Will the Left view on airport privatisation stifle Kerala's infra progress?

The Kerala government is opposing the privatisation of Thiruvananthapuram airport. Paradoxically, one the other hand, it has opened up a debate on whether politics is taking over the development of public infrastructure projects.

The big question: On what grounds is the state contesting the privatisation, because its bid was much lower than that of the Adanis, which walked away with the honours?

 
Thiruvananthapuram Airport, once the property of the Maharaja of Travancore, was the first one to link Kerala with international destinations.

Kerala, which has a large NRI population, started flights to Colombo and Male in the early 1970s. On January 31, 1978, Air India (which then operated just internationally, with Indian Airlines doing the domestic business) did its maiden flight to Dubai on a runway of restricted length with no approach equipment, good lights, or even a proper parking bay. Even after 42 years, things are much the same, say industry experts.

The government’s decision to privatise the airport has created political alignments and bickering among parties in Kerala and between the state and the Centre.

Congress MP Shashi Tharoor is supporting the Centre-approved project while his party is at one with the CPI(M)-led Left Democratic Front government.

The Centre decided to lease six airports in the country — Thiruvananthapuram, Ahmedabad, Jaipur, Lucknow, Mangaluru, and Guwahati — through public-private partnership (PPP) to Adani Enterprises, which emerged as the highest bidder in a global competitive bidding process.

Kerala’s reservations date back to 2003, when it requested the Centre to include the state government whenever there was a decision to induct a private player to manage Thiruvananthapuram airport. The Centre, at the time, assured the state it would be consulted on the privatisation process.

Shortly after the Union Cabinet approved leasing the airport to Adani, Kerala Chief Minister Pinarayi Vijayan wrote Prime Minister Narendra Modi, saying the Centre’s “unilateral decision” was against the wishes of the people of the state, and that “it will be difficult” for the state government to offer co-operation in this. Kerala also said its claim to manage the airport was rejected by the Centre even after it offered to match the Adanis’ bid.

The Centre has said after various discussions and recommendations of an empowered group of secretaries, it was decided, in consultation with the state government, the latter would participate in bidding for the airport through a special purpose vehicle (SPV). The Kerala SPV was also given the right of first refusal (RoFR), or a provision to match the winning bid if its quote was 10 per cent or less than that of the top bidder. However, according to the civil aviation minister, Kerala State Industrial Development Corporation’s bid was 19.64 per cent lower than that of the Adanis.

Subsequently, a petition was filed in the Kerala High Court last year, but it was dismissed. Then a special leave petition was filed in the Supreme Court. But neither the Kerala High Court nor the Supreme Court has granted a stay on the privatisation process. The Supreme Court remitted the matter back to the Kerala High Court, which is yet to give its final decision.

“It is about expanding the potential of the airport to its fullest, thereby providing a better facility to businesses and locals, and attracting investors,” said Tharoor, adding that the Airports Authority of India (AAI) received Rs 2,500 crore a year from Mumbai and Delhi airports alone, which are managed by private enterprises.

Agrees B Govindarajan, chief operating officer, Tirwin Management Services (P) Ltd, a training and consultancy firm which specialises in logistics, including aviation.

He said the Kerala government’s position was not unexpected. Though Cochin International airport is an example of public-private partnership, in which the chairman and many directors are from government, it faces challenges, he said.

“Here is a chance for Thiruvananthapuram to grow, not just the airport. Airport privatisation has proved it brings a great difference to a place in terms of business and other activities. We see it happening in our neighbouring states,” said Govindarajan.


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