Draft Guidelines for UDF at airports formulated

New Delhi, Aug 18 (UNI) The Ministry of Civil Aviation has formulated the draft guidelines for user development fee (UDF) at airports.

To estimate the UDF, a block of four years is to be taken, a official release said today.

Estimated revenue and costs are to be given by the company based on their projections. For such projections a traffic growth of CAGR of past 5 years is proposed.

A review after two years period has also been provided in the guidelines, wherein changes, if any on account of assumption, would be considered to revise UDF.

To estimate revenue of the company, the sum of the total aeronautical revenue and a portion of non-aeronautical revenue is considered.

The level of project cost will be determined on the following considerations: -- Costs based on accepted norms.

-- Consider only aviation related costs.

-- Whether transparent competitive bidding has been followed for award of construction contracts.

-- Whether costs are in line with target capacity creation.

-- Approval, if any, granted by the Centre in the past provided that the actual implementation is in line with the earlier approved costs.

Following expenditure would be admissible as a pass through into the tariff: -- Cost of capital employed.

-- Depreciation.

-- Operation and maintenance.

-- Taxes.

For estimating the cost of the capital employed, cost of debt on actual basis and 14 per cent return on equity to be considered.

Since expenditure items such as personnel costs, operations and maintenance and pre-operative expenditure have not been verified, a cap is proposed for these items.

Depreciation is proposed to be taken on the rates provided under the Companies Act.

In any given year if the incidence of UDF is considered to be very high the guidelines provide for carrying forward the deficit to future years as regulatory asset.

The guidelines will be finalised after detailed discussions with all stakeholders, the release said.

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