Adani Enterprises plan hits air pocket in Kerala govt vs Centre row

Gautam Adani | File photo
An impasse between the Kerala government and the Centre is threatening the privatisation plan of Trivandrum airport. The Airports Authority of India (AAI) has opposed a joint ownership structure between the state government and Adani Enterprises, asking instead that the airport remain in its domain.  

However, the group will be handed over the other five airports, which it won in the bidding process, by April 2020. Till now, the group has been given the letters of award for Ahmedabad, Lucknow and Mangalore airports. For Jaipur and Guwahati airports, there are minor legal issues. The Centre has consulted Solicitor General Tushar Mehta, who has suggested handing over of the airports after the cases are settled. 

Sources aware of the development said that the Kerala government in its discussions with the Civil Aviation Ministry had proposed a model under which a consortium led by Trivandrum International Airport Ltd (TIAL) — the special purpose vehicle set up by the state government — would operate it. Adani Enterprises and a group of businessmen from the Gulf would have stake in it.

 “A joint ownership structure was proposed by the state where Adani will hold the majority stake, TIAL will hold 26 per cent while the rest will be held by a group of businessmen from the Gulf. However, the AAI has in writing opposed such an ownership model,” said a senior official aware of the development. When asked about the impasse, Civil Aviation Minister Hardeep Singh Puri said that the Centre was still negotiating with the state government to find a solution.

In a letter written to the Ministry of Civil Aviation,the AAI has said that either it should be allowed to keep the airport or it should be fully privatised. “A partial privatisation after a party had won the bid to run it helps no one. It will face legal scrutiny and moreover the AAI will not gain financially from such a structure,” the official said.

Last November, the government decided to privatise six airports, including Trivandram, through a PPP model. Adani won the bidding by offering to pay AAI Rs 168 per passenger, even outbidding the Kerala State Industrial Development Corporation which bid at Rs 135 per passenger.

Then a political fight broke out. Kerala CM Pinarayi Vijayan opposed the privatisation and in a letter to PM Narendra Modi, pointed out that a written assurance was given to the government in 2003 by the then Civil Aviation Secretary that whenever a decision was taken to involve a private player to manage the airport, the Centre would consult the state government. This was on account of the fact that the state had given 635 acres for the airport, the value of which would be the state’s stake in it.

Vijayan also said that it was surprising that the Request for Proposal contained no condition for prior experience in operating airports. Instead, all that a bidder needed was experience in infrastructure projects.

 However, in the past, the Centre has privatized several airports such as Hyderabad, Bengaluru, Delhi, and Mumbai airports under the same model. In order to break the current duopoly of GVK and GMR, the government allowed companies without any prior experience to bid for the projects. Adani, which has no prior experience in operating or managing an airport, won the bids for five out of the six airports, outbidding GVK and GMR.




Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel