Further, there are legal officers who are on rolls of MIAL for handling operational matters, and their costs are being allowed under Employee costs. The Authority also finds that in the recent concession agreements entered by AAI, legal costs are not to be included as a part of the pass-through costs of Airport operations. Therefore, the Authority proposes not to consider legal costs as part of the Operating Expenses. 9.2.52 The Authority notes that an amount of Rs. 8.69 Crores of Legal charges has been inadvertently included in Professional Charges in FY 2024. Therefore, the Authority has adjusted the base cost of Professional Charges for FY 24 by this sum and proposes to only consider Rs. 15.01 Crores (Rs. 23.70 Crores – Refer Table 106 less Rs. 8.69 Crs) as the base for estimating the Professional Charges for the Fourth Control Period. The Administrative expenditure proposed by the Authority, as recomputed after aforesaid adjustments as below: Table 252: Administrative Expenses as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Miscellaneous Expenses 7.46 7.79 8.13 8.49 8.86 40.73 Travelling and Conveyance 1.78 1.85 1.94 2.02 2.11 9.70 Communication Expenses 0.83 0.86 0.90 0.94 0.98 4.51 Director's Sitting Fees 0.37 0.39 0.41 0.43 0.44 2.04 Professional Charges 15.69 16.38 17.10 17.85 18.63 85.64 Remuneration to Auditors 1.24 1.30 1.36 1.42 1.48 6.80 Total Administrative Expenses 27.36 28.57 29.83 31.14 32.51 149.40 Advertisement Expenses MIAL’s submission for Advertisement Expenses 9.2.53 MIAL has estimated the Advertisement Expenses at the inflation rate of 10% on the base cost of FY24. Table 253: Advertisement Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Advertisement Expenses 3.94 4.33 4.76 5.24 5.77 24.04 Authority’s examination regarding MIAL’s submission for Advertisement Expenses: 9.2.54 The Authority proposes to consider the Advertisement Expenses at the standard inflation rate as explain in para 8.3.2, thus ensuring it grows proportionally with overall economic conditions, avoiding overly aggressive or conservative estimations. 9.2.55 The Advertisement costs proposed by the Authority for the Fourth Control Period is as follows: Consultation Paper No. 08/2024-25 Page 294 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 254: Advertisement Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Advertisement Expenses 3.74 3.91 4.08 4.26 4.44 20.43 9.2.56 The Authority additionally also takes into cognizance of the decision taken in the Third Control Period Order (Refer 6.8.8), “The Authority decides to cap the advertisement cost at Rs. 5 crores per annum and consider advertisement cost only upto this ceiling limit subject to True up only if sufficiently justified.” 9.2.57 Thus, the Authority proposes to follow the above principle, by capping the Advertisement Expenses at a ceiling cost of Rs. 5 Crores/year for the Fourth Control Period. Consumable Store Expenses MIAL’s submission for Consumable Store Expenses: 9.2.58 The Authority notes that the Consumable Store expenses estimated by MIAL for the Fourth Control Period is increased by the inflation rate of 5% (rounded off) plus another 5% additional increase, totaling 10%. Table 255: Consumable Stores Expenses as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Consumable Stores Expenses 19.22 21.14 23.25 25.58 28.14 117.32 Authority’s examination regarding MIAL’s submission for Consumable Store Expenses: 9.2.59 The Authority notes that Consumable Stores Expenses include purchase and consumption of facility stores including engineering stores, cleaning chemicals, petrol and lubes and other consumables. 9.2.60 The Authority notes that this is a regular day-to-day expense, therefore proposes to apply a CPI (as per OMDA) inflationary increase as explained in para 8.3.2. and recomputes this expenditure as set out below: Table 256: Consumable Stores Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Consumable Stores Expenses 18.26 17.35 16.33 17.04 21.39 90.37 Insurance Expenses: MIAL’s submission for Insurance Expenses 9.2.61 The Insurance Cost is based on the sum insured under various policies like All Risk Policy, Terrorism and Sabotage Risk Policy, Cyber Security Insurance and Airport Operator’s Liability Policy. 9.2.62 MIAL has projected Insurance Expenses as 0.11% of the Gross Block of Assets, in line with the actual trend noted in FY 2024. Table 257: Insurance Expenses submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Gross Fixed Assets A 19,060.50 21,153.23 24,958.06 26,990.27 34,048.76 Insurance Expense as a % of B 0.11% Gross Fixed Assets Insurance Expenses A*B 20.46 23.27 27.45 29.69 37.46 138.33 Consultation Paper No. 08/2024-25 Page 295 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding MIAL’s submission for Insurance Expenses 9.2.63 The Authority notes that the Insurance Expenses in FY 21, 22 & 23 are all approximately around 0.10% of the gross block and insurance rates are on the increase due to geopolitical tensions around the world and other market related factors. The Authority proposes to use the rate proposed by MIAL and to adopt the Gross fixed assets from the fixed assets register for computing the Insurance cost estimate. 9.2.64 As stated above, the Authority has recomputed the Insurance expense for the Fourth Control Period as per table below: Table 258: Insurance Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Gross Fixed Assets A 17,935.39 18,843.08 20,116.44 20,963.42 23,753.29 Insurance Expense as a % B 0.11% of Gross Fixed Assets Insurance Expenses A*B 19.73 20.73 22.13 23.06 26.13 111.77 Working Capital Interest MIAL’s submission for Working Capital Interest Expense 9.2.65 The Authority notes that MIAL has projected an Interest Expense on the general Working Capital required which pertains to the funds required to manage day-to-day operations. This is claimed by MIAL at an interest rate of 12% per annum on the average balance of working capital required. 9.2.66 Additionally, MIAL is also claiming a working capital interest on the concession fees it is obligated to pay to the AAI every year at the same rate of 12%. Table 259: Total Working Capital Interest as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Working Capital (WC) A 45.62 111.61 126.56 124.62 136.71 545.12 Interest WC Interest on Concession B 8.42 22.18 26.43 26.70 31.29 115.02 Fees Total WC Interest C = (A+B) 54.03 133.80 152.99 151.32 168.00 660.14 Authority’s examination regarding MIAL’s submission for Working Capital Interest Expense: 9.2.67 The Authority noted that MIAL has considered Total Revenue, i.e., on both Aero & Non-Aero. However, this approach is not inappropriate, as it would result in passengers having to bear the costs of non- aeronautical activities of the operator as well. Therefore, the Authority proposes to compute working capital interest only to the extent required for aeronautical operations i.e., using only aeronautical revenues and expenses. 9.2.68 The Authority finds MIAL computation of working capital interest on concession fees as a separate line item not appropriate, in view of the approach adopted by the Authority to reassess working capital requirement based on only aeronautical activities which is a comprehensive assessment of working capital. Therefore, the working capital interest claimed by MIAL on concession fees as a separate line item is excluded from the computation. 9.2.69 The Authority proposes to consider only the aeronautical income and expenditure to calculate the Working Capital requirement based on currently prevailing arrangements for collection of revenues from the Airline and payment to Trade payables. The Authority computation of working capital is as shown below: Consultation Paper No. 08/2024-25 Page 296 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 260: Working Capital Interest proposed by the Authority for the Fourth Control Period (Rs. in crores) Trade Receivables Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total No of Receivable A 45 45 45 45 45 Turnover Days No of Days in a Period B 365 365 365 366 365 Total Aeronautical C 1,610.90 1,369.03 1,280.59 1,359.83 1,533.97 7,174.31 Revenue Trade Receivables D = (C*A/B) 198.60 168.78 157.88 167.19 191.59 884.05 Trade Payables Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total No of Payable Turnover E 100 100 100 100 100 Days No of Days in a Period F 365 365 365 366 365 Opex considered for G 734.50 732.19 741.10 787.58 905.86 3,901.23 financials Trade Payables H = (G*E/F) 201.23 200.60 203.04 215.18 248.18 1,068.24 Working Capital Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Requirement Trade Receivables I 198.60 168.78 157.88 167.19 191.59 884.05 Trade Payables J 201.23 200.60 203.04 215.18 248.18 1,068.24 Working Capital K = I-J (2.63) (31.82) (45.16) (47.99) (56.60) (184.19) Requirement Change in Working L (2.63) (29.19) (13.35) (2.83) (8.60) (56.60) Capital Working Capital Loan Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Balance Opening Balance M - (2.63) (31.82) (45.16) (47.99) Debt Drawdown N=L (2.63) (29.19) (13.35) (2.83) (8.60) Debt Repayments O - - - - - Closing Balance P=M+N+O (2.63) (31.82) (45.16) (47.99) (56.60) Average Working Q=Avg(M,P) (1.31) (17.22) (38.49) (46.58) (52.29) - Capital Requirement R=Q*10.15% Interest on Working [Refer para - - - - - - Capital 7.2.11] 9.2.70 The working capital computed in the above Table 260, indicates that the working capital requirement is negative, clearly indicating that there is no necessity for a working capital loan for the whole control period. Consequently, the Authority proposes not to include any working capital interest expenses as part of the operating expenditure in the computation of TR for the Fourth Control Period. However, working capital interest, if any paid by the MIAL on aeronautical working capital shall be evaluated during the True up of the Fourth Control Period, subject to MIAL providing adequate justifications and demonstrating reasonableness. Financing Charges: MIAL’s submission for Financing Charges: 9.2.71 The Authority notes that MIAL estimated Financing Charges include: (i) amortization of existing loan processing fees paid to bankers, arranger’s fee and other upfront fees (Rs. 107.52 Crores) as per accounting standards, (ii) upfront fee of 1.5% to be paid on debt drawdown for Capex during the Fourth Control Period, Consultation Paper No. 08/2024-25 Page 297 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD (iii) performance bank guarantee given to AAI as mandated under OMDA of Rs. 300 crores at 1.50% annual fees. Table 261: Financing Charges as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Amortization of existing ECB loan 13.47 14.64 15.81 16.98 18.13 79.04 Commission on bank guarantee 4.50 4.73 4.96 5.21 5.47 24.87 Other finance charges 2.61 2.74 2.88 3.02 3.17 14.43 Upfront fee of 1.50% on future debts 50.32 36.04 43.56 37.20 15.98 183.11 Financing Charges 70.91 58.16 67.23 62.42 42.76 301.48 Authority’s examination regarding MIAL’s submission for Financing Charges: 9.2.72 The Authority has reviewed MIAL’s submission regarding expenses related to the amortization of the existing ECB loan and associated finance charges, which are in line with the existing arrangements, and therefore the Authority proposes to include these charges as a part of the allowable costs. 9.2.73 With regards to the commission on bank guarantee fees, the Authority notes from Page No. 116, Schedule 8 of the OMDA, “The AOA should contain an express provision requiring the AO to submit an unconditional and irrevocable performance bank guarantee from a scheduled commercial bank enforceable and encashable at New Delhi of Rs. 3,000,000,000 (Rupees Three Hundred Crore) in favour of the JVC (but encashable by AAI) valid for the duration of the AOA.” 9.2.74 From the para above, it can be clearly understood that the bank guarantee fees is only applicable till the duration of the AOA (Airport Operator Agreement) and thereafter the agreement has been discontinued (Refer para 4.9.61). 9.2.75 At the same time of reviewing and understanding the above-mentioned provision as per OMDA, the Authority also observes MIAL’s response to this matter, where the Authority has been informed that AAI has not yet released the performance bank guarantee and MIAL is protesting against the same. The extract of the letter from GVK to the Airports Authority of India (AAI) dated 31st May, 2021 is given below: “We write to you pursuant to MIAL letter no. MIAL/CEO/024 dated 28th May, 2021. We would like to reiterate and reaffirm our view that MIAL is not required to submit a Performance Bank Guarantee, due to the reasons given by MIAL, from time to time, and in the MIAL letter no. MIAL/CEO/009 dated 3rd May, 2021. However, in view of the stand taken by AAI that it will not release the Performance Bank Guarantee of ACSA, which is no more an Airport Operator, in spite of Performance Bank Guarantee submitted by ACSA expiring on 31st May, 2021, MIAL is hereby submitting the Performance Bank Guarantee, without prejudice and under protest. Please find enclosed the Performance Bank Guarantee No … dated 31st May, 2021 of Es. 300 crores from Yes Bank Ltd. with AAI as a beneficiary. Kindly release the Performance Bank Guarantee of ACSA at the earliest, as ACSA is a foreign company, and any such delay may create negative impression about doing business in India.” 9.2.76 In view of the above response of MIAL, the Authority proposes to allow the performance bank guarantee fees as submitted by MIAL. Consultation Paper No. 08/2024-25 Page 298 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2.77 The Authority has reviewed the computation of interest on finance charges and notes that MIAL has considered finance charges at the rate of 1.50% of the debt drawdown during the Fourth Control Period. The Authority proposes to consider the recomputed Finance charges set out in the below table for the Fourth Control Period as Operating Expenses. Table 262: ECB Loan Details Particulars Details Loan Amount (in USD Mn) 750.00 Transaction Cost (in USD Mn) 14.07 Transaction Cost % 1.88% Effective Interest Rate (EIR) 7.59% Interest Cost 6.60% to 8.60% USD to INR rate 76.44 Table 263: Amortization Schedule for transaction Cost of USD of 14.06 Mn (Rs. 107.52 Crs) based on EIR method (Rs. in crores) FY FY FY Particulars Ref FY 23 FY 26 FY 27 FY 28 FY 29 Total 24 25 30 Interest Cost A 54.48 54.85 55.24 55.60 55.70 55.54 55.08 13.64 400.13 (in USD Mn) Interest Cost incl. Transaction B 55.96 56.46 57.00 57.51 57.77 57.76 57.46 14.26 414.19 Cost (in USD Mn) Amortized Transaction C = B- 1.49 1.62 1.76 1.92 2.07 2.22 2.37 0.62 14.07 Cost A (in USD Mn) Amortized Transaction D = 11.36 12.37 13.47 14.64 15.81 16.98 18.13 4.75 107.52 Cost C*76.44 (in INR Crores) Amortized Transaction Cost for the Fourth Control E N/A N/A 13.47 14.64 15.81 16.98 18.13 N/A 79.04 Period (in INR Crores) Table 264: Upfront Fees of 1.50% on Future Debts (Drawdown for Capex Projected) (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Total Debt Drawdown A 1,580.37 1,020.67 1,310.94 964.53 137.21 Upfront Fees on Future Debt B = 4.50 4.73 4.96 5.21 5.47 24.87 Drawdown A*1.50% Consultation Paper No. 08/2024-25 Page 299 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 265: Financing Charges as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Amortization of existing ECB 13.47 14.64 15.81 16.98 18.13 79.04 loan (From Table 263) Performance Bank Guarantee Fees 4.50 4.73 4.96 5.21 5.47 24.87 Other finance charges 2.61 2.74 2.89 3.02 3.17 14.43 Upfront fee of 1.50% on future 23.71 15.31 19.66 14.47 2.06 75.21 debts Financing Charges 44.29 37.42 43.32 39.68 28.83 193.54 Runway Recarpeting Expenses MIAL’s submission for Runway Recarpeting Expenses 9.2.78 The Runway Recarpeting cost includes balance unamortized portion for runway 09/27 as per MIAL. Table 266: Runway Recarpeting Cost as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Runway Recarpeting Cost – Runway 9/27 re- 0.09 0.09 - - - 0.19 carpeting – Civil Works Authority’s examination regarding MIAL’s submission for Runway Recarpeting Expenses 9.2.79 MIAL has proposed recarpeting of 09/27 during the Fourth Control Period under Capex which the Authority has proposed to be taken as operating expenditure since MIAL has not demonstrated any PCN value increase. [Refer Table 66 as part of Capex]. 9.2.80 The Authority notes that the following runway recarpeting expenses have been carried forwarded from the previous control periods: (i) Runway 9/27: Rs. 1.53 crores incurred during FY 2022, Rs. 0.28 crores incurred during FY 2024. (ii) Runway 14/32: Current period amortization of Rs. 0.12 crores incurred during FY 2021, Current period amortization of Rs. 91.74 crores incurred during FY 2024. 9.2.81 Similarly, the Authority notes that the following runway recarpeting expenses are proposed to be incurred by MIAL starting from the Fourth Control Period: (i) Runway 9/27: Current period amortization of Rs. 21.20 to be incurred from FY 2029. (ii) Runway 14/32: Current period amortization of Rs. 13.13 to be incurred from FY 2027. Table 267: Runway Recarpeting Cost proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Runway Recarpeting – 09/27 0.83 0.83 0.07 0.07 - 1.80 Runway Recarpeting – 14/32 23.05 22.94 22.94 22.94 - 91.86 Runway Recarpeting – 09/27 - - - - 21.20* 21.20 Runway Recarpeting – 14/32 - - 4.38 4.38 4.38** 13.13 Total Runway Recarpeting Cost 23.89 23.77 27.38 27.38 25.58 127.99 *Rs. 106 Crores pertaining to RWY 09/27 is amortized over 5 years as Rs. 21.20 Crores starting from FY 29 till FY 33. ** Rs. 21.89 Crores pertaining to RWY 14/32 is amortized over 5 years as Rs. 4.38 Crores starting from FY 27 till FY 31. Consultation Paper No. 08/2024-25 Page 300 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Carrying Cost on Runway Recarpeting Expenses MIAL’s submission for Carrying Cost on Runway Recarpeting Expenses 9.2.82 MIAL has claimed the Carrying Cost on the Runway Recarpeting Expenses based on their claimed Runway Recarpeting expenses as follows: Table 268: Carrying Cost on Runway Recarpeting as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Carrying Cost on Runway Recarpeting 0.02 0.01 - - - 0.03 Authority’s examination regarding MIAL’s submission for Carrying Cost on Runway Recarpeting Expenses 9.2.83 The Authority has calculated the Carrying Cost based on their revised Runway Recarpeting expenses. Table 269: Carrying Cost on Runway Recarpeting proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Opening unamortized amount 93.66* 69.78 46.01 40.52 13.13 Add: Addition - - 21.89 - 105.99 Less: Amortized During the year (Runway 23.89 23.77 27.38 27.38 25.58 Recarpeting Cost) Closing unamortized amount 69.78 46.01 40.52 13.13 93.55 Average unamortized amount (a) 81.72 57.89 43.26 26.82 53.34 FRoR (b) 12.74% 12.74% 12.74% 12.74% 12.74% Carrying Cost on Runway Recarpeting (a*b) 10.41 7.38 5.51 3.42 6.80 33.51 * Refer Table 120’s closing unamortized amount. Corporate Cost Allocation MIAL’s submission for Corporate Cost Expense 9.2.84 The Authority notes that MIAL has projected corporate costs (Refer para’s 4.9.102 and 4.9.103 for detailed explanation of the corporate services availed) for the Fourth Control Period. MIAL has assumed Rs. 94 crores as the value for FY 25 against the Rs. 76 crores proposed in FY 24. Consequently, MIAL has estimated the Corporate Cost Allocation for the Fourth Control Period using the same (FY 25’s value) as the base for future years in the Fourth Control Period applying a 10% increase y-o-y (5% rounded-off Inflation and 5% Additional Increase). Table 270: Corporate Cost as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Corporate Cost 94.00 103.40 113.74 125.11 137.63 573.88 Authority’s examination regarding MIAL’s submission for Corporate Cost Expense: 9.2.85 The Authority has proposed taking FY 24 as the base value (Rs. 74 crores – Refer Table 124) for Corporate Cost and apply 6% Y-o-Y increase, in line with the Employee salary costs growth. Consultation Paper No. 08/2024-25 Page 301 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 271: Corporate Cost proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Corporate Cost 78.44 83.15 88.14 93.42 99.03 442.17 Digitalization Cost MIAL’s submission for Digitalization Cost 9.2.86 The Authority notes that MIAL believes that the next phase of growth will be dependent on digital transformation / technological intervention, where they can provide end-to-end services to customers on a single platform which will result in an enhanced consumer experience and more satisfaction. 9.2.87 Additionally, MIAL asserts that the customer expectations in terms of service quality have increased multi- fold, and MIAL believes that the Digitization of airport will be key enabler for achieving the same. The AO needs to focus on enhancing passenger handling capacity, augmenting airport infrastructure, and improving overall service quality. 9.2.88 While focusing on this, MIAL submits that it does not have the bandwidth nor expertise to undertake digitalization of airport experience. It will have to be done with the help of industry experts in the Digital Field. Building specific manpower for this field will have challenges and considering pace at which digitization is required to be adopted, timelines are also not conducive. Hence MIAL, by virtue of a competitive bidding process has awarded the contract to Adani Digital Labs Ltd, which can help MIAL to embark on this journey of Digital Transformation. 9.2.89 MIAL has entered into a Digital platform agreement on 1st April 2024 to use a Software platform that is developed and hosted in a private cloud by ADL. The agreement defines Digital platform as below: “The Company has proposed to design, develop and implement based on its existing intellectual property and back end infrastructure (collectively and hereinafter referred to as “Existing IP”) a customized platform which will be accessible through applications, sites and other modes (collectively and hereinafter referred to as the “Platform”), and to own, operate and otherwise deliver the Platform as a service, so as to provide inter alia, the following functionalities: (i) to enhance Airport User experience at CSMIA; (ii) to update real time information about flights and various amenities and facilities at CSMIA; (iii) to facilitate a state-of-the-art digital point of sale and inventory management system (as may be applicable) for CSMIA; (iv) to develop solutions which enable Sellers (defined in Clause 2.3 hereinafter) to create and operate an online storefront enabling booking, purchase, and delivery of goods and services, which will be available to Airport Users; (v) to provide loyalty benefits and drive user engagement as set out in Clause 2.6; (vi) any other similar additional digital services as MIAL may decide to facilitate.” 9.2.90 One of the key components of the Digital platform is the Adani One app (Related Party Transaction) which the users are expected to download onto their mobile phones to get a seamless digital experience while using the Airport. Several services are proposed to be added to the App in a phased manner as depicted in the picture. Adani One App’s overview is provided in the below figure: Consultation Paper No. 08/2024-25 Page 302 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Figure 44: Digitalization App – Overview of the Services Offered 9.2.91 MIAL has entered into a Digital platform agreement on 1st April 2024 to use a Software platform that is developed and hosted in a private cloud by ADL. The agreement defines Digital platform as below: “The Company has proposed to design, develop and implement based on its existing intellectual property and back end infrastructure (collectively and hereinafter referred to as “Existing IP”) a customized platform which will be accessible through applications, sites and other modes (collectively and hereinafter referred to as the “Platform”), and to own, operate and otherwise deliver the Platform as a service, so as to provide inter alia, the following functionalities: (i) to enhance Airport User experience at CSMIA; (ii) to update real time information about flights and various amenities and facilities at CSMIA; (iii) to facilitate a state-of-the-art digital point of sale and inventory management system (as may be applicable) for CSMIA; (iv) to develop solutions which enable Sellers (defined in Clause 2.3 hereinafter) to create and operate an online storefront enabling booking, purchase, and delivery of goods and services, which will be available to Airport Users; (v) to provide loyalty benefits and drive user engagement as set out in Clause 2.6; (vi) any other similar additional digital services as MIAL may decide to facilitate.” 9.2.92 The App functionality covers both aeronautical and non-aeronautical services. The app extensively provides services that fall under non aeronautical activities which generates revenue by charging the passenger directly. The Authority also finds the ADL could generate revenue from business partners who provide their services through the Adani One App. MIAL has estimated Digitization costs under three-line items as set out below: Table 272: Digitalization Costs submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Basis Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Fixed Cost to Digital Service 7.50 Crs / A 90.00 95.00 99.00 104.00 109.00 497.00 Provider as per the agreement month Rs. 60 / Onboarding Costs B 33.00 8.00 11.00 11.00 12.00 75.00 Pax Loyalty Program Costs C 15.00 16.00 18.00 20.00 18.00 87.00 Total Digitalization Cost A+B+C 138.00 119.00 128.00 135.00 139.00 659.00 submitted by MIAL Consultation Paper No. 08/2024-25 Page 303 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Authority’s examination regarding MIAL’s submission for Digitalization Expense: 9.2.93 The Authority reviewed the Board Minutes which approved the competitive bidding process and noted that: (i) The Independent Probity Auditors (IPA) were involved in every stage of the competitive bidding process. (ii) In addition, the technical commercial weightage and the Proof of Concept (POC) scoring has been reviewed and confirmed by two independent professional firms namely, BDO Digital Services and R. Subramanian and Company LLP, appointed to meet the additional requirement of the Audit Committee of MIAL. (iii) It was observed that Adani Digital Labs Pvt Ltd (ADL) remains the bidder with the highest score as per MIAL RFP criteria and as per evaluation by both BDO and R Subramanian & Co. 9.2.94 The Authority also noted that since ADL is a Group Entity, MIAL sought the approval of the Audit Committee and the Board as per the article 8.5.7 (i) (f) of the OMDA. Based on the Board approval, MIAL has entered into an agreement with Adani Digital Labs limited with the following terms: (i) Term: 10 years, extendable up to 2nd May 2036 (ii) Rates: As per bids: Rs. 7.50 Crs / month escalated every year on 1st April at the rate of Consumer Price Index increase for industrial workers as published by GoI and the Loyalty Handling Charges of 5% on value of Loyalty points redeemed. (iii) Rates: As per bids: Rs. 7.5 Crore per year (iv) Other terms: IPR related to the platform shall be owned by ADL 9.2.95 In addition to above, the Authorities also observed that: (i) The bid for digitization was awarded to ADL which is a new entity. ADL’s selection is ahead of Tech Mahindra Ltd which is an established Software services company with several years of experience. (ii) The Authority also notes that there is no restriction on usage of user data by ADL for any of its commercial benefit and ADL can use the platform data subject to data privacy requirements as per the law. 9.2.96 The Authority examination covered the break-up of digitalization cost submitted by MIAL is as follows: A. Fixed Cost to Digital Service Provider: Rs. 497 Crores The Authority finds that (a) digitization enables better passenger service and has become an essential ingredient for an acceptable level of customer service. Many airports across the world are investing in digitization of its services (b) ADL was selected following due process of price discovery through competitive bidding as required under the OMDA and therefore was considered being acceptable by the Audit Committee of MIAL. Based on these findings, the Authority is proposing to consider these costs as a part of the Operating Expenditure. The Authority has further analyzed this cost for allocation between aeronautical and non-aeronautical expenditure, in Para 9.3.14. Consultation Paper No. 08/2024-25 Page 304 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD B. Onboarding Costs: Rs. 75 Crores The Authority finds that (a) MIAL has estimated user onboarding costs required to get passengers onboarded into the Adani One App assuming 12% and 10% of unique passengers utilizing the Airport during FY25 and for the rest of the control period respectively, would get onboarded, incurring a one- time cost estimated at Rs. 60 per passenger. (b) The costs are for promotional activities and more likely to be incurred by ADL but could also be incurred by MIAL directly. If ADL incurs the cost MIAL may have to reimburse such expenditure. (c) this component, if payable to ADL was not covered in the bids evaluated in the competitive bidding for selecting the Digital services platform. Based on findings as above, further considering that revenue generation through digitization is only from non-aeronautical activities and by ADL through monetizing the platform data, the Authority, proposes to classify this component as non-aeronautical in nature. C. Loyalty Program Costs: Rs. 87 Crores The Authority noted that (a) Loyalty Program costs are estimated at 1.5% of sales accrued through the Loyalty program estimating that 30% of non-aeronautical sale shall be through the loyalty program and 100% of the loyalty points earned shall be redeemed (b) Loyalty Program costs does not include separately Loyalty handling charges payable to ADL. Presumably this is included in the Loyalty Program costs (c) Loyalty program is for incentivizing the passengers on their non-aero purchase through the Adani One app. Based on these findings, the Authority does not find any reason for including any part of the costs as aeronautical in nature and therefore must be classified as fully non-aeronautical in nature. 9.2.97 The Authority has recomputed the Digitization costs after treating onboarding costs and Loyalty Program costs as non-aeronautical costs as below: Table 273: Digitalization Costs as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Basis Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Fixed Cost to Digital Service 7.50 Crs / A 90.00 95.00 99.00 104.00 109.00 497.00 Provider month Onboarding Costs B - - - - - - Loyalty Program Costs C - - - - - - Total Digitalization Cost A+B+C 90.00 95.00 99.00 104.00 109.00 497.00 9.2.98 For the purposes of Aeronautical Allocation of the Digitalization Cost, the Authority proposes to implement a Multi-Criteria Decision Analysis (MCDA) approach to allocate the Costs between Aeronautical and Non-Aeronautical which has been explained in detail in the para’s from 9.3.13 to 9.3.21. Other Miscellaneous Expenses MIAL’s submission for Other Miscellaneous Expenses 9.2.99 The Authority notes that MIAL has only projected Collection Charges over DF for FY 25 but has treated it as a Non-Aero expense. MIAL, in its MYTP submission, has stated that other miscellaneous charges like Bad Debts written off, Exchange Gain/Loss, CWIP written off, Loss on Sale of Asset, etc., if any, shall be claimed on an actual incurrence basis during the Tariff determination for the next control period. Authority’s examination regarding MIAL’s submission for Miscellaneous Expenses 9.2.100 The Authority has proposed not to consider Collection Charges over DF as a part of pass-through operations cost. Consultation Paper No. 08/2024-25 Page 305 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.2.101 Additionally, CMC and Digi Yatra Contribution (Refer Table 190) which was submitted under Capex by MIAL, the Authority is proposing to include as a part of operating expenditure for the Fourth Control Period as per the table below: Table 274: Other Expenses proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Full Body Scanner – CMC Cost - - - 0.93 0.97 1.90 Digi Yatra Contribution 3.15 3.15 3.15 3.15 3.15 15.75 Total Other Expenses 3.15 3.15 3.15 4.08 4.12 17.65 9.2.102 Considering the changes above, the Authority has recalculated the Operating and Maintenance Expenditure as follows: Table 275: Operating and Maintenance Expenditure computed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Employee Costs 182.69 193.65 205.27 217.59 269.25 1,068.45 R&M Expenses 198.93 206.49 227.84 251.39 277.38 1,162.04 Operating Contract’s 200.51 192.55 183.43 191.83 236.60 1,004.93 Utilities Expenses 157.10 148.20 138.22 144.30 183.69 771.52 Administrative Expenses 27.36 28.57 29.83 31.14 32.51 149.40 Rents, Rates & Taxes 71.42 71.94 72.48 75.10 75.69 366.62 Insurance Expense 19.73 20.73 22.13 23.06 26.13 111.77 Advertisement Expense 3.74 3.91 4.08 4.26 4.44 20.43 Consumable Stores 18.26 17.35 16.33 17.04 21.39 90.37 Corporate Cost 78.44 83.15 88.14 93.42 99.03 442.17 Runway Recarpeting 23.89 23.77 27.38 27.38 25.58 127.99 Carrying Cost on Runway Recarpeting 10.41 7.38 5.51 3.42 6.80 33.51 Digitalization Cost 138.00 119.00 128.00 135.00 139.00 659.00 Other Expenses 3.15 3.15 3.15 4.08 4.12 17.65 Working Capital Interest - - - - - - Financing Charges 44.29 37.42 43.33 39.69 28.84 193.57 Total Operating Expenditure 1,177.92 1,157.26 1,195.11 1,258.70 1,430.45 6,219.44 9.3 AUTHORITY’S EXAMINATION REGARDING THE AERONAUTICAL PORTION OF O&M EXPENSES FOR THE FOURTH CONTROL PERIOD COSTS THAT ARE ALLOCATED BY A COMMON METHOD ARE LISTED BELOW WITH THEIR ALLOCATION METHODOLOGY EXPLAINED IN DETAIL: 9.3.1 For computation of the aero portion in the Fourth Control Period, the Authority has reviewed and adopted the allocation methodology followed as per the R. Subramaniam study report which is detailed as follows: 9.3.2 The majority of the cost heads are allocated at the ratio: (i) Total Aeronautical Expenses in the Third Control Period over the Total Expenses in the same period is computed and the same is used as the allocation percentage in the Fourth Control Period as shown below: Consultation Paper No. 08/2024-25 Page 306 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Example: 𝑨𝒆𝒓𝒐𝒏𝒂𝒖𝒕𝒊𝒄𝒂𝒍 𝑨𝒍𝒍𝒐𝒄𝒂𝒕𝒊𝒐𝒏 𝒐𝒇 𝑨𝒅𝒎𝒊𝒏𝒊𝒔𝒕𝒓𝒂𝒕𝒊𝒗𝒆 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔 𝒇𝒐𝒓 𝟒𝒕𝒉 𝑪𝑷 (%) 𝐴𝑒𝑟𝑜𝑛𝑎𝑢𝑡𝑖𝑐𝑎𝑙 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝑜𝑓 3𝑟𝑑 𝐶𝑃 = ∗100 𝑇𝑜𝑡𝑎𝑙 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐸𝑥𝑝𝑒𝑛𝑒𝑠 𝑜𝑓 3𝑟𝑑 𝐶𝑃 9.3.3 The cost heads that are segregated using the method explained in the above para 9.3.2 are as listed below: (i) Repair and Maintenance Expenses, (ii) Operating Contracts (iii) Utilities Expenses, (iv) Administrative Expenses, (v) Rents, Rates and Taxes, (vi) Insurance Expenses (vii) Advertisement Expenses, (viii) Consumable Stores Expenses, ITEMS THAT ARE NOT ALLOCATED BY THE ABOVE-MENTIONED METHOD ARE LISTED BELOW WITH THEIR RESPECTIVE ALLOCATION METHODOLOGIES: 9.3.4 Employee Cost – Allocated over the Total Employee Count. Aero and Non-Aero Employees are segregated respectively, while Common Employees are segregated over the Gross Fixed Assets Allocation Ratio of FY 23-24 as clearly shown below: Table 276: Employee Cost - Aeronautical Allocation as proposed by the Authority Particulars Total Employees Allocation % Adopted Aero Employees Final Allocation % Aero 933 100% 933 Non-Aero 50 0% 0 Common 122 83.38% 102 Total 1105 1035 93.64% 9.3.5 The Authority notes that MIAL has adopted this same methodology at the Common Ratio of 83.40% (Refer Table 70) for Common Employees. This small difference in Gross Fixed Assets ratio of FY 23-24 is not bringing in any change to the finally arrived Allocation (93.64%) up to 2 decimals. Thus, the Authority has also used the rounded-down allocation percentage of 93.00% as done by MIAL. 9.3.6 Working Capital Interest – MIAL has allocated it at the Gross Fixed Assets Ratio. Since the Authority has calculated the Working Capital Interest only on the Aeronautical Revenue part (Refer 9.2.67), the Authority has proposed to apply 100% for the allocation. 9.3.7 Financing Charges – MIAL has allocated Financing Charges at the Gross Fixed Assets Ratio. The Authority also finds this approach right since Financing Charges are generally procured for long-term and therefore proposes to adopt the same ratio. 9.3.8 Runway Recarpeting Expenses and its Carrying Cost – MIAL has allocated these expenses as 100% Aero. The Authority notes that these that these expenses are directly related to the core operations of MIAL and are integral to the delivery of aeronautical services. Hence the Authority proposes to consider it as per MIAL’s submission. Consultation Paper No. 08/2024-25 Page 307 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.3.9 Corporate Cost – The Authority notes that MIAL has allocated the Corporate Cost at the same rate of 93.00% as used for Employee Expenses since the nature of these expenses are similar to each other. The Authority finds this reasoning valid and accepts the same ratio. 9.3.10 Digitalization Cost – The Authority has proposed to allow the Digitalization Expense (Refer para’s from 9.2.86 to 9.2.98). Table 277: Digitalization Costs submitted by MIAL (Rs. in crores) Particulars Basis Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Fixed Cost to Digital 7.50 Crs / A 90.00 95.00 99.00 104.00 109.00 497.00 Service Provider month Onboarding Costs Rs. 60 / Pax B 33.00 8.00 11.00 11.00 12.00 75.00 Loyalty Program Costs C 15.00 16.00 18.00 20.00 18.00 87.00 Total Digitalization Cost D = 138.00 119.00 128.00 135.00 139.00 659.00 submitted by MIAL A+B+C 9.3.11 The Authority notes that a lot of the services being provided in the Digitalization App (Adani One) are related to Non-Aeronautical Services along with the two of three costs heads being entirely Non- Aeronautical, namely the onboarding costs and Loyalty Program Costs. 9.3.12 Therefore, the authority proposes to apply the allocation ratio % only on the Fixed Cost and completely not including the Onboarding & Loyalty Program Costs for Aeronautical Allocation for the purposes of TR computation. Allocation of Digitalization Cost: 9.3.13 The Authority observes that it is a challenging task to clearly differentiate the costs between Aeronautical and Non-Aeronautical services. The Authority notes that MIAL, in its MYTP submission, had allocated the costs based on the average aeronautical percentage (at 90.00%) of all the major Opex costs in the Third Control Period. Later as a part of the clarification submitted to the Authority, it has revised the cost allocation based on the Manpower cost ratios to Aeronautical services (82.00%), provided through the Adani One App. However, MIAL could not provide adequate data point to support such allocation. 9.3.14 The Authority is reaching a conclusion that the allocation of the costs must be based on the utility of the service coverage through the App, the nature of revenues generated through the platform and the passenger feedback rather than employing cost drivers alone. After evaluating a couple of options, the Authority is tentatively considering a Multi-Criteria Decision Analysis (MCDA) approach to allocate the Costs between Aeronautical and Non-Aeronautical. 9.3.15 This MCDA approach employs a list of variables to segregate the costs. Each variable has been assigned a score between 1 to 5, where 1 being the lowest and 5 being the highest. The Aeronautical and Non- Aeronautical Services offered in the App have been grouped into different categories based on the nature / similarity of their functions. Following which, each of the categorizations is assigned a score under each variable based on their function. Each variable and its categorization is detailed below: (i) Different variables have been assigned and segregated into Aeronautical and Non-Aeronautical Services availed at the Airport using the Digitalization App: a) Necessity (Is it a Necessary Service for an Airport Passenger?) Consultation Paper No. 08/2024-25 Page 308 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD b) Channel Usefulness (Is it an Exclusively Provided Service / Information for an Airport Passenger? And how useful is it for them ?) c) Revenue Generating Capacity (Is it a Revenue Generating Service or Not?) 9.3.16 Each variable has been given a judgmental score between ‘1’ to ‘5’ (‘1’ being the lowest and ‘5’ being the highest). 9.3.17 The Aeronautical services and the Non-Aeronautical services offered have been classified into different categories based on the kind/variety of services they offer and ranked for each of the variable mentioned above. Table 278: Digitalization Cost Allocation – Multi Criteria Decision Analysis Approach – Score card based on functionalities available in Adani One App Channel Revenue Generating Particulars Necessity Total Score Usefulness Capability Aeronautical Services: Flight Tracking Information 5 2 - 7 Baggage Belt Information 5 2 - 7 Other Aeronautical Services 5 2 - 7 Total Aero Score 21 Non-Aeronautical Services: Concessionaires 5 5 5 15 Porter Services & Baggage Wrapping 5 5 5 15 Bills Payments & Banking Related - - 1 1 Services Other Bookings 4 3 5 12 Other Non-Aeronautical Services 1 1 4 6 Total Non-Aero Score 49 9.3.18 The Authority has used the rationale, as set out in the below table for the judgmental scoring done in the above table: Table 279: Digitalization Cost Allocation – Reasoning for the Scores provided under the Multi Criteria Decision Analysis Approach Revenue Generating Services Offered Necessity Channel Usefulness Capability Aeronautical Services Absolutely necessary Since the information provided is Does not generate any Flight Tracking information for all not an exclusive information, score revenue, so given a Information passengers, so given a for channel usefulness is considered score of ‘0’. score of ‘5’. lower at ‘2’. Absolutely necessary Since the information provided is Does not generate any Baggage Belt information for all not an exclusive information, score revenue, so given a Information passengers, so given a for channel usefulness is considered score of ‘0’. score of ‘5’. lower at ‘2’. Most of these services Other Aeronautical are used as per the Services (Baby passenger’s needs at a Stroller, Baby Care Since not availed / used by everyone, Does not generate any specific point of time Room, Cloak Room, channel usefulness is considered revenue, so given a and not regularly used, Lost & Found, Prayer lower at ‘2’. score of ‘0’. but all the services are Room, Special necessities, so given a Assistance, Airline score of ‘5’. Consultation Paper No. 08/2024-25 Page 309 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Revenue Generating Services Offered Necessity Channel Usefulness Capability Ticketing Counter, etc) Non-Aeronautical Services Concessionaire Pre-booking and collecting the items services are an integral / products on the go at the Airport Major Revenue part of the Airport and makes it a highly user-friendly Generating service on Concessionaires provide a range of experience and it is an exclusive the App, so given a services, so given a service provided on the App, so score of ‘5’. score of ‘5’. given a score of ‘5’. Generates Revenue Highly necessary through both Porter service for the Exclusive service - information Porter Services and Services and Baggage passengers within the provided only on this App, so given Baggage Wrapping Wrapping Facilities, Airport, so given a a score of ‘5’. so given a score of score of ‘5’. ‘5’. Would be generating Bill Payments and Not a necessary or Not a exclusively provided service revenue on a Banking Related critical service at all, so for the passengers, so given a score commission basis, so Services given a score of ‘0’. of ‘0’. given a score of ‘1’. Other Bookings Services like (Includes Bookings transportations and An extremely necessary for Hotel, Cabs, Not an exclusive service at all, but a other bookings would service for all the Flights, Trains & very useful one for the passengers be generating revenue passengers, so given a Other nevertheless, so given a score of ‘3’. directly when booked score of ‘4’. Transportation through the App, so Services) given a score of ‘5’. Other Non- Aeronautical Services like Museum Services (Museum Tour, Postal Services, Not a necessary or Tour, Play Zone Car Parking, etc critical service at all but Services, Postal Some of the services like Museum would be having a some of the services Services, Car Parking, Tour & Play Zone Services are direct revenue provided are related FASTag & DTH exclusive services, but most of them generating model. specifically to the Recharge, Pranaam are not, so given a score of ‘1’. Note: Car Parking is Airport, so given a Services, Adani a Non-Aeronautical score of ‘1’. Rewards, Adani One Revenue earned by ICICI Bank Credit MIAL. Cards, etc) 9.3.19 Using these scores of Aeronautical and Non-Aeronautical, the allocation percentage is identified as below: Table 280: Digitalization Cost Aeronautical Allocation as proposed by the Authority Total Score’s Total Aeronautical Score (a) 21 Total Non-Aeronautical Score (b) 49 Total (c) 70 Aeronautical Allocation (%) (d = a/c) 30.00% 9.3.20 Therefore, as seen from the preceding table, the Digitalization Cost can be allocated at 30.00% and the Authority is seeking stakeholder response before concluding on this aspect. 9.3.21 Thus, applying this 30.00% only on the Platform usage fees payable to the Digital Service Provider (as detailed above in Table 280) the cost allocable to Aeronautical services is as below: Consultation Paper No. 08/2024-25 Page 310 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Table 281: Allocation of Digitalization Costs as computed by the Authority (Rs. in crores) Particulars Basis Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Fixed Cost to Digital 7.50 Crs A 90.00 95.00 99.00 104.00 109.00 497.00 Service Provider / month Aeronautical Allocation B=(A*30.00%) 27.00 28.50 29.70 31.20 32.70 149.10 9.3.22 The Authority proposes to follow the below summarized approach for allocating the operating expenditure between aeronautical and non-aeronautical as below Table 282: Rationale behind Aeronautical % of Operating Expenses Aeronautical % Aeronautical % Rationale behind MIAL Rationale behind Cost Head as submitted by as per Authority decision Authority decision MIAL Analysis Based on the Employee Head Count, Aero and Non- Aero employees have been segregated respectively, Employee Costs 93.00% 93.00% Same as MIAL while common employees have been segregated using gross fixed asset ratio. (Refer Table 276) R&M Expenses 94.93% 95.48% Operating Contract’s 89.43% 91.27% The ratio of the Utilities Expenses 98.70% 98.77% Total Aeronautical Administrative MIAL has taken average of 80.61% 80.43% Cost for the five Expenses aero % of every year of the years of the Third Rents, Rates & Third Control Period to 88.33% 91.23% Control Period is Taxes arrive at the aero % for the divided by the Total Insurance Expense 83.40% 83.00% Fourth Control Period. Cost of the Third Advertisement 89.78% 87.97% Control Period. Expense Consumable Stores 91.38% 87.55% Corporate Cost 93.00% 93.00% Same as Employee Cost Same as MIAL Runway Recarpeting 100.00% 100.00% Fully considered as Aero Same as MIAL Carrying Cost on 100.00% 100.00% Fully considered as Aero Same as MIAL Runway Recarpeting Based on the Multi- Based on Manpower Criteria Decision Digitalization Cost 82.00% 30.00% Assigned (Refer para Analysis Approach 9.3.13) (Refer para 9.3.15) DF Collection Fully considered as non- 0.00% 0.00% Fully Disallowed Charges Aero Authority has reallocated some costs from CAPEX Other Expenses 0.00% 100.00% NA to Operating Expenses which has been considered as 100% Aero. As the working capital interest has Working Capital Considered fully as 83.40% 100.00% been calculated Interest Corporate Overheads. only on Aero revenue, it is Consultation Paper No. 08/2024-25 Page 311 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD Aeronautical % Aeronautical % Rationale behind MIAL Rationale behind Cost Head as submitted by as per Authority decision Authority decision MIAL Analysis considered as 100% Aero. Considered fully as 83.38% Financing Charges 83.40% Corporate (Refer 9.2.2(v)) Overheads. 9.3.23 Based on the above, the Authority has proposed on the following Aeronautical Portion of Operating Expenses for each Cost head. Table 283: Aeronautical Portion of Total Operating and Maintenance Expenditure proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars FY 25 FY 26 FY 27 FY 28 FY 29 Total Employee Costs 169.90 180.10 190.90 202.36 250.40 993.66 R&M Expenses 189.94 197.16 217.55 240.04 264.85 1,109.54 Operating Contract's 166.63 158.38 149.02 155.57 195.27 824.87 Utilities Expenses 155.17 146.38 136.51 142.52 181.42 762.00 Administrative Expenses 22.01 22.98 23.99 25.04 26.14 120.16 Rents, Rates & Taxes 59.53 60.00 60.49 62.04 62.57 304.63 Insurance Expense 16.38 17.20 18.37 19.14 21.69 92.77 Advertisement Expense 3.29 3.44 3.59 3.75 3.91 17.97 Consumable Stores 15.98 15.19 14.29 14.92 18.73 79.12 Corporate Cost 72.95 77.33 81.97 86.88 92.10 411.22 Runway Recarpeting 23.89 23.77 27.38 27.38 25.58 127.99 Carrying Cost on Runway Recarpeting 10.41 7.38 5.51 3.42 6.80 33.51 Digitalization Cost 27.00 28.50 29.70 31.20 32.70 149.10 Other Expenses 3.15 3.15 3.15 4.08 4.12 17.65 Working Capital Interest - - - - - - Financing Charges 36.93 31.20 36.12 33.09 24.04 161.38 Total Aero Operating Expenditure 973.15 972.15 998.54 1,051.42 1,210.32 5,205.57 9.3.24 Based on the above, the Authority proposes Aeronautical Operating and Maintenance Expenditure of Rs. 5,205.57 Crores for the Fourth Control Period as against MIAL’s submission of Rs. 7,190.41 Crores. The reasons for this variance are as under: (i) The expenses are estimated at the CPI inflation rate in line with the provisions of OMDA, while MIAL has estimated the same at a rounded-off inflationary increase plus an additional increase of 5% over that. (ii) Employee Costs and Corporate Cost Allocation have been estimated at 6% YoY against MIAL’s submission of 10% YoY. (iii) Digitalization Cost expenses has been considered as aeronautical expenditure tentatively based on a method which considers aeronautical and non-aeronautical usage of the application and on which the Authority will take a final decision based on stakeholder feedback during public consultations. (iv) Legal Expenses have been excluded in line with the recent concession agreements entered by AAI, where legal costs are not to be included as a part of the pass-through costs of Airport operations. (v) The working capital interest has been reworked based on a comprehensive assessment of working capital and Financing Charges reworked based on debt draw down on revised capex. Consultation Paper No. 08/2024-25 Page 312 of 349OPERATION & MAINTENANCE EXPENSES FOR THE FOURTH CONTROL PERIOD 9.4 AUTHORITY’S PROPOSALS REGARDING AERONAUTICAL O&M EXPENSES FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its examination, the Authority proposes the following regarding Aeronautical Operation and Maintenance (O&M) Expenses for the Fourth Control Period: 9.4.1 To consider Aeronautical O&M Expenses for the Fourth Control Period as per Table 283. 9.4.2 To true up Aeronautical O&M Expenses for the Fourth Control Period based on actuals at the time of tariff determination for the Fifth Control Period subject to the reasonability and efficiency. Consultation Paper No. 08/2024-25 Page 313 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD 10. NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD 10.1 MIAL SUBMISSION REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD 10.1.1 MIAL has project Non-Aeronautical Revenue for the Fourth Control Period based on the following assumptions in their MYTP. (i) Renovation of Terminal 1: MIAL is planning to demolish Terminal 1 in FY 2025-26 and re- construct it, which is expected to start functioning by FY 2028-29. This re-construction will increase the total Terminal area from 5,51,563 sqm to 6,49,506 sqm. Table 284: Terminal Area Details Terminal’s Existing (FY24) FY26 FY29 T1 1,03,131 - 2,01,074 T2 4,48,432 4,48,432 4,48,432 Total 5,51,563 4,48,432 6,49,506 (ii) Base Year: FY 2023-24 was considered as the base year for all the revenue and the relevant growth percentages were applied for the same. (iii) Passenger Traffic: MIAL has based the growth in revenue on the increase/decrease in passenger traffic. 10.1.2 Passenger Traffic projected by MIAL for the Fourth Control Period. Table 285: Passenger Traffic Projected for the Fourth Control Period Forecasted (ConsideringT1 demolition) Total Passengers (in Millions) FY 25 FY 26 FY 27 FY 28 FY 29 Total Embarking 26.71 22.58 20.75 21.46 24.40 115.88 Disembarking 25.98 22.02 20.27 20.98 23.93 113.18 Transit 0.03 0.02 0.02 0.02 0.02 0.11 Total Passengers 52.72 44.62 41.04 42.46 48.34 229.17 Forecasted (Considering T1 demolition) Passengers Growth FY 25 FY 26 FY 27 FY 28 FY 29 Embarking Domestic Passenger (0.60%) (12.93%) (6.30%) 4.23% 17.67% Disembarking Domestic Passenger 1.14% (12.93%) (6.30%) 4.23% 17.67% Total Domestic Passengers 0.26% (12.93%) (6.30%) 4.23% 17.67% Embarking International Passenger 0.39% (22.01%) (13.31%) 0.92% 0.91% Disembarking International Passenger (3.80%) (22.01%) (13.31%) 0.92% 0.91% Total International Passengers (excluding transit) (1.43%) (22.01%) (13.31%) 0.92% 0.91% Domestic ATM's 3.69% (14.51%) (6.68%) 3.79% 17.13% International ATM's (2.37%) (22.37%) (14.11%) 0.00% 0.00% Total ATM's 2.14% (16.43%) (8.37%) 2.98% 13.58% 10.1.3 The basis of projection adopted by MIAL for each of the revenue streams under each broad head are as follows: Consultation Paper No. 08/2024-25 Page 314 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Table 286: Retail licenses revenue -Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP Basis of projection as adopted by MIAL for the Fourth Control Period in Retail Licenses Revenue MYTP Revenue from F&B Concessions have been considered basis projected passenger traffic. Further 2% growth in Average Transaction Value (ATV) per pax and 1% growth in penetration is considered each year of the Fourth Control Period. F&B Revenues to MIAL is (1) revenue share or MMG (Minimum Monthly Guarantee), whichever is higher and (2) common area maintenance charges as per company policy. Revenue from Flight Catering concessions is considered basis projected Flight Kitchen passenger traffic, and 5% growth based on actual revenue of FY24. Revenue from Retail Concessions have been projected basis projected passenger traffic. Further 2% growth in Average Transaction Value (ATV) per pax and 1% Retail concession growth in penetration is considered each year of the Fourth Control Period. Revenues to MIAL is (1) revenue share or MMG, whichever is higher and (2) common area maintenance charges as per company policy. Foreign exchange, Banks & The revenue from Forex is based on fixed MMG contract. Revenue from ATM ATM concessions is assumed to increase at 5% on likely actual revenue of FY24. IT & Communication The revenue from IT and communication is assumed to increase by 5% YoY. Revenue from Car rental and Hotel reservation concessions is projected basis Car Rental & Hotel projected passenger traffic, and 5% growth based on likely actual revenue of Reservation FY24. Revenue from Duty Free Concessions have been projected basis projected international passenger traffic. Further 2% growth in Average Transaction Value (ATV) per pax and 1% growth in penetration is considered each year of the Duty Free Shops Fourth Control Period. Revenues to MIAL is (1) revenue share or MMG, whichever is higher and (2) common area maintenance charges as per company policy. Revenue from Advertising concession is expected to grow at 5% in line with Advertising Income expected business growth. Car Parking / Ground Revenue from Car Parking concessions is projected based on fixed MMG Transport contract (10% annual increase) As per contract with various Ground Handling agencies, revenue from Ground Ground Handling Handling concessions is higher of MMG and revenue share. Total Ground Handling revenue is expected to grow in line with traffic growth Revenue from other retail licenses revenue is projected based on growth in Others passenger traffic. Table 287: Rent & Services Revenue - Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP Basis of projection as adopted by MIAL for the Fourth Control Period in Rent & Services Revenue MYTP Land Rent & Lease Hanger Rent Land Lease Rent, Hanger Rent, Terminal Building rent, Cargo and Other Terminal Building Rent building Rents are expected to increase at a rate of 7.5% p.a. considering FY24 Cargo Building Rent & likely numbers as base numbers. Other Building Rent Cute Counter Charges are assumed to increase as per ATM growth based on Cute Counter Charges likely actual revenue of FY24. Revenue from F&B Concessions have been projected basis projected departing passenger traffic, Average Transaction Value (ATV) per pax and penetration of Lounges FY24 and considering growth in ATV by 2% and penetration by 1% respectively for each year of the Fourth Control Period. Revenues to MIAL is (1) revenue Consultation Paper No. 08/2024-25 Page 315 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Basis of projection as adopted by MIAL for the Fourth Control Period in Rent & Services Revenue MYTP share or MMG whichever is higher and (2) common area maintenance charges as per company policy. Table 288: Retail licenses revenue - Cargo – Basis of projection for NAR as adopted by MIAL for the Fourth Control Period as part of MYTP Basis of projection as adopted by MIAL for the Fourth Control Period in Cargo Revenue MYTP Domestic Cargo revenue have been projected based on cargo volume of FY24 and change in cargo volume which in turn is dependent on domestic ATM Domestic Cargo traffic, and 5% growth in yield per ton. Revenues accruing to MIAL is revenue share or MMG, whichever is higher. International Cargo International and Perishable Cargo revenue have been projected based on cargo Revenue volume of FY24 and change in cargo volume which in turn is dependent on international ATM traffic, and 5% growth in yield per ton. Revenues accruing to Perishable Cargo MIAL is revenue share or MMG, whichever is higher. Courier Cargo revenue have been projected based on cargo volume of FY24 and change in cargo volume which in turn is dependent on international ATM traffic, Courier Revenue and 5% growth in yield per ton. Revenues accruing to MIAL are revenue share as per Concession Agreement. Cargo Handling Revenue Cargo handling revenues are projected to increase by 5% 10.1.4 Based on the above basis, MIAL has projected revenue from non-aeronautical services for Chhatrapati Shivaji Maharaj Airport as follows: Table 289: Non-Aeronautical Revenue/ Revenue Share Assets projections submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Retail Licenses Revenue F&B 151.45 155.04 163.80 176.99 201.97 849.25 Flight Kitchen 57.65 51.17 49.38 53.63 64.02 275.85 Retail concession 149.65 142.58 139.90 150.29 173.52 755.94 Foreign Exchange, Banks & 94.16 78.46 71.68 76.08 81.30 401.68 ATM IT & Communication 146.35 130.06 125.60 136.44 163.13 701.58 Car Rental & Hotel Reservation 26.73 23.76 22.94 24.92 29.80 128.15 Duty Free Shops 348.01 286.05 260.41 272.32 284.84 1,451.63 Advertising Income 230.23 204.75 197.84 214.93 256.88 1,104.63 Car Parking / Ground Transport 61.89 57.62 58.30 66.35 83.10 327.26 Ground Handling 144.84 121.04 110.91 114.22 129.74 620.75 Others 27.17 22.99 21.15 21.88 24.91 118.10 Total Retail Licences Revenue A 1,438.13 1,273.54 1,221.92 1,308.06 1,493.23 6,734.88 Rent & Services Revenue Land Rent & Lease 199.24 214.18 230.25 247.52 266.08 1,157.27 Hanger Rent 35.49 19.07 - - - 54.56 Terminal Building Rent 116.93 113.95 109.86 118.10 155.42 614.26 Cute Counter Charges 14.28 11.93 10.93 11.26 12.79 61.19 Lounges 79.80 77.67 79.55 85.91 98.02 420.95 Cargo Building Rent & Other 37.71 40.54 43.58 46.85 50.36 219.04 Building Rent Total Rent & Services Revenue B 483.44 477.34 474.17 509.64 582.67 2,527.26 Consultation Paper No. 08/2024-25 Page 316 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Cargo Revenue Domestic Cargo 33.26 32.78 33.80 36.55 41.79 178.18 Perishable Cargo 35.83 30.49 28.43 30.00 31.65 156.40 Courier Revenue 19.51 10.33 9.31 9.78 10.27 59.20 International Cargo Revenue 323.52 295.87 289.88 307.96 327.20 1,544.43 Cargo Handling Revenue 32.93 34.57 36.30 38.12 40.02 181.94 Total Cargo Revenue C 445.05 404.04 397.73 422.40 450.93 2,120.14 Total Non-Aeronautical D = 2,366.61 2,154.93 2,093.83 2,240.10 2,526.82 11,382.29 Revenue A+B+C Table 290: ‘S’-Factor projections submitted by MIAL for the Fourth Control Period (Rs. in crores) S-Factor Calculation FY25 FY26 FY27 FY28 FY29 Total Retail License Revenue (A) 1,438.13 1,273.54 1,221.92 1,308.06 1,493.23 6,734.88 Rent & Service Revenue (B) 483.44 477.34 474.17 509.64 582.67 2,527.26 Cargo Revenue (C) 445.05 404.04 397.73 422.40 450.93 2,120.14 Total Revenue Share Assets (A+B+C) 2,366.61 2,154.93 2,093.83 2,240.10 2,526.82 11,382.29 Less: Revenue from Other than Revenue 16.66 17.50 18.37 19.29 20.25 92.07 Share Assets (i.e. Non-Transfer Assets) Less: Revenue from Existing Assets 592.61 442.07 291.53 291.53 291.53 1,909.27 Net Revenue Share Assets 1,757.35 1,695.35 1,783.91 1,929.29 2,215.05 9,380.95 Less: Annual Fees @38.7% 680.09 656.10 690.37 746.64 857.22 3,630.43 Revenue Share Assets to be used for 1,077.26 1,039.25 1,093.54 1,182.65 1,357.83 5,750.52 Target Revenues Cross subsidy (S factor @ 30%) from 323.18 311.77 328.06 354.80 407.35 1,725.16 Revenue Share Assets 10.1.5 The growth rates assumed by MIAL have been presented in the table below: Table 291: Growth rates assumed by MIAL for Non-Aeronautical Revenue Revenue Head Growth Rate Retail Licenses Revenue Based on Projected Passenger Traffic, ATV- 2% Y-o-Y growth, Penetration- F&B 1% Y-o-Y growth. Flight Kitchen Based on Projected Embarking Passenger Traffic and 5% Y-o-Y growth. Based on Projected Passenger Traffic, ATV- 2% Y-o-Y growth, Penetration- Retail Concession 1% Y-o-Y growth. Foreign Exchange- Projected Passenger Traffic and 5% Y-o-Y growth. Foreign Exchange, Banks & Bank and ATM- Projected International Passenger Traffic and 5% Y-o-Y ATM growth. IT & Communication 5% Y-o-Y growth. Car Rental & Hotel Reservation Based on Projected International Passenger Traffic, ATV- 2% Y-o-Y growth, Duty Free Shops Penetration- 1% Y-o-Y growth. Advertising Income 5% Y-o-Y growth. Car Parking / Ground Transport 10% Y-o-Y growth Ground Handling Based on ATM growth rate Others Based on projected passenger traffic Rent & Services Revenue Land Rent & Lease Hanger Rent 7.5% Y-o-Y growth Terminal Building Rent Consultation Paper No. 08/2024-25 Page 317 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Revenue Head Growth Rate Cargo Building Rent & Other Building Rent Cute Counter Charges Based on ATM growth rate Based on Projected Departing Passenger Traffic, ATV- 2% Y-o-Y growth, Lounges Penetration- 1% Y-o-Y growth. Cargo Revenue Domestic Cargo 5% Y-o-Y growth, 7.5% for Blue Dart Cargo International Cargo Revenue 5% Y-o-Y growth, 7.5% for license fees Perishable Cargo Courier Revenue 5% Y-o-Y growth Cargo Handling Revenue 10.2 AUTHORITY’S EXAMINATION REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD 10.2.1 The Authority analyzed the trend of the non-aeronautical revenues over the past three Control Periods which is given below: Figure 45: Category wise NAR for the 1st CP, 2nd CP and 3rd CP Category wise NAR for 1stCP, 2ndCP and 3rd CP 1,600 1,400 1,200 1,000 800 600 400 200 0 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 Retail Licenses Revenue Rent & Services Revenue Cargo Revenue 10.2.2 The Authority also compared the actual revenues vis-a-vis revenues budgeted by MIAL at the time of tariff determination for the past three Control Periods which is given below: Figure 46: Comparison of Projected and Actual Non-Aeronautical Revenue Comparison of Projected and Actual NAR 3,000 2,500 2,000 1,500 1,000 500 0 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 Projected Actual Consultation Paper No. 08/2024-25 Page 318 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD 10.2.3 The Authority observed a consistent upward trend in all categories of Non-Aeronautical Revenue. It also noted that the variances between actual and budgeted figures were comparable, except when influenced by external factors such as the impact of COVID-19. Additionally, during the Third Control Period (3rd CP), non-aeronautical revenues consistently surpassed the budgeted revenue outlined in the Multi-Year Tariff Proposal (MYTP) except in FY 20. If all other factors remained unchanged, the differences between budgeted and actual revenues were not significant. This was then compared to the revenue trends projected by MIAL for the Fourth Control Period, as detailed below: Figure 47: Category wise Non-Aeronautical Revenue for the Fourth Control Period Category wise NAR for all the Four Control Periods 2,000 1,500 1,000 500 0 FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19FY 20FY 21FY 22FY 23FY 24FY 25FY 26FY 27FY 28FY 29 Retail Licenses Revenue Rent & Services Revenue Cargo Revenue 10.2.4 While optically, the trend of the amounts projected for the Fourth Control Period were in line with the trend in 1st CP, 2nd CP and 3rd CP, the Authority further delved into detailed analysis using measures of CAGR for each of the three Control Periods. CAGR computed for the 1st CP, 2nd CP, 3rd CP and 4th CP (under consideration) is provided below: Table 292: CAGR for all the Four Control Periods as submitted by MIAL in the MYTP of the Fourth Control Period CAGR for 4th CP Particulars CAGR for 1st CP CAGR for 2nd CP CAGR for 3rd CP (under consideration) Retail Licenses 15.75% 18.91% 4.68% 0.61% Revenue Rent & Services 7.92% 21.35% 10.86% 2.00% Revenue Cargo Revenue 8.38% 2.69% 6.67% 1.06% 10.2.5 Since the CAGR for the Fourth Control Period was much lower than the CAGR for 1st CP, 2nd CP and 3rd CP, the Authority further analyzed the head wise break up of these broad categories. A summary of the head wise proposals of the Authority in comparison with the basis of projection as adopted by MIAL was as provided below: Table 293: Retail Licenses Revenue - Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period Basis of projection as Retail Licenses Basis of projection as adopted by MIAL for 4th CP in proposed by Authority for Revenue MYTP 4th CP Revenue from F&B Concessions have been considered basis The Authority proposes to F&B projected passenger traffic. Further 2% growth in Average consider MIAL's projection Consultation Paper No. 08/2024-25 Page 319 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Basis of projection as Retail Licenses Basis of projection as adopted by MIAL for 4th CP in proposed by Authority for Revenue MYTP 4th CP Transaction Value (ATV) per pax and 1% growth in for F&B, Retail Concession penetration is considered each year of the Fourth Control and Duty-Free Shops with Period. Revenues to MIAL is (1) revenue share or MMG, only change in ATV growth whichever is higher and (2) common area maintenance rate. Authority has considered charges as per company policy. 4.5% growth in ATV instead Revenue from Retail Concessions have been projected basis of 2% by MIAL. projected passenger traffic. Further 2% growth in Average Penetration has been Transaction Value (ATV) per pax and 1% growth in considered the same as MIAL Retail penetration is considered each year of the Fourth Control i.e., 1%. Concession Period. Revenues to MIAL is (1) revenue share or MMG, whichever is higher and (2) common area maintenance charges as per company policy. Revenue from Duty Free Concessions have been projected basis projected international passenger traffic. Further 2% growth in Average Transaction Value (ATV) per pax and 1% Duty Free growth in penetration is considered each year of the Fourth Shops Control Period. Revenues to MIAL is (1) revenue share or MMG, whichever is higher and (2) common area maintenance charges as per company policy. The Authority has considered Revenue from Flight Catering concessions is considered 7% growth which is in line Flight Kitchen basis projected passenger traffic, and 5% growth based on with CAGR instead of 5% actual revenue of FY24. considered by MIAL. Foreign The revenue from Forex is based on fixed MMG contract. exchange, Revenue from ATM concessions is assumed to increase at Banks & ATM 5% on likely actual revenue of FY24. IT & The revenue from IT and communication is assumed to Communication increase by 5% YoY. Car Rental & Revenue from Car rental and Hotel reservation concessions Hotel is considered projected basis projected passenger traffic, and Reservation 5% growth based on likely actual revenue of FY24. Advertising Revenue from Advertising concession is expected to grow at Considered to be rational by Income 5% in line with expected business growth. the Independent Consultant. Car Parking / Revenue from Car Parking concessions is projected based on Ground fixed MMG contract (10% annual increase) Transport As per contract with various Ground Handling agencies, Ground revenue from Ground Handling concessions is higher of Handling MMG and revenue share. Total Ground Handling revenue is expected to grow in line with traffic growth Revenue from other retail licenses revenue is projected based Others on growth in passenger traffic. Table 294: Rent & Services Revenue -Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period Rent & Services Basis of projection as adopted by MIAL for 4th CP Basis of projection as proposed by Revenue in MYTP Authority for 4th CP Land Rent & Land Lease Rent is expected to increase at a rate of Lease 7.5% p.a. considering FY24 as base. Considered to be rational by the Hanger Rent is forecasted at a growth rate of 7.5% Independent Consultant. Hanger Rent p.a. It is projected only till first half of FY 26, since Consultation Paper No. 08/2024-25 Page 320 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Rent & Services Basis of projection as adopted by MIAL for 4th CP Basis of projection as proposed by Revenue in MYTP Authority for 4th CP the Hangars are being moved to Navi Mumbai International Airport. Terminal Building rent is expected to increase at a Terminal rate of 7.5% p.a. considering FY24 numbers as base. Building Rent Impact in terminal area due to T1 demolition is also accounted Cargo Building Cargo & Other Building Rent is expected to increase Rent & Other at a rate of 7.5% p.a. considering FY24 as base. Building Rent Cute Counter Cute Counter Charges are assumed to increase as per Charges ATM growth based on likely actual revenue of FY24. The Authority noted that MIAL has reduced the base year revenue (FY24) by Rs. 71.84 Crs (a reduction of 47.38%). MIAL did not respond to Authority’s request and subsequent reminders to Revenue from Lounges have been projected basis substantiate the reduction by projected departing passenger traffic, Average providing copy of agreement / Transaction Value (ATV) per pax and penetration of computations and other documents in FY24 and considering growth in ATV by 2% and support of the lower base revenue. penetration by 1% respectively for each year of the Further, Authority has learnt that Fourth Control Period. Adani Group has acquired stake in Revenues to MIAL is (1) revenue share or MMG the concessionaire after the whichever is higher and (2) common area Lounges concession was awarded in the year maintenance charges as per company policy. FY25. MIAL has assumed FY 25 value for future forecast Therefore, the Authority could not which is considerably lower than FY 24 value stating consider the reduced base for that- “MIAL has appointed new concessionaire for estimation instead has used the lounge business in FY25. Since new concessionaire higher base of Rs. 151.64 Crs for has to incur substantial capex to refurbish the entire estimation noting, that the revenue lounge facility. Revenue share payable to MIAL has was earned from a contract, that has reduced.” undergone the probity audit review. Further the Authority has considered 4.5% ATV growth instead of 2% taken by MIAL, retaining the penetration growth at 1% as considered by MIAL. Table 295: Cargo Revenue - Basis of projection for the Non-Aeronautical Revenue as submitted by MIAL for the Fourth Control Period and as proposed by the Authority for the Fourth Control Period Basis of projection as adopted by MIAL for 4th Basis of projection as proposed by Cargo Revenue CP in MYTP Authority for 4th CP Domestic Cargo revenue have been projected based on cargo volume of FY24 and change in cargo volume which in turn is dependent on Considered to be rational by the Domestic Cargo domestic ATM traffic, and 5% growth in yield Independent Consultant. per ton. Revenues accruing to MIAL is revenue share or MMG, whichever is higher. International International and Perishable Cargo revenue have The Authority followed MIAL's Cargo Revenue been projected based on cargo volume of FY24 projection basis but identified a and change in cargo volume which in turn is computation error by MIAL in FY21, Perishable dependent on international ATM traffic, and 5% where it incorrectly used the lower Cargo growth in yield per ton. Revenues accruing to amount between Revenue Share and Consultation Paper No. 08/2024-25 Page 321 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Basis of projection as adopted by MIAL for 4th Basis of projection as proposed by Cargo Revenue CP in MYTP Authority for 4th CP MIAL is revenue share or MMG, whichever is MMG for revenue calculation. The higher. Authority corrected this and recalculated the revenue accordingly. Courier Cargo revenue have been projected based on cargo volume of FY24 and change in cargo volume which in turn is dependent on Courier Revenue international ATM traffic, and 5% growth in yield Considered to be rational by the per ton. Revenues accruing to MIAL are revenue Independent Consultant. share as per Concession Agreement. Cargo Handling Cargo handling revenues are projected to increase Revenue by 5% 10.2.6 The Authority notes that MIAL has deducted Revenue from Other Revenue Share Assets from the Net Non-Aeronautical Revenue (NAR) (Refer Table 290). The Authority notes that MIAL generates revenue from Non transfer assets. Since these assets are outside the Terminal, they do not form part of Non aeronautical assets as per OMDA, which has been adopted consistently in earlier control periods. 10.2.7 Upon reviewing the audited financial statements of MIAL, the Authority notes that this revenue is reported independently and is not included under other revenue categories. Therefore, a separate exclusion is unnecessary. Accordingly, the Authority proposes not to consider this revenue as a part of the Net NAR. 10.2.8 The Authority also notes that, as stated in Table 171, MIAL is incurring a total expenditure of Rs. 141.87 Crores, towards the expansion of the following facilities in Terminal 2: (i) New Terminal 2 NW Pier – Rs. 23.10 Crores (ii) New Terminal 2 NW Pier Bus Boarding Gate (V3) – Rs. 4.78 Crores (iii) Terminal 2 Extension – Rs. 113.99 10.2.9 The Authority observes that that the construction of New Terminal 2 NW Pier and the Bus Boarding Gate relate to the gates and Security Hold Area and therefore do not create additional non aeronautical areas for revenue generation. 10.2.10 The Authority notes that the Terminal 2 Extension at a cost of Rs. 113.99 Crores will increase the floor space of Terminal 2 by an additional 13,080 sqm which is an increase of 2.92% of the existing Terminal 2 area. The non aeronautical income considers the additional traffic throughput that gets serviced through this expansion for estimating retail revenue generation. As this location is in the fag end of the terminal, the additional revenue generation potential is expected to be minimal and will get adjusted on true-up in the next control period. 10.2.11 The growth rates considered by the Authority have been presented in the table below: Table 296: Growth rates considered by the Authority for the Non-Aeronautical Revenue Revenue Head Growth Rate considered by the Authority Retail Licenses Revenue Based on Projected Passenger Traffic, ATV- 4.5% Y-o-Y growth, F&B Penetration- 1% Y-o-Y growth. Flight Kitchen Based on Projected Embarking Passenger Traffic and 7% Y-o-Y growth. Based on Projected Passenger Traffic, ATV- 4.5% Y-o-Y growth, Retail concession Penetration- 1% Y-o-Y growth. Consultation Paper No. 08/2024-25 Page 322 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Revenue Head Growth Rate considered by the Authority Foreign Exchange- Projected Passenger Traffic and 5% Y-o-Y growth. Foreign exchange, Banks & Bank and ATM- Projected International Passenger Traffic and 5% Y-o-Y ATM growth. IT & Communication Car Rental & Hotel 5% Y-o-Y growth. Reservation Based on Projected International Passenger Traffic, ATV- 4.5% Y-o-Y Duty Free Shops growth, Penetration- 1% Y-o-Y growth. Advertising Income 5% Y-o-Y growth. Car Parking / Ground Transport 10% Y-o-Y growth Ground Handling Based on ATM growth rate Others Based on projected passenger traffic Rent & Services Revenue Land Rent & Lease Hanger Rent Terminal Building Rent 7.5% Y-o-Y growth Cargo Building Rent & Other Building Rent Cute Counter Charges Based on ATM growth rate Based on Projected Departing Passenger Traffic, ATV- 4.5% Y-o-Y growth, Lounges Penetration- 1% Y-o-Y growth. Cargo Revenue Domestic Cargo 5% Y-o-Y growth, 7.5% for Blue Dart Cargo International Cargo Revenue 5% Y-o-Y growth, 7.5% for license fees Perishable Cargo Courier Revenue 5% Y-o-Y growth Cargo Handling Revenue 10.2.12 The Authority noted that MIAL has submitted the projections for the Revenue Share Assets and ‘S’ Factor based on the Hon’ble TDSAT Order AERA Appeal No. 2 of 2021 dated 6th October 2023 for the Second Control Period. With regards to the Revenue Share Assets and subsequently the derived ‘S’ Factor, the Hon’ble TDSAT tribunal has given directions to exclude the revenue from existing assets and the annual fee paid to AAI from the ‘S Factor computation as explained in para 1.8.1. The Authority, consistent with the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court from 1.9.2 to 1.9.5. 10.2.13 Hence, the Authority has not excluded the revenue from existing assets and the annual fee paid to AAI from the ‘S’ Factor Computation. Treatment of Marketing Fund 10.2.14 The Authority noted that MIAL collects a marketing fund from concessionaires, calculated as a percentage of their revenues, to support marketing and promotional activities during festivals and similar events. The Airport Operator (AO) has full discretion over the quantum, timing, and type of expenditures from this fund. Since FY 2018-19, this fund has been recorded as a balance sheet item rather than as income, with yearly adjustments made for the money spent. Any unspent funds are carried forward to subsequent years, as there is no clause in the agreement for returning these funds to the concessionaires. Additionally, MIAL invoices and charges tax on the collection, acknowledging to the indirect tax authority that it provides a Consultation Paper No. 08/2024-25 Page 323 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD service in exchange for this consideration. The closing balance of unutilized marketing fund at FY 24 is Rs. 50.24 crores. 10.2.15 The Authority recognized that the marketing fund balances were being carried over year-to-year without being fully utilized or squared off. 10.2.16 MIAL clarified that it is collecting "Marketing Fund" at a specified percentage from various concessionaires as per the agreement with respective concessionaires and to be utilized towards sales promotional activities as defined in such agreements in accordance with the Marketing Fund policy adopted by the Company. In accordance with the policy, the fund is collected to carry out marketing & promotional events at CSMIA to enhance retail, F&B and service experience of the Airport users. The fund is only spent on promotions & advertisements to increase footfall for the concessionaires. It is also utilized for sensitizing Airport users about the facilities and services available at the Airport for concessionaires. Some of the major heads under which these funds are utilized are as follows: (i) Marketing collaterals like flyers, brochures, banners, hoardings at the Airport. (ii) Ambience creation during marketing and promotional events. (iii) Marketing surveys / researches towards consumer preference of brands. (iv) Appointment of consultants to focus on enhancing passenger spend through analytics, training, visual merchandising and experience. 10.2.17 The Authority, considering: (i) the explanations by MIAL as above, (ii) the treatment of the collection as a separate fund in the balance sheet of MIAL without considering it as revenue being accepted by MIAL’s Independent Auditors and their Audit Committee and Board, proposes to continue with the practice of treating the collections towards Marketing Fund as an earmarked fund and therefore not to consider it as a part of Non-Aeronautical revenue. 10.2.18 Based on the above, the revised non-aeronautical revenues as proposed by the Authority were as follows: Table 297: Non-Aeronautical Revenues as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Retail Licenses Revenue F&B 154.23 159.84 170.66 186.81 216.52 888.07 Flight Kitchen 58.75 53.14 52.26 57.83 70.35 292.33 Retail Concession 152.77 147.99 147.61 161.35 189.89 799.62 Foreign Exchange, Banks & 94.16 78.46 71.68 76.08 81.30 401.68 ATM IT & Communication 146.35 130.06 125.60 136.44 163.13 701.59 Car Rental & Hotel Reservation 26.73 23.76 22.94 24.92 29.80 128.15 Duty Free Shops 356.01 298.80 277.57 296.31 316.32 1,545.00 Advertising Income 230.23 204.75 197.84 214.93 256.88 1,104.64 Car Parking / Ground Transport 61.89 57.62 58.30 66.35 83.10 327.27 Ground Handling 151.36 132.06 126.33 135.82 161.06 706.63 Others 56.93 50.60 48.86 53.08 63.46 272.93 Total Retail Licences Revenue A 1,489.41 1,337.07 1,299.66 1,409.93 1,631.83 7,167.90 Rent & Services Revenue Land Rent & Lease* 190.01 204.26 219.58 236.04 253.75 1,103.63 Consultation Paper No. 08/2024-25 Page 324 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Hanger Rent 35.49 19.07 - - - 54.56 Terminal Building Rent 116.93 113.95 109.86 118.10 153.76 612.60 Cute Counter Charges 14.28 11.93 10.93 11.26 12.79 61.20 Lounges 158.29 148.78 149.56 163.42 192.30 812.34 Cargo Building Rent & Other 37.71 40.54 43.58 46.85 50.36 219.04 Building Rent Total Rent & Services B 552.70 538.53 533.51 575.67 662.96 2,863.36 Revenue Cargo Revenue Domestic Cargo 33.26 32.78 33.80 36.55 41.79 178.17 Perishable Cargo 35.83 33.11 28.43 30.00 31.65 159.01 Courier Revenue 19.51 10.33 9.31 9.78 10.27 59.20 International Cargo Revenue 323.52 312.83 289.88 307.96 327.20 1,561.39 Cargo Handling Revenue 32.93 34.57 36.30 38.12 40.02 181.95 Total Cargo Revenue C 445.04 423.62 397.72 422.41 450.93 2,139.72 Total Non-Aeronautical D = 2,487.15 2,299.23 2,230.89 2,408.00 2,745.72 12,170.99 Revenue A+B+C *Land Rent & Lease value is different from MIAL’s submission despite the basis of projection being the same because the base value of FY 24 varies (Refer Table 137). Table 298: ‘S’-Factor as proposed by the Authority for the Fourth Control Period (Rs. in crores) S-Factor Calculation FY25 FY26 FY27 FY28 FY29 Total Total Revenue Share Assets (Refer 2,487.15 2,299.23 2,230.89 2,408.00 2,745.72 12,170.99 Previous Table 297) Cross subsidy (‘S’ factor @ 30%) from 746.14 689.77 669.27 722.40 823.72 3,651.30 Revenue Share Assets 10.2.19 Thus, based on the above, the Authority proposes a Non-Aeronautical Revenue of Rs. 12,170.99 Crores for the Fourth Control Period as against MIAL’s submission of Rs. 5,750.52 Crores. The reasons for the variance are as under: (i) Rental Revenue from Fuel Farm Facility has been reclassified as Aeronautical Revenue. (ii) Increased Average Transaction Value to 4.50% as against the 2% submitted by MIAL. (iii) Enhanced the base revenue from Lounges to FY 2024 levels and thereafter increased as per adjusted factors explained under the respective section as against the reduction in base revenue from lounges submitted by MIAL. (iv) As explained in para 10.2.12, the Authority, consistent with the view that presently it needs to continue the tariff determination exercise consistent with the decisions taken in the Tariff Order for the Third Control Period and consequently has not excluded the revenue from existing assets, non- transfer assets and the annual fee paid to AAI. 10.3 AUTHORITY’S PROPOSALS REGARDING NON-AERONAUTICAL REVENUE FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its analysis, the Authority proposes the following for Non- Aeronautical Revenue for the Fourth Control Period: 10.3.1 To consider Non-Aeronautical Revenue and ‘S’ Factor for the Fourth Control Period for CSMIA as per Table 298. Consultation Paper No. 08/2024-25 Page 325 of 349NON-AERONAUTICAL REVENUE (NAR) FOR THE FOURTH CONTROL PERIOD 10.3.2 To consider true up of Non-Aeronautical Revenues at the time of the determination of tariff for the Next Control Period if it is higher than that proposed by the Authority in Table 297. Consultation Paper No. 08/2024-25 Page 326 of 349TAXATION FOR THE FOURTH CONTROL PERIOD 11. TAXATION FOR THE FOURTH CONTROL PERIOD 11.1 MIAL’S SUBMISSION ON TAXATION FOR THE FOURTH CONTROL PERIOD 11.1.1 MIAL, in their MYTP has calculated the Corporate Taxes on earnings pertaining to Aeronautical services in accordance with the Hon’ble Supreme Court and Hon’ble TDSAT judgements. 11.1.2 Accordingly, Aeronautical Tax proposed to be included as part of the Target Revenue for the Fourth Control Period, as submitted by MIAL is detailed below: Table 299: Aeronautical Taxation as submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars FY25 FY26 FY27 FY28 FY29 Average RAB 5,802.30 7,699.29 9,704.47 11,577.12 14,926.84 [Refer Table 217] D/E ratio 48.00% 48.00% 48.00% 48.00% 48.00% [Refer Table 226] Interest Rate 11.93% 11.88% 11.91% 11.94% 11.96% [Refer Table 226] Interest Expense for Tax Purpose 332.23 439.09 554.98 663.44 856.67 Aeronautical Tax Aeronautical Revenue 6,014.20 9,027.78 8,510.66 9,116.26 10,483.97 30% of Non-Aeronautical Revenue and Other Income (Cross Subsidy) 323.17 311.78 328.06 354.79 407.34 [Refer Table 290] Total Income for Aero Tax 6,337.38 9,339.56 8,838.72 9,471.05 10,891.32 Computation Aeronautical Expenses 1,190.11 1,288.22 1,395.32 1,518.10 1,798.70 [Refer Table 234] Depreciation 522.33 688.56 812.53 924.47 963.05 [Refer Table 209] Interest Expenses 332.23 439.09 554.98 663.44 856.67 Profit before Tax 4,292.71 6,923.69 6,075.89 6,365.04 7,272.90 Tax Rate 25.17% 25.17% 25.17% 25.17% 25.17% Aeronautical Tax 1,080.39 1,742.55 1,529.18 1,601.95 1,830.44 11.2 AUTHORITY’S EXAMINATION REGARDING TAXATION FOR THE FOURTH CONTROL PERIOD 11.2.1 The Authority examined the submissions made by MIAL regarding the Aeronautical Taxes for the Fourth Control Period on the basis of the following: (i) MIAL has considered ‘S’ Factor as part of the revenue base (Hon’ble TDSAT order dated 6th October 2023). (ii) MIAL has not considered Annual Fees as an expense for the purpose of determination of Aeronautical Taxes (based on the Hon’ble Supreme Court order dated 11th July 2022). (iii) MIAL has considered Depreciation as per the Companies Act and not under the Income Tax Act. (iv) MIAL has calculated the Interest expenses for the purposes of Income tax Computation using the formula RAB x 48% (Gearing) x Cost of Debt. 11.2.2 With regards to the submission made by MIAL, the Authority consistent with the decisions followed in the True up of the First, Second and Third Control Periods proposes to retain the same approach, as Consultation Paper No. 08/2024-25 Page 327 of 349TAXATION FOR THE FOURTH CONTROL PERIOD mentioned in para 4.2.5 of this Consultation Paper with regards to the treatment of the ‘S’ Factor for computation of Aeronautical Taxes. 11.2.3 Further, the Authority proposes implementing the Hon’ble Supreme Court judgement dated 11th July 2022 as detailed in para 1.7.3 and recomputing the Aeronautical Taxes based on the regulatory accounts. This will involve not treating the Annual Fee paid to AAI during the control period as an expense while computing the Aeronautical Taxes for the tariff determination of the Fourth Control Period. 11.2.4 Consequently, the Authority has re-computed the taxes as follows: Table 300: Interest Expenses as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Average RAB A 5,146.45 6,057.71 6,625.48 7,132.95 8,379.97 [Refer Table 218] D/E Ratio B 48.00% 48.00% 48.00% 48.00% 48.00% [Refer Table 227] Interest Rate C 10.15% 10.15% 10.15% 10.15% 10.15% [Refer Table 227] Interest Expense D = A*B*C 250.74 295.13 322.79 347.52 408.27 1,624.45 Table 301: Aeronautical Taxation as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Ref FY25 FY26 FY27 FY28 FY29 Total Aeronautical Revenue A 1,604.31 1,363.41 1,275.32 1,354.22 1,547.55 7,144.81 30% of Non- Aeronautical Revenue B - - - - - - and Other Income (Cross Subsidy) Total Income for Aero Tax C=A+B 1,604.31 1,363.41 1,275.32 1,354.22 1,547.55 7,144.81 Computation Aeronautical Expenses D 973.15 972.15 998.54 1,051.42 1,210.32 5,205.57 [Refer Table 283] Annual Fees to AAI E - - - - - - Depreciation F 419.98 505.25 540.26 565.13 577.70 2,608.31 [Refer Table 212] Interest Expenses G 250.74 295.13 322.79 347.52 408.27 1,624.45 [Refer Table 300] H=C- Profit Before Tax D-E-F- (39.55) (409.12) (586.27) (609.85) (648.73) (2,293.53) G Opening Accumulated I (1,489.97) (1,529.52) (1,938.64) (2,524.91) (3,134.76) (Losses) Current (Losses) J (39.55) (409.12) (586.27) (609.85) (648.73) Current year Set Off K - - - - - Closing Accumulated L (1,529.52) (1,938.64) (2,524.91) (3,134.76) (3,783.49) (Losses) Profit for Taxation M - - - - - - Tax Rate N 25.17% 25.17% 25.17% 25.17% 25.17% Aeronautical Tax O=M*N - - - - - Consultation Paper No. 08/2024-25 Page 328 of 349TAXATION FOR THE FOURTH CONTROL PERIOD 11.3 AUTHORITY’S PROPOSAL REGARDING THE AERONAUTICAL TAXES FOR THE FOURTH CONTROL PERIOD Based on the material before it and its analysis, the Authority proposes the following regarding Aeronautical Taxes for the Fourth Control Period: 11.3.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 11.3.2 To consider the Aeronautical Taxes for the Fourth Control Period for CSMIA as per Table 301. Consultation Paper No. 08/2024-25 Page 329 of 349QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12. QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12.1 MIAL’S SUBMISSION REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12.1.1 MIAL in its MYTP has stated that, “With respect to the Airport Service Quality obligations of MIAL, OMDA provide the list of Objective and Subjective Service Quality Requirements in Schedule 3 and Schedule 4.” 12.1.2 MIAL has submitted the ASQ rating achieved by the Airport in the last few years as below: Figure 48: ASQ Rating achieved at CSMIA in the last few years as submitted by MIAL 12.2 AUTHORITY’S EXAMINATION REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12.2.1 The Authority notes that: As per section 13 (1) (d) of the AERA Act, 2008, the Authority shall “monitor the set performance standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any Authority authorized by it in this behalf.” As per section 13(1)(a)(ii) of the AERA Act, 2008, the Authority is required to determine the tariff for Aeronautical services taking into consideration “the service provided, its quality and other relevant factors.” 12.2.2 The Authority noted the methodology carried out by ACI for arriving at the ASQ ratings for Airport as follows: (i) ACI ASQ is a quarterly benchmarking program measuring passenger’s satisfaction and experience about an Airport with participation from around 350-400 airports across the world. (ii) The passenger experience is measured based on passenger emotions and their impact to arrive at Emotional Score. Consultation Paper No. 08/2024-25 Page 330 of 349QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD (iii) The passenger satisfaction is measured based on various service quality parameters as mentioned below: a) Arrival at the airport (Ease of getting to the Airport, Signage to access terminal and parking facilities). b) Check-in (Ease of finding check-in area, waiting time at check-in, courtesy and helpfulness of staff). c) Security screening (Ease of going through security screening, waiting time at the security screening and courtesy and helpfulness of security screening staff). d) Border / Passport Control (Waiting time at Border/passport control and courtesy and helpfulness of staff). e) Shopping / Dining (Restaurants/bars and value for money, shops and value for money, courtesy and helpfulness of staff). f) Gate Areas (Comfort of waiting and availability of seats at gate areas). g) Throughout the airport (Ease of finding way, availability of flight information, walking distance inside terminal, ease of making connection with other flights, courtesy and helpfulness of staff, wi-fi service quality, availability of charging stations, entertainment and leisure options, availability and cleanliness of washrooms/toilets). h) Airport atmosphere (Health, safety, cleanliness and ambience). (iv) Additional service quality parameters considered by ACI ASQ are ground transportation to/from the airport, availability of baggage cart/trolleys, efficiency of check-in staff and business/executive lounges. (v) ACI ASQ also evaluates the service quality satisfaction level through three indexes namely Ease of traveling index, Waiting time index and staff index. 12.2.3 The Authority notes MIAL’s submission (Refer Figure 48) with regard to the ASQ rating achieved by MIAL in the last few years as tabulated below: Table 302: ASQ Rating achieved by MIAL from CY 2019-2024 Calendar Year / CY 2019 CY 2020 CY 2021 CY 2022 CY 2023 CY 2024 Quarter Q1 5.00 5.00 4.98 5.00 5.00 5.00 Q2 5.00 5.00 4.99 5.00 5.00 Q3 5.00 5.00 5.00 5.00 5.00 Q4 5.00 5.00 5.00 5.00 5.00 Grand Total 20.00 20.00 19.97 20.00 20.00 5.00 12.2.4 The Authority also notes from ACI’s website that MIAL has been awarded as the best airport handling over 40 million passengers (departure) for 2023 in Asia-Pacific region. 12.2.5 Further, based on the information available to it, the Authority finds that the ASQ rating awarded to MIAL for FY 2019-20 to FY 2023-24 is in the range of 4.98 – 5.00. 12.2.6 Based on the above, the Authority does not propose any adjustment towards tariff determination for the Fourth Control Period on account of quality of service maintained by CSMIA, as MIAL has been able to consistently maintain ASQ rating close to 5.00 which is better than the minimum benchmark of OMDA. Consultation Paper No. 08/2024-25 Page 331 of 349QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12.3 AUTHORITY’S PROPOSAL REGARDING QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD Based on the material before it and its analysis, the Authority proposes the following regarding the Quality of Service for the Fourth Control Period: 12.3.1 To not consider any adjustment in the Target Revenue on account of Quality of Service for the Fourth Control Period (refer para 12.2.6). Consultation Paper No. 08/2024-25 Page 332 of 349TARGET REVENUE FOR THE FOURTH CONTROL PERIOD 13. TARGET REVENUE FOR THE FOURTH CONTROL PERIOD 13.1 MIAL’S SUBMISSION ON TARGET REVENUE FOR THE FOURTH CONTROL PERIOD 13.1.1 MIAL submitted their MYTP on the 6th of June 2024 that included TR & Yield Per Passenger (YPP) for the Fourth Control Period as per the regulatory building blocks detailed in the earlier chapters as follows: Table 303: Target Revenue submitted by MIAL for the Fourth Control Period (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Average RAB A1 5,802.29 7,699.19 9,704.06 11,576.34 14,925.00 [Refer Table 217] Average HRAB [Refer A2 238.36 196.24 152.41 109.00 69.74 Table 213] Total A=A1+A2 6,040.66 7,895.53 9,856.88 11,686.12 14,996.58 FRoR B 15.24% 15.24% 15.24% 15.24% 15.24% [Refer Table 226] Return on RAB C=A*B 920.68 1,203.38 1,502.25 1,781.00 2,285.40 7,692.70 Aeronautical Depreciation D 561.77 733.36 855.40 968.40 997.64 4,116.57 [Refer Table 209] Aeronautical O&M Expenses E 1,190.11 1,288.22 1,395.32 1,518.10 1,798.70 7,190.45 [Refer Table 234] Aeronautical Taxes F 1,080.39 1,742.55 1,529.18 1,601.95 1,830.44 7,784.52 [Refer Table 299] Gross Target G=C+D+E+F 3,752.94 4,967.52 5,282.22 5,869.57 6,912.46 26,784.72 Revenue Less: S Factor (30% of Non-Aeronautical H 323.18 311.77 328.06 354.80 407.35 1,725.16 Revenue) [Refer Table 290] Net Target Revenue I=G-H 3,429.77 4,655.74 4,954.16 5,514.78 6,505.12 25,058.85 True up for the 3rd CP J 13,665.34 [Refer Table 147] Adjusted Net Target K=I+J 17,095.11 4,655.74 4,954.16 5,514.78 6,505.12 38,724.90 Revenue Discount Factor L 1.00 0.87 0.75 0.65 0.57 PV of Adjusted Target Revenue as on 1st Oct M=K*L 17,095.11 4,039.99 3,730.38 3,603.32 3,688.27 32,156.61 2024 X Factor Increase % 675.72% 13.2 AUTHORITY’S EXAMINATION OF TARGET REVENUE FOR THE FOURTH CONTROL PERIOD 13.2.1 The Authority, based on its examination across the regulatory building blocks and the proposals including True up for the past control periods, has recalculated the Target Revenue for the Fourth Control Period. 13.2.2 The Authority notes that MIAL has proposed the demolition and reconstruction of T1 (Refer 6.3.105) as part of its Capex proposals, which would bring down the traffic from FY 24’s numbers and would start growing gradually from Oct-28 when the new proposed Terminal 1 starts functioning. 13.2.3 As mentioned in para’s from 1.9.2 to 1.9.5, with regard to the issues raised by the Authority in the Civil Appeal against the judgements of the Hon’ble TDSAT, the Authority is of the view that presently it needs to Consultation Paper No. 08/2024-25 Page 333 of 349TARGET REVENUE FOR THE FOURTH CONTROL PERIOD continue the tariff determination exercise in line with the decisions taken in the Tariff Order for the Third Control Period as the matter is sub-judice before the Hon’ble Supreme Court. 13.2.4 Further, the Authority proposes to implement the Hon’ble Supreme Court judgement dated 11th July 2022 and recompute the Aeronautical Taxes based on the regulatory accounts by not treating the Annual Fee pertaining to Aeronautical Revenues as an expense while computing the Aeronautical Taxes as per the directions contained in the said judgement of the Hon’ble Supreme Court. 13.2.5 Based on the detailed examination of each building block of the Third Control Period, there is an over recovery of Rs. 937.84 Crores (Refer Table 150), which is being adjusted in the Fourth Control Period. 13.2.6 As a result, in spite of the considerable investment in aeronautical assets and the associated expansion in capacity, the expected increase in Target Revenue has been offset to an extent by this over recovery carried forward from the Third Control Period. Consequently, while MIAL has projected a considerable increase in tariff based on the Hon’ble TDSAT order and the Hon’ble Supreme Court order, the Authority after its thorough examination has proposed a measured and balanced increase taking into consideration the over recovery already earned by MIAL and the efficient cost that could be considered for the tariff determination exercise. 13.2.7 The observations and proposals of the Authority across the regulatory building blocks impact the computation of the TR. With respect to each element of the regulatory building blocks considered by MIAL in computation of the TR in the table above, the Authority proposes as follows: (i) To consider the average RAB in accordance with Table 218. (ii) To consider the average HRAB in accordance with Table 216. (iii) To consider the FRoR in accordance with Table 227. (iv) To consider the Depreciation as per Table 212. (v) To consider the O&M expenses as per Table 283. (vi) To consider the Aeronautical Tax as per Table 301. (vii) To consider the Non-Aeronautical Revenue as per Table 297. (viii) To consider the True up of the Third Control Period as per Table 150. (ix) To consider the total traffic in accordance with Table 154. Treatment of assets identified in the Self-Contained Note by AIA: 13.2.8 Apart from the above-mentioned calculations, the Authority has also computed the return on RAB on the assets specified in the SCN as per para 3.1.6 as below and adjusted it from the Target Revenue calculations: Table 304: Change in Return on RAB for the Fourth Control Period as proposed by the Authority based on the SCN (Rs. in crores) Fourth Control Period - Return on RAB Total Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Opening WDV A 149.26 142.14 135.06 128.06 121.05 Closing WDV B 142.14 135.06 128.06 121.05 114.04 C = Average Return on RAB (A,B) * FRoR 18.56 17.66 16.76 15.87 14.97 83.82 Impact as per SCN (12.74%) 13.2.9 The following table lists the summary of impact of the adjustments made in Return on RAB and Depreciation with respect to the directions given by the Authorized Investigation Agency on a case registered against MIAL as mentioned in para 3.1.6: Consultation Paper No. 08/2024-25 Page 334 of 349TARGET REVENUE FOR THE FOURTH CONTROL PERIOD Table 305: Summary of Impact on Depreciation and Return on RAB based on the request of Authorized Investigation Agency (Rs. in crores) Particulars Ref 1st Year 2nd Year 3rd Year 4th Year 5th Year Total Impact on Depreciation 2nd Control Period A 5.98 7.23 8.50 10.14 10.66 42.51 [Refer Table 35] 3rd Control Period B 10.63 10.42 8.61 8.06 7.54 45.26 [Refer Table 84] 4th Control Period C 7.12 7.07 7.01 7.01 7.01 35.22 [Refer Table 211] Impact on Return on RAB 2nd Control Period D 12.14 14.06 17.69 21.65 23.58 89.11 [Refer Table 50] 3rd Control Period E 24.24 22.89 21.67 20.60 19.60 109.00 [Refer Table 149] 4th Control Period F 18.56 17.66 16.76 15.87 14.97 83.82 [Refer Table 304] Total Impact 2nd Control Period G=A+D 18.12 21.28 26.19 31.79 34.24 131.62 3rd Control Period H=B+E 34.86 33.31 30.28 28.66 27.15 154.26 4th Control Period I=C+F 25.68 24.73 23.77 22.88 21.98 119.04 Total Impact of all J=G+H+I 78.66 79.32 80.24 83.33 83.37 404.93* Control Periods Note: *The above impact does not include carrying cost. However, the impact of carrying cost is factored in final calculation of Target Revenue. 13.2.10 After considering the above, the Authority proposes the following Target Revenue as per the table below: Table 306: Target Revenue as proposed by the Authority for the Fourth Control Period (Rs. in crores) Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Average RAB A1 5,146.45 6,057.71 6,625.48 7,132.95 8,379.97 [Refer Table 218] Average HRAB A2 190.15 162.89 134.55 106.83 69.84 [Refer Table 216] Total A=A1+A2 5,336.60 6,220.60 6,760.02 7,239.79 8,449.81 FRoR B 12.74% 12.74% 12.74% 12.74% 12.74% [Refer Table 227] Return on RAB C=A*B 679.86 792.48 861.20 922.32 1,076.47 4,332.33 Impact on Return on RAB due to D (As per 18.56 17.66 16.76 15.87 14.97 non-existent Table 304) assets as per SCN Net Return on E=C-D 661.30 774.82 844.44 906.45 1,061.50 4,248.51 RAB Aeronautical Depreciation F 445.73 534.01 568.19 592.62 597.44 2,737.99 [Refer Table 212] Aeronautical O&M Expenses G 973.15 972.15 998.54 1,051.42 1,210.32 5,205.57 [Refer Table 283] Consultation Paper No. 08/2024-25 Page 335 of 349TARGET REVENUE FOR THE FOURTH CONTROL PERIOD Particulars Ref FY 25 FY 26 FY 27 FY 28 FY 29 Total Aeronautical Taxes H - - - - - - [Refer Table 301] Gross Target I=E+F+G+H 2,080.18 2,280.98 2,411.17 2,550.49 2,869.25 12,192.08 Revenue Non-Aeronautical Revenue J 2,487.15 2,299.23 2,230.89 2,408.00 2,745.72 12,170.99 [Refer Table 297] S Factor (30% of Non-Aeronautical K 746.14 689.77 669.27 722.40 823.72 3,651.30 Revenue) [Refer Table 298] Target Revenue L=I-K 1,334.03 1,591.21 1,741.90 1,828.09 2,045.54 8,540.78 True up for 3rd CP – Under Recovery / (Over M (937.84) Recovery) (Refer Table 150) Net Target N=L+M 396.20 1,591.21 1,741.90 1,828.09 2,045.54 7,602.94 Revenue Projected Aeronautical O 1,604.31 1,363.41 1,275.32 1,354.22 1,547.55 7,144.81 Revenue P (at FRoR Discount Factor 0.89 0.79 0.70 0.62 0.55 of 12.74%) PV of Net Target Q = N*P 351.43 1,251.92 1,215.61 1,131.60 1,123.12 5,073.67 Revenue PV of Aeronautical R = O*P 1,423.02 1,072.69 890.00 838.27 849.69 5,073.67 Revenue Sum of PV of S = Sum(R) 5,073.67 Target Revenue Total Passenger T [Refer 52.72 44.62 41.04 42.46 48.34 229.17 Traffic (MPPA) Table 154] Yield per Passenger on U = S/T 221.39 Total Traffic (Rs.) Total Departing V [Refer Passenger Traffic 26.71 22.58 20.75 21.46 24.40 115.88 Table 285] (MPPA) Yield per Departing W = S/V 437.84 Passenger on (Rs.) X-Factor Increase (Revised Tariff X 18.18% w.e.f 1st April 2025) 13.2.11 The Authority has determined the Target Revenue of Rs. 7,602.94 Crores (NPV of Rs. 5,073.67 Crores) and an X-Factor of 18.18% (w.e.f 1st April 2025) as against Target Revenue claimed by the MIAL amounting to Rs. 38,724.90 Crores (NPV of Rs. 32,156.61 Crores) and X-Factor of 675.72% (1st Oct 2024). Some major reasons for the variance between Target Revenue proposed by the Authority and claimed by the MIAL are as under: Consultation Paper No. 08/2024-25 Page 336 of 349TARGET REVENUE FOR THE FOURTH CONTROL PERIOD (i) Adjustments have been made to Depreciation (Refer Table 211) Return on RAB (Refer Table 304) with respect to the directions given by the Authorized Investigation Agency on a case registered against MIAL as summarized in para 13.2.9 and Table 305. (ii) Impact of Hon’ble TDSAT directions (Refer para’s 1.9.2 to 1.9.5) for the True Up of the First Control Period, the Second Control Period and the Third Control Period as the matter is sub-judice. (iii) Rationalization in various CAPEX items claimed by MIAL such as Airside Tunnel (proposed to be considered on an incurrence basis), construction of Airport Management Corporate Office Building and construction of T1 (partly allowed in the Fourth Control Period and proposed in a phased manner) etc. (iv) Various adjustments to Operating expenditure based on the Authority’s examination as explained under Chapter 9 including Legal Expenses for the Fourth Control Period. (v) Re-classification of Revenue earned from Fuel Farm Facility from Non- Aeronautical Revenue to Aeronautical Revenue in the Third and Fourth Control Period. 13.2.12 The Authority noted that it is necessary to have the individual year wise tariff card laying down the different aeronautical charges and the workings for the aeronautical revenues, in order to have a constructive stakeholder discussion and hence MIAL has been directed to submit the detailed Annual Tariff proposals in line with the Target Revenue and Yield arrived at by the Authority within 7 days of issuance of this Consultation Paper. 13.3 AUTHORITY’S PROPOSAL REGARDING TARGET REVENUE FOR THE FOURTH CONTROL PERIOD Based on the material before it and based on its analysis, the Authority proposes the following with regard to the Target Revenue for the Fourth Control Period: 13.3.1 To consider the Target Revenue and YPP for the Fourth Control Period for Chhatrapati Shivaji Maharaj International Airport as per Table 306. 13.3.2 To direct MIAL to submit the Annual Tariff Proposal (Tariff Rate Card) within 7 days from issue of this Consultation Paper which will be put up for stakeholders consultation. Consultation Paper No. 08/2024-25 Page 337 of 349SUMMARY OF AUTHORITY’S PROPOSALS 14. SUMMARY OF AUTHORITY’S PROPOSALS CHAPTER 2: TRUE-UP OF THE FIRST CONTROL PERIOD 2.7.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 2.7.2 To consider True up of Aeronautical Taxes as per Table 20. 2.7.3 To consider the True up for the First Control Period as per Table 23. 2.7.4 To consider the over-recovery of Rs. 291.78 crores during the True up for the First Control Period as part of the tariff determination exercise for the Fourth Control Period. CHAPTER 3: TRUE-UP OF THE SECOND CONTROL PERIOD 3.10.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 3.10.2 To consider the Aeronautical Taxes as per Table 44. 3.10.3 To consider the impact on depreciation as per Table 35 and Return on RAB as per Table 50 as identified by the Self-Contained Note (SCN) issued by the Authorized Investigation Agency (AIA). 3.10.4 To True up the Target Revenue for the Second Control Period as per the Table 51. 3.10.5 To consider the over-recovery of Rs. 1,278.32 crores during the True up for the Second Control Period as part of the tariff determination exercise for the Fourth Control Period CHAPTER 4: TRUE-UP OF THE THIRD CONTROL PERIOD 4.14.1 To consider the Traffic for True up for the Third Control Period based on actuals as per 4.14.2 To consider RAB as per Table 75 and HRAB as per Table 81 for the True up of the Third Control Period. 4.14.3 To consider Aeronautical Depreciation for the True up of the Third Control Period as per Table 86 and Table 87. 4.14.4 To consider the FRoR for the True up for the Third Control Period, i.e., 12.81%. 4.14.5 To consider Aeronautical Operation and Maintenance Expenses for the True Up for the Third Control Period as per Table 129. 4.14.6 To consider Non-Aeronautical Revenue for the True up for the Third Control Period as per Table 138. 4.14.7 To consider Aeronautical Revenues for the True up of the Third Control Period as per Table 146. 4.14.8 To consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 4.14.9 To consider Aeronautical Taxes for the True up of the Third Control Period as per Table 142. 4.14.10 To consider the impact on depreciation as per Table 84 and Return on RAB as per Table 149 as identified by the Self-Contained Note (SCN) issued by the Authorized Investigation Agency (AIA). 4.14.11 To consider over-recovery of Rs. 937.84 crores (as per Table 150) for the tariff determination exercise for the Fourth Control Period. Consultation Paper No. 08/2024-25 Page 338 of 349SUMMARY OF AUTHORITY’S PROPOSALS CHAPTER 5: TRAFFIC FOR THE FOURTH CONTROL PERIOD 5.3.1 To consider Traffic for the Fourth Control Period for CSMIA as per Table 154, which shall be trued up based on actuals at the time of tariff determination the tariff for the Fifth Control Period. CHAPTER 6: CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FOURTH CONTROL PERIOD 6.8.1 To consider average RAB and average HRAB as per Table 219 for the Fourth Control Period. 6.8.2 To consider Depreciation as per Table 212 for the Fourth Control Period. 6.8.3 To reduce (adjust) 1% of the uncapitalized project cost from the TR in case any particular capital project is not completed/capitalized as per the approved capitalization schedule, as mentioned in Table 208. The same will be examined at the time of Tariff Determination for the Fifth Control Period. 6.8.4 To consider Input Tax Credit for the Fourth Control Period as per Table 203, and to examine the accounting of input tax credit in accordance with Chapter V of The Central Goods and Services Tax Act, 2017 and make necessary adjustments at the time of tariff determination for the Fifth Control Period. 6.8.5 To consider Average RAB while calculating RAB for tariff determination for the Fourth Control Period and to true-up the Aeronautical Capital expenditure, Depreciation and RAB based on actual additions to RAB on a pro-rata basis at the time of tariff determination for Fifth Control Period subject to the same being reasonable, efficient and justified CHAPTER 7: FAIR RATE OF RETURN FOR THE FOURTH CONTROL PERIOD 7.3.1 To consider Cost of Equity, efficient Cost of Debt, Notional Debt Equity Ratio and FRoR for the Fourth Control Period as per Table 227. 7.3.2 To true up the Cost of Debt for the Fourth Control Period based on actuals (or) SBI average 1-year MCLR plus 150 bps (whichever is lower) at the time of tariff determination for the Fifth Control Period. CHAPTER 8: INFLATION FOR THE FOURTH CONTROL PERIOD 8.4.1 To consider the Mean CPI Inflation (as per the provisions of OMDA) for the Fourth Control Period for MIAL based on the 90th RBI Forecasters Survey as detailed in Table 229. CHAPTER 9: OPERATION & MAINTENANCE (O&M) EXPENSES FOR THE FOURTH CONTROL PERIOD 9.4.1 To consider Aeronautical O&M Expenses for the Fourth Control Period as per Table 283. 9.4.2 To true up Aeronautical O&M Expenses for the Fourth Control Period based on actuals at the time of tariff determination for the Fifth Control Period subject to the reasonability and efficiency. CHAPTER 10: NON-AERONAUTICAL REVENUES FOR THE FOURTH CONTROL PERIOD 10.3.1 To consider Non-Aeronautical Revenue and ‘S’ Factor for the Fourth Control Period for CSMIA as per Table 298. 10.3.2 To consider true up of Non-Aeronautical Revenues at the time of the determination of tariff for the Next Control Period if it is higher than that proposed by the Authority in Table 297 CHAPTER 11: TAXATION FOR THE FOURTH CONTROL PERIOD 11.3.1 To not consider Annual Fee pertaining to Aeronautical Revenues as an expense while computing Aeronautical Taxes. 11.3.2 To consider the Aeronautical Taxes for the Fourth Control Period for CSMIA as per Table 301 Consultation Paper No. 08/2024-25 Page 339 of 349SUMMARY OF AUTHORITY’S PROPOSALS CHAPTER 12: QUALITY OF SERVICE FOR THE FOURTH CONTROL PERIOD 12.3.1 To not consider any adjustment in the Target Revenue on account of Quality of Service for the Fourth Control Period (refer para 12.2.6). CHAPTER 13: TARGET REVENUE (TR) FOR THE FOURTH CONTROL PERIOD 13.3.1 To consider the Target Revenue and YPP for the Fourth Control Period for Chhatrapati Shivaji Maharaj International Airport as per Table 306. 13.3.2 To direct MIAL to submit the Annual Tariff Proposal (Tariff Rate Card) within 7 days from issue of this Consultation Paper which will be put up for stakeholders consultation Consultation Paper No. 08/2024-25 Page 340 of 349STAKEHOLDERS’ CONSULTATION TIMELINE 15. STAKEHOLDERS’ CONSULTATION TIMELINE 15.1.1 In accordance with the provision of Section 13(4) of the AERA Act, 2008, the proposals contained in the Chapter 14 - Summary of the Authority’s proposals read with the relevant discussion in the other chapters of the Paper is hereby put forth for Stakeholders’ Consultation. 15.1.2 For removal of doubts, it is clarified and explained that the contents of this Consultation Paper may not be construed as any Order or Direction by the Authority. The Authority shall pass an Order, in the matter, only after considering the submissions of the stakeholders in response hereto and by making such decisions fully documented and explained in terms of the provisions of the Act. 15.1.3 The Authority welcomes written evidence-based feedback, comments and suggestions from the stakeholders on the proposals made in this Consultation Paper, latest by 9th April, 2025. Secretary Airports Economic Regulatory Authority of India 3rd Floor, Udaan Bhawan Safdarjung Airport New Delhi – 110003 Tel: 011-24695044-47; Fax: 011-24695048 (Chairperson) Consultation Paper No. 08/2024-25 Page 341 of 349ANNEXURES 16. ANNEXURES 16.1 ANNEXURE - 1 – ASSETS IDENTIFIED IN THE SELF-CONTAINED NOTE BY THE AUTHORIZED INVESTIGATION AGENCY 16.1.1 The following are the list of assets identified in the Self-Contained Note (SCN) by the Authorized Investigation Agency (AIA) in the Second Control Period: Table 307: List of the Assets identified in the SCN in the Second Control Period Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR 1 10138000680 Roads (West Side of Hotel Lalit) Civil 11,09,11,740 Non-Aero 2 10149904990 Roads (West Side of Hotel Lalit) Electrical 11,88,260 Non-Aero 3 10138000670 Road Network (Taxi and Bus staging) 16,92,69,230 Non-Aero 4 10149904950 Road Network (Taxi and Bus staging) 18,30,769 Non-Aero 5 10138000660 Road Network - T1B 14,90,87,832 Non-Aero 6 10133000550 Storm Water Drain 4,22,44,000 Non-Aero 7 10149904940 Road Network - T1B 1,32,80,167 Non-Aero Construction of Drain Realignment & Compound 8 10131006830 3,88,09,853 Aero wall 9 10131006680 Site Development Cost 10,94,27,593 Non-Aero 10 10149905000 Internal Roads -MIAL Colony-Electrical 3,84,55,304 Non-Aero 11 10149905010 Roads-North Sahar Electrical 3,34,13,938 Non-Aero 12 10138000690 Internal Roads -MIAL Colony -Civil 23,47,14,692 Non-Aero 13 10138000700 Roads-North Sahar Civil 43,89,40,061 Non-Aero Cityside Road & Infra development works- 14 10132001250 44,36,80,000 Non-Aero RE/2K17-003 15 10138000730 Roads- CSIA 39,76,59,999 Non-Aero 16 10131008980 Box Culvert 28,33,60,000 Non-Aero 17 10133000550 Storm Water Drain 23,31,62,437 Non-Aero Mithi river retaining & security compound wall- 18 10131008410 19,27,37,588 Aero PH-2 19 10192001210 Upgradation & Strengthening of taxiways E5-P 25,02,91,863 Aero Upgradation & Strengthening of taxiways TWY 20 10192001190 16,53,02,999 Aero S7&R Upgradation & Strengthening of taxiways K- 21 10192001200 12,95,36,275 Aero 1&Juncti 22 10131006980 Construction of Mithi River RCC Retaining Wall & 17,76,26,584 Aero Construction PH-III Mithi River RCC Retaining 23 10131008730 11,95,79,736 Aero Wall 24 10133000530 Open Drain realignment (Sahar road culvert to T2) 48,08,49,997 Non-Aero Covered Drain realignment (Sahar road 25 10133000540 39,17,60,001 Non-Aero culverttoT2) 26 1013100384 Gate 6 – Civil Works 1,00,864 Common Common User Terminal - PTB-Phase II - Core, 27 1013100564 75,13,62,098 Common Shell Common User Terminal - PTB-Phase II - Wall 28 1013100750 -2,88,87,574 Common Cladding Consultation Paper No. 08/2024-25 Page 342 of 349ANNEXURES Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR Common User Terminal - PTB-Phase II- Dichroic 29 1013100751 -6,00,359 Common Glass Common User Terminal - PTB-Phase II- CCTV 30 1210000000 1,25,373 Aero Accesso Common User Terminal - PTB-Phase II-Electrical- 31 1017100630 24,14,173 Common HW 32 1014990248 South West Pier- Level 1 (LM Office - Air India)-E 61,194 Aero 33 1014990249 South West Pier- Level 1 (ROFS)-Electrical Works 1,94,944 Aero South West Pier- Level 1 (LM Office - Indian 34 1014990250 19,358 Aero Airlines Common User Terminal - PTB-Phase II-Glass 35 1014990348 1,63,918 Common Doors 36 1016101132 Common User Terminal - PTB-Phase II-Signages 4,59,13,993 Aero Common User Terminal - PTB-Phase II- CCTV 37 1015200073 13,39,609 Aero Accesso Common User Terminal - PTB-Phase II - Green 38 1014100498 1,38,972 Common Wall Common User Terminal - PTB-Phase II - Water 39 1014100499 8,09,107 Common Features Common User Terminal - PTB-Phase II-Building 40 1014100500 27,30,176 Aero Main 41 1014100502 Common User Terminal - PTB-Phase II-Monorail 7,70,012 Common Common User Terminal - PTB-Phase II-PHE 42 1014100503 1,41,90,199 Aero System Common User Terminal - PTB-Phase II-Piped 43 1014100504 11,34,790 Non-Aero Natural Common User Terminal - PTB-Phase II-Fire Alarm 44 1014200074 13,04,315 Aero Sy Common User Terminal - PTB-Phase II-Fire 45 1014200075 73,17,032 Aero Protection Common User Terminal - PTB-Phase II-Inline BHS 46 1014300010 2,14,23,504 Aero Sy Common User Terminal - PTB-Phase II-HVAC 47 1014600090 4,21,83,688 Aero Works 48 1014600092 South West Pier - PTB - HVAC Works 51,06,401 Aero Common User Terminal - PTB-Phase II-VTHT 49 1014800023 1,48,63,924 Aero System Common User Terminal - PTB-Phase II-Passenger 50 1014950006 4,36,608 Aero Boa Common User Terminal - PTB-Phase II- 51 1014950010 -9,59,920 Common Landscaping Common User Terminal - PTB-Phase II- 52 1014950011 13,59,359 Common Landscaping - Common User Terminal - PTB-Phase II- 53 1014950012 33,00,396 Common Landscaping - Common User Terminal - PTB-Phase II - HOS 54 1013800025 46,13,476 Aero Road Common User Terminal - PTB-Phase II-Electrical 55 1014990267 4,82,05,635 Common W 56 1013100720 Terminal 2 - PTB-Phase III-Core, Shell & Others 5,66,28,736 Common 57 1013100830 Terminal 2 - PTB-Phase III - Core, Shell & Others 79,04,751 Common Consultation Paper No. 08/2024-25 Page 343 of 349ANNEXURES Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR Terminal 2 - PTB-Phase III-Building Maintenance 58 1013100832 7,01,849 Common U Common User Terminal - PTB-Phase III-Core, 59 1013100857 18,576 Common Shell 60 1014990342 Terminal 2 - PTB-Phase III-Electricals Works (Cab 71,28,460 Common 61 1016101376 Terminal 2 - PTB-Phase III-Airport Counters (Mill 8,93,791 Aero 62 1016101377 Terminal 2 (PTB-Phase III) - Furniture’s 82,99,369 Common 63 1016101420 Common User Terminal - PTB-Phase III-Fittings 20,691 Aero Terminal 2 - PTB-Phase III - Green Wall 64 1014100700 10,728 Aero (Mechanical) 65 1014100701 Terminal 2 - PTB-Phase III - VDGS 7,15,241 Aero Terminal 2 - PTB-Phase III - Water Features 66 1014100702 97,205 Common (Mech) 67 1014100705 Terminal 2 - PTB-Phase III-PHE System 22,96,429 Aero Terminal 2 - PTB-Phase III-Piped Natural Gas 68 1014100706 10,14,146 Non-Aero System 69 1014100736 Terminal 2 - PTB-Phase III-Manual Chain Pulleys 83,215 Aero 70 1014200095 Terminal 2 - PTB-Phase III-Fire Detection and Ala 27,31,107 Aero 71 1014600134 Terminal 2 - PTB-Phase III-HVAC Works 1,46,60,285 Aero 72 1014950008 Terminal 2 - PTB-Phase III-Passenger Boarding Bri -17,44,152 Aero 73 1013800053 Terminal 2 - PTB-Phase III - HOS Road (Pit Cover) 7,33,039 Aero South West Pier- Level 1 (ALM Areas & Airside 74 1013100483 -77,84,822 Aero Safe 75 1013100515 South West Pier- Level 1 (LM Office - Air India)-C 2,20,448 Common 76 1013100516 South West Pier- Level 1 (ROFS)-Civil Works 5,84,189 Aero South West Pier- Level 1 (ALM Areas & Airside 77 1013100734 2,33,05,553 Aero Safe 78 1013100735 South West Pier- Level 1 (LM Office - Air India)-C 2,28,849 Aero 79 1013100746 South West Pier - PTB - External Façade 1,01,68,803 Common South West Pier- L1 (LM Office-Indian Airlines- 80 1013100758 30,537 Aero Facade 81 1013100797 South West Pier- Level 1 (LM Office)- 1,24,367 Aero 82 1131100005 South West Pier - PTB - Core, Shell & Others 5,91,80,987 Common 83 1131200003 South West Pier- Level 1 - Toilet Accessories 8,16,859 Aero 84 1014990269 South West Pier - PTB - Electrical Works (Cables, 50,99,646 Common 85 1014990352 South West Pier- L1 Fire Detection & Alarm Sys 27,493 Aero South West Pier- Level 1 (ALM Areas & Airside 86 1016100924 2,78,936 Aero Safe South West Pier - PTB - Hollow Metal Doors/Fire 87 1016101143 24,59,319 Aero Ra 88 1016101325 South West Pier- Level 1 (ROFS)-Civil Works 99,356 Aero South West Pier- Level 1 (LM Office - Indian 89 1016101326 4,160 Aero Airlines 90 1016101361 South West Pier- Level 1 (LM Office - Air India)-F 5,159 Aero South West Pier- Level 1 (ALM Areas & Airside 91 1015100734 34,366 Aero Safe Consultation Paper No. 08/2024-25 Page 344 of 349ANNEXURES Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR South West Pier- Level 1 (ROFS)-Furniture & 92 1015100735 3,681 Aero Fixtures South West Pier- Level 1 (ALM Areas & Airside 93 1014100298 5,56,685 Aero Safe S W P-Level 1(ALM Areas & Airside Safe) 94 1014100299 33,121 Aero Monorail System South West Pier- Level 1 (LM Office - Indian 95 1014100359 5,686 Aero Airlines 96 1014100362 South West Pier- Level 1 (LM Office - Air India)-P 16,281 Aero 97 1014100364 South West Pier- Level 1 (ROFS)-PHE Works 68,209 Aero 98 1014100506 South West Pier - PTB - PHE System (Mechanical) 12,14,477 Aero 99 1014100507 South West Pier - PTB - Piped Natural Gas System 13,21,335 Aero 100 1014200057 South West Pier- L1 ALM Fire Protection Sys 4,29,461 Aero 101 1014200061 South West Pier- Level 1 (LM Office - Air India)-F -43,450 Aero 102 1014200062 South West Pier- Level 1 (LM Office - Air India)-F 2,175 Aero 103 1014200064 South West Pier- Level 1 (ROFS)-Fire Protection 1,13,896 Aero South West Pier- Level 1 (LM Office - Indian 104 1014200066 12,334 Aero Airlines 105 1014200077 South West Pier - PTB - Fire Protection System 10,11,279 Aero 106 1014200100 South West Pier- L1 Fire Detection & Alarm Sys 1,589 Aero South West Pier- Level 1 (ROFS)-Fire Detection & 107 1014200101 2,050 Aero A South West Pier- Level 1 (ROFS)-Fire Detection & 108 1014200103 629 Aero A South West Pier- Level 1 (ROFS)-Fire Detection & 109 1014200105 155 Aero A South West Pier- Level 1 (LM Office - Indian 110 1014200106 214 Aero Airlines South West Pier- Level 1 (LM Office - Indian 111 1014200108 66 Aero Airlines Southwest Pier- Level 1 (LM Office - Indian 112 1014200110 16 Aero Airlines 113 1014200111 Southwest Pier - PTB - Fire Alarm System 2,26,476 Aero 114 1014600038 Southwest Pier- Level 1 (ROFS)-HVAC Works 2,96,386 Aero 115 1014800024 South West Pier - PTB - VTHT System 15,80,901 Aero South West Pier - PTB - Passenger Boarding 116 1014950007 7,28,236 Aero Bridges 117 1013800026 South West Pier - PTB - HOS Road 19,74,606 Aero Southwest Pier- Level 1 (ALM Areas & Airside 118 1014990238 22,40,734 Aero Safe Common User Terminal - PTB-Phase IV-Core, 119 1013100780 60,69,743 Common Shell CommUserTerm- PTB-Phase IV-ExtFacad-Wall 120 1013700025 99,54,220 Common Cladding CommonUserTerm-PTB-Phase IV-Flooring - 121 1013700026 27,170 Aero PaverBlock Common User Terminal - PTB-Phase IV-Building 122 1014100718 1,24,511 Aero Mai Consultation Paper No. 08/2024-25 Page 345 of 349ANNEXURES Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR Common User Terminal - PTB-Phase IV- 123 1014100719 1,18,502 Common Transformer Common User Terminal - PTB-Phase IV-Fire 124 1014200097 2,28,964 Aero Detection Common User Terminal - PTB-Phase IV-HVAC 125 1014600136 19,54,775 Aero Works Common User Terminal - PTB-Phase IV-VTHT 126 1014800047 1,80,834 Aero System Common User Terminal - PTB-Phase IV-Passenger 127 1014950009 -8,10,838 Aero Bo 128 1014990376 Common User Terminal - PTB-Phase IV-Electrical 30,50,679 Common 129 1014990406 Common User Terminal - PTB-Phase IV-CCTV 2,31,843 Aero 130 1016101343 Common User Terminal - PTB-Phase IV-Airport 1,32,397 Aero 131 1016101345 Common User Terminal - PTB-Phase IV-Carpets 2,28,630 Aero Common User Terminal - PTB-Phase IV-Hollow 132 1016101348 21,44,477 Aero Metal 133 1016101351 Common User Terminal - PTB-Phase IV-Signages 4,36,658 Aero CommUserTermnl-PTB-Phase IV-Core Toilet 134 1016101380 48,191 Aero Accessories Common User Terminal - PTB-Phase IV-Rolling 135 1016101381 18,309 Common Shutt Common User Terminal- PTB-Phase IV- 136 1210000005 13,36,156 Aero AccessContSys 137 1013100388 Terminal 1C - Civil Work 43,91,510 Common 138 1013100480 Domestic Sewage Treatment Plant - Civil Works 3,63,098 Aero Duct Bank (from DSS1 to T1C & CCR2) - 139 1014100217 71,010 Aero Electrical Domestic Sewage Treatment Plant - Mechanical 140 1014100296 5,53,829 Aero Works 141 1014200035 Terminal 1C - Fire Protection System 1,74,293 Aero 142 1014600058 Terminal 1C - HVAC 3,59,065 Aero 143 1014700014 Terminal 1C - Inline BHS 11,197 Aero 144 1014910016 Terminal 1C - PHE System 1,61,362 Aero 145 1014950004 Terminal 1C - Passenger Boarding Bridges -7,14,916 Aero 146 1014990159 Terminal 1C - LT Electrical System 7,41,259 Common 147 1015100705 Terminal 1C - Public Address System 14,123 Aero 148 1016100701 Terminal 1C – Signages 5,350 Aero 149 1017100485 Terminal 1C - IT Cabling 23,337 Aero Parking Stands Y1,Y2,Y3 &Y4 (Remote) - Civil 150 1013100513 6,98,100 Aero Works 151 1013800013 Connecting Road to New International Cargo 16,38,284 Non-Aero 152 1013800037 T2 Apron- Stand R5 to R8 works- Pavement Works 73,99,064 Aero Oil Water Separator No.3 (Apron J)-Mechanical 153 1014100260 44,598 Aero Work 154 1014100397 Oil Water Separator No. 1 - Mechanical Works 12,177 Aero 155 1014100679 T2 Apron Phase 3 - Oil Water Separator No. 5 - Me 544 Aero 156 1014990193 TWY 'N4' - AGL 10,25,395 Aero Consultation Paper No. 08/2024-25 Page 346 of 349ANNEXURES Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR Apron-'R' & Adjacent Area (Remote Parking 157 1014990240 37,83,257 Aero Stands R 158 1014990323 T2 Apron Phase 3 - Electrical Works 2,36,339 Aero 159 1014990324 T2 Apron Phase 3 - High Mast Lighting System 13,97,162 Aero 160 1019200037 Parking Stand’s G5 & G6 [Terminal 2 Apron]-Civil 60,11,150 Aero Parking Stands (J4-J8 including Mike Taxiway)- 161 1019200049 2,75,51,774 Aero Civil 162 1019200060 Parking Stands V13, V14, V15 & Y1-Civil Work 1,45,73,484 Aero 163 1019200088 T2 Apron Phase 3 - Civil Works 11,80,41,336 Aero Parking Stands Y1, Y2,Y3 &Y4 (Remote) – 164 1019200101 45,432 Aero Taxiways 165 1013100595 T2 MLCP - Civil Works 8,42,78,859 Non-Aero 166 1014100513 T2 MLCP - Monorail 1,89,456 Non-Aero 167 1014100727 T2 MLCP - PHE System -2,48,418 Non-Aero 168 1014200078 T2 MLCP - Fire Alarm System 13,91,516 Aero 169 1014200081 T2 MLCP - Fire Protection & Detection System 25,55,539 Aero 170 1014600093 T2 MLCP - HVAC Works 24,41,790 Non-Aero 171 1014990272 T2 MLCP - Electrical Works 18,66,943 Non-Aero T2 MLCP - Toilet Accessories (Electric Hand 172 1015100740 26,516 Non-Aero Drier) 173 1016101151 T2 MLCP - Hollow Metal Doors 15,93,318 Non-Aero 174 1017100627 T2 MLCP - CCTV - Hardware 9,52,873 Aero 175 1131200004 T2 MLCP - PHE System: Sanitary Fittings 62,905 Non-Aero 176 1210100010 T2 MLCP - CCTV 82,603 Aero 177 1013100810 T2 Forecourt Road - Elevated Road - Civil Works 2,05,14,129 Aero 178 1013200053 T2 Forecourt Road - At grade Road - Civil Works 4,64,09,193 Aero 179 1013200122 T2 Forecourt Road - At grade Road - Civil Works 9,20,022 Aero T2 Forecourt Road - Traffic Signal (Electro- 180 1014990029 3,17,689 Aero Mechan) 181 1014990271 T2 Forecourt Road - Elevated Road - Light Fixtures 47,15,093 Aero 182 1014990270 T2 Forecourt Road - At grade Road - Light Fixtures 15,87,227 Aero 183 1014990389 T2 Forecourt Road - Elevated Road - Light Poles 20,30,144 Aero 184 1016101145 T2 Forecourt Road - At grade Road - Light Poles 14,54,345 Aero 185 1016101146 T2 Forecourt Road - Elevated Road - Light Poles 7,08,010 Aero 186 1016101148 T2 Forecourt Road - Signages 13,62,253 Aero 187 10138000720 Roads-WEH 15,58,59,201 Non-Aero Road and Sewage network at International 188 10138000640 36,59,91,755 Non-Aero Terminal at CSIA 189 10149904920 Road and Sewage Network - Electrical works 1,81,93,240 Non-Aero Infrastructure Development - Civil works 190 10138000650 12,99,60,774 Non-Aero to Support operation of Domestic Terminal 191 10149904930 Infrastructure Development - Electrical works 3,91,33,225 Non-Aero Total 6,89,55,69,114* *Refer Table 27 Consultation Paper No. 08/2024-25 Page 347 of 349ANNEXURES 16.1.2 The following are the list of assets identified in the Self-Contained Note (SCN) by the Authorized Investigation Agency (AIA) in the Third Control Period: Table 308: List of the Assets identified in the SCN in the Third Control Period Capitalized Classification S. No. Asset Code Asset description as per FAR amount as per of the Asset FAR 1 10138000770 Development of Roads - Cargo 23,63,19,999 Non-Aero 2 10138000790 Access Road - Andheri Kurla to International Terminal 21,95,20,001 Non-Aero 3 10138000780 Road Connecting Project Office and International 18,14,40,000 Non-Aero 4 11313000010 Covered Drain at Landside 40,26,43,999 Non-Aero 5 10133000570 Utility Corridor for Landside Development-Civil 43,88,04,551 Non-Aero 6 10149905320 Utility Corridor Landside Dev-Electrical Work 4,20,45,449 Non-Aero 7 10131009110 Infra and Utility Corridor Development-CSMIA 9,96,80,001 Non-Aero 8 10138000800 Approach Road - Sahar and WEH 12,29,34,910 Non-Aero Total 1,74,33,88,910* *Refer Table 68 Consultation Paper No. 08/2024-25 Page 348 of 349APPENDIX 17. APPENDIX 17.1 APPENDIX 1 – MINUTES OF THE AIRPORTS’ USERS CONSULTATION COMMITTEE (AUCC) Consultation Paper No. 08/2024-25 Page 349 of 349Date: - 2 April 2024 Minutes of the Meeting - Airport Users Consultation Committee (AUCC) with Stakeholders held on 13th March 2024 to discuss the capital expenditure projects with cost above Rs. 50 Crores planned in the Fourth Control Period (FoCP) for Mumbai International Airport Limited (MIAL) Pursuant to the provisions contained in the AERA Guidelines, Mumbai International Airport Limited (MIAL) invited stakeholders to attend a consultation meeting to discuss the capex proposal above Rs. 50 Crores planned in the FoCP (1st Apr 2024 till 31st March 2029). The meeting was held on 13th March 2024 at Hilton Hotel Near Terminal 2, Chatrapati Shivaji Maharaj International Airport (CSMIA). Meeting notice was shared with all the stakeholders on 23rd February 2024 and subsequently, Project Information File (PIF) with respect to planned capex projects was also shared with the stakeholders on 29th February 2024. The meeting was attended by various airport stakeholders including but not limited to IATA, FIA, AOC, DGCA, APAO, BAOA, MMRCL, Airline Partners. Attendance sheet of the meeting has been provided as Annexure 1 to this document. 1. Mr. Ashwin Noronha welcomed all the stakeholders to the AUCC meeting of MIAL for the capex projects proposed to be executed in FoCP. 2. Mr. Prakash Tulsiani gave a brief about Adani Airport Strategy, Aviation outlook and also gave a background of CSMIA along with the milestones achieved by the airport in last few years. He emphasized that the mission of MIAL is to ensure safe, secure, and sustainable operations. Strategic priorities of the airport and areas of capital deployment in the FoCP were also explained. 3. Mr. Ashwin Noronha gave an overview of the traffic forecast of the next 10 years. He also gave details of various domestic and international destinations being served from CSMIA. The drivers that will make India the next aviation hub was also briefed to the stakeholders. 4. Ms. Ashwini Thorat gave a detailed presentation on the existing infrastructure and the corresponding challenges and bottlenecks in the existing infrastructure. 5. She also briefed the Master Plan of the Airport along with capex projects proposed to be executed in the FoCP. The capex projects as per the master plan were divided into 5 broad categories. a. Airside Improvement Worksb. Passenger Terminal Improvement & Associated Works c. Kerbside Improvement Works d. External Connectivity Improvement Works and e. Ancillary Buildings Works The need, description, and justification of various sub projects in each of the above categories were explained in detail. 6. Mr. Ashwin Noronha briefed about the sustaining/operational capex projects planned to be executed in FoCP. These projects are expected to improve the service quality and operational efficiency of the airport. He then gave a comprehensive view of the total capex proposed (major projects and sustaining/operational capex) along with completion milestones. 7. Lastly, Mr. Ashwin Noronha thanked the stakeholders and opened the floor for questions and comments. The participants were also informed that the queries could be submitted via email to ceo.mumbaiairport@adani.com by 20th March 2024. Below is the summary of Questions from the forum and responses thereof by MIAL: - Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting How will the passengers be connected from It was clarified that there will be walking Terminal 2 (T2) to the metro station? connectors between the metro station and T2 forecourt for the movement of staff and Mr. Jayagopal N the passengers. For the convenience of 1. (AIASL) passengers, MIAL will make provision of check in at metro stations which will ensure baggage connectivity between the two. He wanted to know about the simultaneous MIAL had explored the possibility of Captain R K Bali use of cross runways to address the simultaneous utilization of cross runways 2. (BAOA) requirements of the GA operators? few years back. But due to safety concerns, same was not found to be viable. Details shared are conceptual in nature and The capex proposals for the 4th Control 3. Allan Young (IATA) insufficient to enable the airline community Period stem from the requirement of ensuring compliance, enhancingQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting to provide informed feedback regarding operational efficiency and/or capacity, as various investment proposals identified in the Master Plan of Mumbai Airport prepared by a third-party Agency. The PIF document along with the presentation given by MIAL team in the AUCC meeting adequately cover (a) the need and justification of the proposed capex proposals, besides highlighting the benefits that would accrue out of the projects; (b) the capital cost estimates of projects more than Rs. 50 Cr. value; (c) project dependencies, wherever applicable (e.g. proposed Hangar, wherein the status of dependencies w.r.t. AIAHL and AIESL land have been highlighted for the information of the stakeholders; (d) repercussions of not implementing a particular capex proposal; (e) how MIAL proposes to alleviate any disruption to current operations during execution of the projects (e.g. Tunnel project), etc. To sum up, the PIF document presents all requisite information for holding a stakeholder consultation in a transparent and meaningful manner. Various projects proposed in the FoCP capex plan will not only help in enhancing terminal and airside capacity of the airport in the most judicious and cost-effective manner, but also will ensure safe and secure airport operations, as underscored in the PIF document andQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting emphasized while deliberating in detail during the AUCC meeting. MIAL has not followed AERA’s Consultation As per the consultation protocol defined in Protocol to start the consultation 4 months appendix 1 of the AERA guidelines, no in advance of the start of tariff timelines have been given with respect to determination. start of consultation. Consultation protocol provides for giving all the relevant information to the stakeholders like justification of the project, traffic forecasts, project cost estimates and likely impact on tariff. This information was provided by MIAL as part of PIF and presentation in AUCC meeting. Further composition of AUCC should adequately represent the interest of all the airport users as per protocol. Meeting was attended by various airlines operating from CSMIA, industry bodies like FIA and IATA, regulators like DGCA and various other stakeholders like CISF, MMRC etc. Scope of AUCC is projects more than Rs 50 Crs as per the protocol. Same was duly followed by MIAL. Please provide project-by-project details Time frames of execution for each of the regarding each project’s project timeframes, project was shared by MIAL in PIF and dependencies, and a link to when benefits considers various dependencies like are forecast to be delivered. availability of land, wherever required, interdependency on other projects etc. It is worth noting that capitalization /commissioning of many projects will happen in latter half of the control periodQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting and considers timelines required for execution of the projects. How CP4 capex proposals are compatible All the capex proposals are outcome of the with the ultimate long-term master plan and long-term Master Plan and consider its phasing strategy. expected traffic growth, traffic mix and increase in transfer traffic and is aligned with long term vision of MIAL to handle 50+ ATMs per hour and 65+ mn capacity. Traffic Forecasts indicate a reduction in Methodology followed for traffic demand during CP4, please provide details forecasting was explained in PIF document on rationale and methodology followed for shared before the AUCC meeting. Same is forecasting traffic. reproduced hereunder. The traffic forecast methodology inter alia consisted of the following: • Analysing existing baseline traffic for the Mumbai Metropolitan Region (MMR) served by CSMIA. • Top-down analysis consisting of macroeconomic and demographic analysis and ascertaining various growth scenarios such as “unconstrained”, “constrained”, etc. • Bottom-up analysis including Airlines Forecast, Market schedules and seat capacity offered by carrier, airport supply side constraints, etc. Forecasting takes into consideration physical infrastructure available at the airport which can cater to the demands of all airport users.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Demand triggers for investment across the CSMIA currently operates with severe period taking into account IATA level of constraints and the works proposed are service, construction timeframes, capacity, required even at the current traffic levels. and demand planning, for each capacity For example, the Parallel Taxiways enhancing project. proposed on Eastern and Western sides of RWY 14-32 are required to ensure airside safety and enhance operational efficiency, besides increasing ATM handling capacity. When the primary runway, i.e. RWY 09-27 is closed for maintenance purposes, the capacity of CSMIA drops to 35 ATMs/hr. from declared capacity of 46 ATMs/hr. Projects such as reconstruction of airside Storm Water Drains, Perimeter Roads, etc. are required, irrespective of traffic numbers. Reconstruction of T1 and corresponding kerbside development is warranted to ensure passenger safety, since the building is not structurally safe. Construction of tunnel connecting T1, T2 and proposed new Southern aprons is required in light of inter-dependency of operation, leading to high airside vehicle movement. To sum up, the capex proposed for 4th Control Period is justified even with current traffic, i.e. the demand stands triggered. T1 closure and re-provision impacts on New T1 will be under reconstruction from demand during CP4 including how any H2FY26 to H1FY29. MIAL has proposed to displaced demand will be re-provided at T2 undertake various projects to enhance theQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting capacity of T2 like construction of Northwest Pier and addition of ~4000 sq.m. of floor area to handle spill over demand from closure of T1. Assumptions regarding airline relocations to Since there is lot of unmet demand in MMR, Navi Mumbai and their impact on CP4 traffic projections (as provided in the PIF) demand have been done considering CSMIA specific factors only including but not limited to supply side constraint. As we are planning a medium to long-term As per traffic projections of the infrastructure, please share the traffic data independent traffic study done by MIAL, presented at the AUCC in more detail beyond traffic at MIAL is expected to be 60 mn in CP4 FY31, 65 mn in FY37 and 69 mn in FY48. When is the last point in time traffic MIAL conducted a detailed traffic Study for forecasts were analysed in detail? CSMIA in Dec 2023. Airside Improvement Works Please provide details of how the CP4 capital Since there is lot of unmet demand in MMR, plan specifically accounts for capacity capacity enhancement on account of enhancement on account of likely operationalization of Navi Mumbai airport completion of Navi Mumbai Airport in is not likely to impact CSMIA traffic. Summer 2025 Capex proposal does not justify its business Most of the projects related to airside case, particularly in areas where there is a improvement like runway recarpeting, significant increase claimed in throughput reconstruction of perimeter road and and capacity. airside water drains are proposed to ensureQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting regulatory compliance, operational efficiency, and protection of airside assets. Projects related to capacity enhancement like parallel taxiways for RWY 14-32 are proposed as when the primary runway, i.e. RWY 09-27 is closed for maintenance purposes, the capacity drops to 35 ATMs/hr. (from declared capacity of 46 ATMs/hr.), leading to cascading delays and completely disrupting operations. CSMIA experiences huge demand from airlines, which calls for increasing the airside capacity immediately. Claims of increasing aircraft movements Noted. However, it is worth mentioning from 46 to 50+ ACMs per hour, as stated in that there is significant demand of slots the overall CAPEX proposal, must be from the airlines in the peak hour, which substantiated with thorough research. clearly indicates further peaking. Detailed research and consultations have been held to confirm this. The Master Plan proposals, part of which have been put forward as Capex Proposals in the 4th Control Period, are an outcome of that demand. The proposal of constructing parallel As per traffic forecast, there is an taxiways for RWY 14/32 needs a careful immediate need to enhance the airside assessment with respect to RWY 14/32’s capacity of CSMIA to 50+ ATMs/hr. This is “Dependent” operations with Navi Mumbai's possible only when parallel taxiways to parallel runways. RWY 14-32 are constructed. The ATC complex demolition is imperative Various locations are being assessed to due to its current structure and rooftop relocate the ATC technical block from theQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting antenna, which are not in compliance with current location. Same will be done post ICAO Annex 14 standards for transitional the finalization of new location. obstacle limitation surfaces during flight operations on runway 14/32. CAPEX plan does not address the demolition of the ATC complex. Please provide details regarding the lifecycle Given the adverse weather conditions and of the runway recarpeting, options/costs ATMs handled from primary runway 09-27 have been considered regarding different (94% of total), runway recarpeting is surface types, phasing plan, dependencies if typically required after every seven years. any with related AGL development proposals Last recarpeting was last done in March 2020 and is again planned to be done in 2027. Recarpeting will be done after AGL projects like “Follow the Green” are completed before recarpeting is done. With respect to V1 parking stand project, Entire apron parking stand layout has efficient aircraft movements may pose already been prepared considering safe challenge under this proposal. It might be and efficient aircraft movement and prudent to reconsider and reassess the plan, parking. particularly concerning efficient, obstruction-free aircraft movements, including assessing a Jet Blast Safety case. What is the overall airport stand demand Currently there are 131 parking stands at versus available capacity? What proportion Mumbai Airport, out of which 71 are of aircraft are contact versus remote? How contact stands. Out of 131 stands, 17 stands many aircraft are assumed to be parking are being used by obsolete aircraft. Hence overnight? How much towing is assumed? effective stands available for operations is 114 only. Given the expected increase in traffic and increase in runway movementQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting from 46 ATMs to 50+ ATMs, demand for stands will increase. Around 52 aircrafts park overnight at CSMIA and ~ 30 aircrafts are required to be towed on daily basis. It appears Southern apron is going to be South apron will be used to park aircrafts utilized primarily for Business Jets, thus this of all scheduled airlines. cost to be recovered from the Corporate Jet operators, VVIP aircraft parking. Reconstruction of perimeter road Not all of the road needs to be reinforced With heavy rainfall, it is always advisable to with concrete, given almost 50% is adjacent construct concrete roads. The current to the apron and is already a levelled surface, deteriorated surface is a living testimony of while the rest of the perimeter road has very the issues of bituminous perimeter roads – limited vehicular activity and could be built there are numerous incidents recorded by with bituminous materials. Please provide an airlines, GSE operators where the dollies analysis of road utilization by vehicle type get disconnected and hit nearby that should be an input into this project, and properties, posing as great threat to safety a cost-benefits analysis to so we are able to to human lives and airside assets. In view of review the data, options and rationale being this, it is absolutely necessary that proposed. perimeter roads are reconstructed with Pavement Quality Concrete (PQC), with required crust to ensure longevity and safe airport operations. In light of above safety requirement, this project is of utmost importance and is required irrespective of type of vehicles utilizing the perimeter road.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Please provide details in terms of project MIAL will make sure that construction phasing to minimize disruption and maintain program will be undertaken with minimal free flowing traffic supporting operational disruption to traffic. Phasing of requirements during construction delivery. construction is provided in the PIF and was presented during the meeting. Explain how the project is compatible with As already mentioned above, all projects the long-term master plan. stem from Master Plan for CSMIA. As an example, the Master Plan has identified additional aircraft parking stands, given the ever-increasing demand at CSMIA. Accordingly, the same has been proposed, in addition to connecting the stands spread in various aprons (T1 apron, T2 apron and proposed South apron) through a Tunnel. Airside Tunnel What is the total parking stand demand Overall demand is approx. 155 Code C required during peak hours linked to the equivalent aircraft parking stands till FY29. traffic forecast, by campus and aircraft type? It may be noted that the aviation market is moving towards Hub & Spoke model, implying more and more peaking rather than de-peaking. This is evident from the increased request from the airlines received by CSMIA to accommodate their flights in the peak hours. Coupled with this, significant number of additional aircrafts will soon be added by airlines, leading to even greater demand for aircraft parking stands. Accordingly, it is envisaged that total demand of aircraft parking stands will be approx. 155, as per the current turns perQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting stand (active stands) and after taking into consideration other contingencies. Given a number of projects in CP4 are As mentioned in detail in the PIF document, planned to increase stands provision, how there is strong operational inter- does this relate to the need for a tunnel? dependence between T1 and T2. During night-time, some of the flights operating at T2 are required to be parked at the T1 apron due to shortage of stands at T2 apron. When the flights are parked at T1 apron, passengers and baggage are required to be transported between T1 apron and T2 apron via the perimeter road around RWY 14-32, which takes a long time. The situation becomes especially adverse during monsoon season as the adverse weather significantly delays transportation of baggage and passengers between these aprons. In the past, CSMIA has received numerous complaints/ grievances in this regard. In addition to the existing requirement, T1 is proposed to be reconstructed in the 4th Control Period and accordingly, all operations will be shifted to T2. To access the aircraft parking stands in T1, it is imperative that a direct connectivity is established through an underground tunnel, to ensure operational efficiency (movement of staffs, GSE vehicles, etc.) and passenger convenience.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Further, since additional aircraft parking stands are proposed on the Southern side of the RWY 09-27, it is imperative to connect this apron with T1/T2 apron. Considering the ground feasibility, it is proposed to connect T1 apron with this proposed Southern apron. In view of the above-mentioned strong inter-dependence among various aprons and to reduce transit time among them, it is proposed to construct a tunnel that will connect (i) T1 and T2 apron: alignment is underneath RWY 14-32; and (ii) T1 apron and the proposed new Southern apron: alignment is underneath RWY 09-27. The proposed project will be extremely helpful for the airlines and GSE operators to enhance their operational efficiency, besides achieving environmental sustainability, since movement of the ground vehicles and staff will be efficient. Leading to less fuel burn. What is the mix of traffic assumed at the end The mix of passenger traffic in FY29 is as of CP4, considering the redevelopment of T1 under: and related proposal to construct for a T2  O-D (i.e. local): Total 37.20 Mn pier extension. o Domestic: 30.30 Mn o International: 6.9 Mn  Transfer: Total 11.14 MnQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting o D-D: 5.8 Mn o D-I / I-D: 5.2 Mn o I-I: 0.14 Mn Comments are made the tunnel is required to As explained in detail above as well as in support interim operations, however we the PIF document, the Tunnel is a project would in principle not support the that will be required immediately and will development of a long-term infrastructure ensure long term operational efficiency by project to enable an interim solution unless seamless transfer of airside vehicles, staff, there are exceptional circumstances. and passengers among various aprons. What is the % of inter-terminal transfer Proportion of traffic required to be shifted traffic between T1 and T2, and what is the from T1 and T2 and vice versa has been Minimum Connection Time required for highly variable in the past due to various passenger and baggage (by transfer type). events like closure of Jet operations, COVID etc. However, this is expected to increase substantially in future with increase in transfer traffic in all segments of I to I, I to D and D to D. With commissioning of tunnel, MCT between T1 and T2 will reduce significantly and will be stable throughout the day (no dependency on external landside traffic) which will enable airlines to offer more transfer flights from CSMIA. Currently, MIAL provides inter terminal coach facility and many passengers use other means of transport. Lot of GSE equipment travel around the perimeter road which is circuitous route around the runway. With introduction of tunnel and utilisation of EVs for passenger movement, we will be able to minimise carbonQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting footprint and lead to operational cost savings for Ground Handlers and Airlines. With respect to reconstruction of airside The existing storm water drains (SWDs) are storm water drains – please provide further made of brick / stone masonry and are in a details regarding costs, options, and dilapidated condition. At many places, the construction delivery phasing SWDs have collapsed, leading to severe flooding issues. Frequent damages at multiple locations lead to various operational challenges. The SWDs are beyond repair and in a place like Mumbai which receives heavy rainfall, it is proposed to reconstruct the SWDs with Reinforced Cement Concrete (RCC). In addition to existing storm water drains, the proposed airside development (with paved surface areas e.g. addition of Aircraft Parking Stands, Taxiways, etc.) will result in an increase in storm water run-off in the existing drainage network, so enhancement of existing airside storm water drainage system will be required. Costing of the storm water drain has been done by third party based on premise that MIAL will need to construct approx. 44,821 meters of RCC storm water drains to effectively protect the airside. Prices of various goods and services are based on the Schedule of Rates published by various Departments of Govt. of Maharashtra / Delhi Schedule of Rates (DSR) published byQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting CPWD / MoRTH, Govt. of India / Plinth Area Rates (PAR) / Market rate analysis at price level valid including all necessary Taxes, duties, levies etc. as applicable. Construction of SWD will be done in phases in CP4. Airlines should not fund new hangar works The existing Hangars are non-compliant through aeronautical charges. since they infringe the Obstacle Limitation Surfaces. To ensure compliance, MIAL proposes to construct one common Hangar (approx. 10,000 Sqm) in the Southern side of RWY 09-27. These hangars are being built for long term parking and maintenance of aircrafts belonging to various airlines operating from CSMIA. Height of new terminal T-1 needs to be very The broad design of proposed new T1 carefully analyzed with respect to ICAO building has been ascertained after careful Annex 14 standards for the transitional consideration of OLS requirements. obstacle limitation surfaces. Different shape and height at various locations of the proposed T1 building is an outcome of this exercise. Detailed assumptions, analysis regarding MIAL is undertaking various projects to how existing T1 demand will be re- enhance the capacity of T2 in order to provisioned in T2 / Navi Mumbai mitigate the impact of closure of T1. It is proposed to construct the balance portion of the North-West Pier. Further, construction of approx. 4,360 Sqm of additional floor space is proposed in T2 for the facilitation of transfer passenger and proving amenities to passengers.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Terminal Occupancy Working Group, and MIAL will look into the request of IATA and Airline Relocations Working Group should be take suitable action. formed to review the various capacity and demand scenarios for different airlines and airlines grouping Please provide quantitative details regarding Norms as stipulated in the OMDA and/or o Passenger space per passenger circulars of BCAS, have been followed in metrics and maximum waiting times providing various processors /passenger for each element of the passenger touch points. journey o Gate room sizing and assumptions including seated / non-seated passengers o Level of automation assumed both within the terminal and on the ramp e.g. concept of operations to promote automation, centralization, and efficiency o Maximum walking distances and time for DEP/ARR/Intra-terminal transfers o Available seating provision in the departure lounge o Pier service/level of contact versus Level changes and architectural impacts e.g. minimizing levels and turns of +90 degrees o Prioritizing passengers to ensure retail is “on the way not in the way”Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Are dedicated transfer facilities being Yes planned? Details regarding BHS conceptual design Please refer PIF document para "E: Transfer Hub Initiatives at Baggage Handling System at T2” (page 56 of 73) under Operational Capex for details. With respect to expansion of T2, please As per Winter 23 schedule, following are provide details on the peak hour design the declared peak hour passenger handling capacity of T2? capacity of T2:  Departure: o Integrated: 4,644 PAX, 24 ATMs o International: 3,346 PAX, 13 ATMs o Domestic: 3,076 PAX, 18 ATMs  Arrival: o Integrated: 4,979 PAX, 23 ATMs o International: 3,754 PAX, 15 ATMs o Domestic: 2,904 PAX, 16 ATMs Will there be sufficient capacity to MIAL is undertaking various projects to accommodate T1 demand in a phased enhance the capacity of T2 in order to manner when T1 closes in CP4? mitigate the impact of closure of T1. It is proposed to construct the balance portion of the North-West Pier. Further, construction of approx. 4,360 Sqm ofQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting additional floor space is proposed in T2 for the facilitation of transfer passenger and proving amenities to passengers. What is the impact on the level of service Norms as stipulated in the OMDA will be parameters from space per passenger and met. waiting times at processing points to seating and boarding gates Is there an opportunity to support Yes, to leverage ICT based smart solutions operational improvements in terms of and latest technology including Artificial automation as a result of the development? Intelligence, MIAL has proposed various state-of-the-art initiatives such as “Follow the Green” to enhance operational efficiency. Explain in detail Integrated Passenger Please refer para 1.10 (page 37 of 73) of the Facilities being mentioned with respect to PIF document in this regard. expansion of T2 Expansion of General Aviation Terminal Current GA terminal is suitable to handle should be funded by specific users, and not only small business jets. With the planned recovered through aeronautical charges via expansion, GA terminal will not only cater scheduled traffic. to the requirements for smaller business jets but also bigger charter flights. Currently these bigger charter flights are being handled from terminal T-2. Normally these bigger charter flights are run by Schedule airlines. In order to decongest T- 2, it is proposed to expand the existing GA terminal. Kerbside Infrastructure works for T1 and T2 Kerbside roads are already operating with supporting traffic circulation and Level of Service ‘F’ and hence theseQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting congestion, please provide supporting improvement works are warranted even capacity and demand analysis. with the current traffic. Large facility like MIAL Administration and CSMIA does not have an office that is Management Office needs to be adequately adequate to house all its employees and justified staffs of concerned stakeholders under one roof. Currently, employees are sitting in various scattered locations in the airport, and this leads to inconvenience in coordination and makes efficient operation extremely challenging. In addition, with the transformative vision of CSMIA being one of the major global transfer hub airports, it is imperative that associated aviation functions such as training centres on various aspects of aviation are also integrated, so that the workforce can be continually trained to be ever ready to tackle new challenges and embrace latest developments in the aviation sector. As already mentioned in the PIF document, approx. 1,500 staff of MIAL (and additionally staffs of other stakeholders) are proposed to be housed in the MIAL Administration and Management Office, with approx. 70,073 Sqm of office area. Apart from office spaces, the building will also house various other uses such as Aviation Safety Training Institute, DGQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting Training Institute, Airside Operation Simulator Room, Joint Control Centre (JCC), Auditoriums, Seminar Halls, Airport Experience Centre, etc. These facilities are part and parcel of airport operations. What benchmarks and metrics have been The office space standard will be approx. used to size the building e.g. space per 15-20 sqm/staff, which is a standard employee, and how does this compare with industry practice. similar office benchmarks? Given that the NAD Colony primarily houses NAD colony is the residential colony of AAI the CISF/security personnel and passengers employees. MIAL has proposed to build are paying the ASF directly to the multi-storied apartment to accommodate Government, security-related costs that the AAI employees currently staying in 2 should be funded through the ASF rather level flats. The land area so obtained would than recovered through airport charges. be used to shift various aeronautical functions such as meteorological department, P&T, fire, STP and telephone exchange, etc. Investments for the metro infrastructure As per the Memorandum of Understanding should be fully funded by the metro operator signed between Mumbai Metro Rail on a cost recovery basis through fees Corporation (MMRC) and MIAL, MIAL is imposed on metro users and not all airport required to share cost of two metro users. stations (T1 and T2) in the airport area. AERA had approved the levy of Metro Development Fee (MDF) to recover cost of these two stations as these stations will be primarily serving the airport passengers. Further as per this MoU, construction of basements over the metro stations is alsoQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting responsibility of MIAL. Basements will act as dead load, which, in turn, will ensure stability to the metro stations. Please provide information regarding cost Prices of various goods and services are benchmarks that have been applied to based on the Schedule of Rates published estimate project costs by various Departments of Govt. of Maharashtra / Delhi Schedule of Rates (DSR) published by CPWD / MoRTH, Govt. of India / Plinth Area Rates (PAR) / Market rate analysis at price level valid including all necessary Taxes, duties, levies etc. as applicable. What inflation allowances are being Inflation of 5% (average CPI inflation as per assumed given that the capital plan currently recent RBI forecasts) has been considered. excludes these? Soft costs are estimated at 16% of hard Provide allowances relating to “Pre-operative costs. This is in line with actual cost Cost, Design Cost, Project Management incurred by some of the airports. Consultancy (PMC) cost, preliminary IDC is over and above these soft costs. expenses, and Interest during Construction (IDC)” Operational Capex Proposals We support these initiatives on the basis that Automation increases operational they result in operational efficiencies for efficiency by streamlining processes and users and customer service improvements. decreases manual intervention. For each of these areas please provide Automation will speed up passenger flow further details in terms of how this is and reduce lines using advanced facilities achieved e.g., how will automation increase like CTiX machines and full body scanners passenger throughout? How will MIAL which in turn will lead to quicker and moreQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting ensure users’ costs are reduced through the efficient procedures across the airport. solutions being identified? Passengers can independently tag and drop off their bags using self-service baggage drop devices, which reduces the need for human intervention and speeds up the check-in procedure. Automated baggage screening systems increase security check accuracy and speed, improving operational effectiveness of supply chain management in aviation industry This enhances the overall passenger experience while also making the most use of staff and resources at the airport thereby optimizing the overall operating cost. Automated baggage handling systems require fewer personnel for baggage sorting and transportation, leading to cost savings. Self-service check- in and bag drop systems decrease the need for staff at traditional check-in counters, further reducing labour costs. Furthermore, automation minimizes the likelihood of errors and improves operational efficiency, reducing costs associated with delays, rework, and customer complaints. For regulatory / security proposals, please Various factors like increase in operational demonstrate how the most efficient solution efficiency, enhanced passenger is being identified. convenience, higher passenger throughput and overall operational resilience offered by the solution are considered.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting W.r.t CT Handbag X-ray and Full Body CTiX Machine and Full Body Scanners are Scanner investments, what is the impact on being installed to meet requirements set by passenger throughput and customer BCAS. CTX machines will do away with the experience? requirement of taking out electronic devices and liquids from bags. Similarly frisking of passenger using Full Body Scanner will be done in quicker manner as compared to manual frisking. Regarding “Follow the Greens” initiatives, we Follow the Greens project will reduce taxi & support the principle of net zero and holding time of aircraft and directly reducing emissions to the extent possible – contribute to better on time performance, however this is not at any cost. Investments lower carbon emissions and contributing are still subject to business case discipline, towards net-zero vision of CSMIA. Follow and we request further details regarding the Green is expected to reduce taxi time each initiative e.g. fuel burn savings. by 17%, fuel burn by 18% and emissions by 20%. Further it will reduce ATC and Pilots workload and increase the overall throughput. There is dire need to upgrade, more than a Regarding the refurbishment of washrooms, decade old, washrooms at T2, ~1.5L+ the photos in the PIF are unlikely to passengers use them. Due to heavy usage represent all the facilities across the and aging of facility, there has been a campus. This is a very important area to get degradation of fittings & fixtures in most of right for customer comfort, however in this the washrooms. context please provide a condition-based survey report for each terminal and public area so a data-driven response can be taken.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting When was the last runway recarpeting of 09- Runway recarpeting for runway 09-27 was 27 completed? And what is the time span last done in March 2020. It was told that between two recarpeting works? runway recarpeting is normally required after a span of 7 years Whether Taxiway M will be completed in the Adani Group took over the airport in 2021. FoCP in light of land constraints which have It was informed that all the legacy issues affected the execution of this project in the will be resolved in gradual manner. MIAL is past? working with AAI and local government authorities to sort all the issues related to Slum Rehabilitation to expedite the Paresh Shirodkar 4. execution of project. Hence, we are (Saudia) hopeful that project will be done in FoCP. Supported the need for the parallel taxiways Noted. for runway 14-32. He expressed his desired to have parallel It was informed that MIAL has planned taxiway on the south side of main runway taxiway on the south side of runway 09-27 09-27 especially when new additional parking stands are planned in the area? How will closure of T1 impact airlines Please refer response of MIAL to similar operating from Terminal 2 given the fact T2 query raised by IATA . is already congested at various touch points As per AERA guidelines AUCC should have Please refer response of MIAL to similar been done at least 4 months in advance. query raised by IATA MIAL Administration and Management Please refer response of MIAL to similar Office Costing 1,229.36 Cr – Amount should query raised by IATA not be collected from CAPEX for an Administration and Management Office for the Airport Operator. We should not be expected to fund functions that do not relate directly to aeronautical activities. Kindly furbish details of other stakeholdersQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting using this office and secondly if this is being fund through CAPEX all stakeholders including Airlines would have access to the same. Mumbai Metro Line 3: Construction of 3 Please refer response of MIAL to similar Metro Stations at CSIA Costing 249 Cr (MDF query raised by IATA had already been collected and since this is used by a wider public why should it be a part of the CAPEX again) Refurbishment of Washrooms at T2 Cost 182 Please refer response of MIAL to similar Cr – The condition depicted are unlikely to query raised by IATA represent all the facilities across the Airport so a proper inspection along with a Core team is need for use of use expense. Number of projects included in 4th Control All the legacy issues related to execution of Period are being continued from Control various projects proposed in the previous Period 2 and then moved to Control Period 3. control periods will be resolved in gradual manner. Due to ATC congestion at Mumbai airport, MIAL is undertaking various airside flights have to make go around resulting in capacity enhancing projects in Fourth financial loss to airlines and affects the Control Period. Airports Authority of India departure time of the outbound flight. is also upgrading the ATC infrastructure. Ta Anh Quan These initiatives will mitigate the issue of 5. (Vietnam Airlines) traffic congestion. Security procedures at the airport are very MIAL plans to procure CTiX machines and time consuming Full Body Scanners in the near future which will fasten the security clearance process.Questions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting The traffic forecast estimated by MIAL Please refer response of MIAL to similar appears in downward trend, however the query raised by IATA methodology appears unclear and without rationale. It may be noted that certain member airlines of FIA have submitted their forecast data on progressive increased assessment for the upcoming 5 years with MIAL. In view of that, we request MIAL to provide the justification and/or the analysis conducted for the traffic forecast trend Airside improvement works – page 21/23, Around 20 new Code C equivalent stands construction of additional parking stands on will be added. V1 area and on southern side of RWY 09/27 @ proposed block cost of Rs. 78.34 cr and Rs. Ujjwal Dey 53.12 cr respectively. MIAL is requested to 6. (Federation of Indian clarify the number of additional parking Airlines) stands proposed for code C in the said areas. Air side tunnel – page 28 proposed @ block Please refer response of MIAL to similar cost of Rs. 894.14 cr, warrants debate and query raised by IATA approval of stakeholders on the justified need of tunnel vs. developing alternate viable over ground cost effective transport system for airside transit connectivity between T1 & T2. Reconstruction of T1 is proposed in Fourth Transition of traffic from T1 to T2 will be Control Period and accordingly all operations done in consultation with all relevant will be shifted to T2 until recommissioning of stakeholders. new T1. Therefore, there is beforehand need of wider deliberation among stakeholders on mitigation measures taken for hassle free transition – without curtailment of no. ofQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting operational flights at that time, accommodation of displaced / affected flight operations / traffic from T1 into T2, its preparedness for providing robust interim terminal capacity handling solutions at single terminal i.e, T2 without impact on quality service level. Expansion of T2 – page 37, understandably Land for proposed expansion of T2 is can be initiated in unison with land available. reallocation and availability in near future. MIAL is requested to defer the expansion of T2 until actual land confirmation is acquired. Expansion of general Aviation terminal – Please refer response of MIAL to similar page 39, proposed block cost of 101.55 cr is query raised by IATA mainly being the requirement of big corporates, may be funded appropriately through GA / charter user co. Construction of MIAL administration and New office will cater to the requirements management office – On proposed GF plus of all airport stakeholders 06 floors @ block cost of Rs. 1229.36 cr – office space of approx. 70,073 sqm and parking plus utilities space of approx. 50,130 sqm; there is a need to judiciously demarcate and indicate proportionate specific area from the total space to be made available to Airlines / other stakeholders in line of transformative vision of being one of the major global transfer hub service airport of India facilitating associated aviation stakeholdersQuestions by stakeholders during the AUCC Responses from MIAL S. No. Stakeholder Name meeting – Airlines, in view of space crunch faced by associated airlines as always at Mumbai. Quantum of escalation of cost payable by It is to be noted that substantial capex is airlines- Query- It is observed that the getting capitalized in the second half of proposed total outlay for Fourth Control the control period, hence the impact of the Period appears escalated i.e., (Capex + Opex) new capex is limited in the control period. of Rs. 11,635 cr. Accordingly, in view of Estimated impact of the proposed capex on para A.1.5.2.4 (d) of AERA Guidelines, MIAL in YPP basis. if all capex is considered to be the AUCC meeting disclose the projected approved, is approx. Rs 220. Actual impact impact of projects on airport tariff and will depend on actual capex approved by airport charges (such as landing, parking, AERA. space rental, RNFC/TNLC, UDF/ADF, etc., if any) on passengers as approx. INR 200 per passenger. Accordingly, we request MIAL to rationalize the expenditure to the bare minimum so that the passengers/airlines are not burdened with additional levies. He wanted to know the business continuity MIAL will ensure minimal disruption to 7. plan in terms of traffic congestion at T2 in operations during the process of transition Amey Pangam the event T1 is demolished and redeveloped? from T1 to T2. (Indigo) He also appreciated follow the green Noted. initiative and acknowledged that the same will reduce the Pilot’s workload No major renovation of lounge has happened Noted. Suitable action will be taken in this in last 10 years. Lounges is very important regard. facility from customer experience Renuka Pereira (Air perspective. 8. France) MIAL should expedite the adoption of digital processes which will make airport operations more sustainable.Please note that queries raised in AUCC meeting as well written comments from various stakeholders have been addressed in this MoMAnnexure I - List of Participants Airport Stakeholders Adani Airports and MIAL 1. Bhaskar (Sub Inspector, CISF) 1. Prakash Tulsiani (CEO MIAL) 2. Allan Young (Head-Airport Infrastructure, IATA) 2. Ashwin Noronha (COO MIAL) 3. Vikas Gudadhe (Senior DGM, MMRCL) 3. Gargi Kaul (Advisor Regulatory) 4. Ujjwal Dey (Associate Director, FIA) 4. Manoj Chanduka (Sr. VP, Regulatory) 5. Anurag Yadav (Deputy Commandant, CISF) 5. Ashwini Thorat (Chief Design & Planning - Projects) 6. Captain R K Bali (MD, BAOA) 6. Rakesh Tiwary (CFO AAHL) 7. Satyan Nayar (Secretary General, APAO) 7. Rajesh Poddar (CFO MIAL) 8. Chandra Mani Pandey (Director, DGCA) 8. Rajeev Chawla (Head Terminal Operations) 9. Ramesh Pampana (Deputy Director, DGCA) 9. Suryanarayanan Pichumani (Head Airside Operations) Pratik Sonawane (Station Supervisor, Vietnam 10. 10. Surya Prakash (Head Digital Transformation) Airlines) 11. Prashant Neve (DGM, AIASL) 11. Pravind Kumar (Head Projects and E&M) 12. Jayagopal N (GM, AIASL) 12. Balvir Singh Bhatia (GM Terminal Operations) 13. Rahul Wadhwa (Director-AOCS, Indigo) 13. Ashu Madan (AVP Regulatory) 14. Sampat Ullal (Associate Director-AOCS, Indigo) 14. Sanjeev Kumar Gupta (GM HSE) 15. Nimish Asher (Airport Manager, Turkish Airways) 15. Madhur Arora (AGM Regulatory) Vishal Coutinho (Customer Service Duty Manager, 16. 16. Yadu Arora (AGM Operations) British Airways) 17. Viha Upadhyay (Airport Manager, Kenya Airways) 17. Chirag Parmar (Manager Regulatory) 18. Renuka Pereira (Airport Manager, Air France)Airport Stakeholders Adani Airports and MIAL 19. Manju Tullu (Airport Manager, Oman Air) 20. Sanil Nair (VP, BWFS) Khaleel Yammahi (Airport Service Manager, 21. Emirates) Goh Chee Siong (Airport Service Manager, 22. Singapore Airlines) 23. Ajeesh P.G (Airport Manager, Air India Express) 24. Lloyd Fernandes (Station Supervisor, Thai Airways) 25. Pradeep Mangtani (AVP-WR, Air India) 26. Rahul Shah (Airport Manager, Air Vistara) 27. Ta Anh Quan (Airport Manager, Vietnam Airlines) 28. Rajesh V Ahuj (Airport Manager, Air Arabia) 29. Saurabh Dalvi (Head-WR, Celebinas) 30. Daniel Melaku (Airport Manager, Ethiopian Airlines) Captain Aditi Paranjpe (Fleet Supervisor-Line 31. Operations, Indigo) 32. Suresh Anthoney (Airport Manager, Virgin Atlantic) 33. Daisy Jesia (Airport Manager, Air Mauritius) 34. Ashley Pereira (Regional Manager WR, Akasa Air) 35. Sanjay Lobato (Airport Manager, Akasa Air) 36. Vikas Chaturvedi (VP, BWFS)Airport Stakeholders Adani Airports and MIAL 37. Shamon P.S (Regional Manager-WR, Spicejet) 38. Captain Amey Pangam (Fleet Supervisor, Indigo) 39. Keith Vaz (Airport Manager, Gulf Air) Victor Dsouza (Airport Manager, Cathay Pacific 40 Airways) Paresh Shirodkar (Manager-Flight Operations, 41. Saudia) 42. Craig Fernandes (Airport Manager, Fly Dubai) 43. Gavin White (Airport Manager, Air Canada)

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