New tariff likely to be applicable from Jan 1: GVK Power

Sanjay Reddy of GVK Power & Infrastructure says Airports Economic Regulatory Authority (AERA) has floated consultation papers on tariff last week. We expect that by December the tariff will be announced officially. The consultation paper suggests that from January 1, 2013 it will become effective, he adds.
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Oct 15, 2012, 06.17 PM | Source: CNBC-TV18

New tariff likely to be applicable from Jan 1: GVK Power

Sanjay Reddy of GVK Power & Infrastructure says Airports Economic Regulatory Authority (AERA) has floated consultation papers on tariff last week. "We expect that by December the tariff will be announced officially. The consultation paper suggests that from January 1, 2013 it will become effective," he adds.

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New tariff likely to be applicable from Jan 1: GVK Power

Sanjay Reddy of GVK Power & Infrastructure says Airports Economic Regulatory Authority (AERA) has floated consultation papers on tariff last week. "We expect that by December the tariff will be announced officially. The consultation paper suggests that from January 1, 2013 it will become effective," he adds.

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Once the consultation papers are uploaded then AERA gives about a month for comments from all stakeholders.

- Sanjay Reddy (VC)

In an interview to CNBC-TV18, Sanjay Reddy, vice chairman, GVK Power & Infrastructure says Airports Economic Regulatory Authority (AERA) has floated consultation papers on tariff last week. "We expect that by December the tariff will be announced officially. The consultation paper suggests that from January 1, 2013 it will become effective," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

Q: All your investors are looking keenly at the kind of tariff hikes that can be affected at the Mumbai airport. How soon do you expect an announcement from AERA on that?

A: AERA has uploaded consultation papers, last Friday, for both tariff hike as well as the development fee (DF) for the Mumbai airport. That has happened last week.

Q: When is the final decision expected?

A: Once the consultation papers are uploaded then they give about a month for comments from all stakeholders. Depending on the comments then AERA takes few weeks. So, we expect that by December the tariff will be announced officially. The consultation paper suggests that from January 1, 2013 it will become effective.

Q: You had proposed more than 600 percent hike in the tariff. Do you think it is likely that AERA would consider something as stiff as that because the number, which we hear doing the rounds, is closer to a 150 percent?

A: I think the consultation paper suggest an increase of about a 160 percent. The 600 percent is based on what our understanding of the OMDA (Operation Management and Development Agreement) is, our concession agreement with the government.

Obviously, there are gaps between the way we see it and the way AERA sees it. So, some of these things we may have to go for appeal and see how things go. But the first and the most important thing is that once the tariff is implemented then we know where the gaps are and then we can decide how to take it forward.

Q: But would 160 percent cover what you are talking about the kind of cost structures or does it still leave a yawning gap?

A: In terms of cost, yes, it does cover. It depends on how you define cost. It is a little complicated. I can't just simply say it covers it. But if you mean that does it cover basic things like operating cost and debt service? Yes, it does. There is a gap in terms of the way they see return on equity, the way we see return on equity. There are certain tax calculations. Is this something which covers cost? Yes, it covers the basic cost.

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