Arbitration tribunal’s decision credit positive for Delhi International Airport: Moody’s

The arbitral tribunal’s decision to excuse the Delhi International Airport Ltd from its revenue share obligations during the pandemic period is credit positive, as the airport may otherwise require additional debt to make an immediate full payment, Moody’s said.

However, the Airports Authority of India can appeal the arbitration outcome.

Other than this arbitration matter, improvement in Delhi Airport’s credit metrics over the near term will also depend on the successful completion of its expansion and the outcome of its regulated tariff reset scheduled to occur by the end of March 2024, Spencer Ng, Vice President, Senior Credit Officer, Moody’s Investors Service said on the arbitration tribunal’s decision in the matter of Delhi International Airport Ltd.

GMR Airports, in an earlier filing, had said that Delhi International Airports Ltd (DIAL), a step-down subsidiary of the company had invoked arbitration against the Airports Authority of India (AAI) seeking certain reliefs as eligible to it on account of the occurrence of force majeure event (Covid-19 period) under the Operation, Management and Development Agreement dated April 4, 2006 (OMDA).

The Arbitration Tribunal had passed the Award on January 6, and a key aspects of the award said DIAL is excused from making payment of Monthly Annual Fee (MAF) for the period from March 19, 2020 to February 28, 2022 due to existence of force majeure.

Accordingly, the amount of MAF paid by the DIAL to the AAI for the period March 2020 to December 2020 was ordered to be refunded along with interest. DIAL was also excused from making payment of MAF from January 2021 till February 2022.

There shall be extension of the term of OMDA for 1 year and 11 months i.e., the period excused under force majeure.

The award may be challenged, in which case DIAL will appropriately defend the matter, GMR Airports said.