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Finance Ministry, NITI Aayog Objections Overruled Before Adani Group Won Bids for 6 Out of 6 Airports

Passengers cross a road with their luggage, outside an airport in India. (Source: PTI)

Passengers cross a road with their luggage, outside an airport in India. (Source: PTI)

In less than two years, Adani group has become India’s largest private developer in number of airports handled; and the second largest in terms of passenger traffic.

Objections raised by the finance ministry and Niti Aayog regarding the 2019 airport bidding process were over-ruled to allow the Ahmedabad-based Adani Group to operate six major airports in a clean sweep, the Indian Express has reported.

During the discussions held by the government before bids were invited for the privatisation of the airports at Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram, the finance ministry had said in a note that “not more than two airports should be awarded to the same bidder”, while the Niti Aayog had raised a separate concern that a “bidder lacking sufficient technical capacity can well jeopardise the project and compromise the quality of services”.

Gautam Adani’s infra group Adani Enterprises had won the financial bids opened by Airports Authority of India (AAI) in February 2019 to operate all six airports that the government plans to run public-private way like the mega hubs at Delhi and Mumbai, for the next 50 years. The Adani group outbid its rivals, including experienced players such as GMR Group, Zurich Airport and Cochin International Airport Ltd in addition to other infrastructure players, by a big margin in each of the six bids.

The group also signed another deal to acquire a controlling interest in the country’s second largest airport, in Mumbai, in August last year and the Airports Authority of India cleared that takeover on January 12.

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Combined, the seven airports make the Adani group India’s largest private developer in number of airports handled; and the second largest in terms of passenger traffic. This market dominance has been established in less than two years.

Before AAI awarded the bids for the six airports in 2019, the finance ministry’s Department of Economic Affairs had in a note sent on December 10, 2018, said that the six airports projects are highly capital-intensive projects, and hence it is suggested to incorporate the clause that not more than two airports will be awarded to the same bidder duly factoring the high financial risk and performance issues.

“Awarding them to different companies would also facilitate yardstick competition,” the note, sent to the Centre’s Public Private Partnership Appraisal Committee (PPPAC), had read, the Indian Express report said.

A meeting held by the PPAC on December 11, 2018, to discuss the process did not take up this red flag by the DEA, the newspaper said. The DEA had also cited the example of the Delhi and Mumbai airports – the operations of both airports were not awarded to GMR, despite it being the only qualified bidder originally.

The NITI Aayog had also raised a separate concern regarding the airport bidding in a note sent the same day. “A bidder lacking sufficient technical capacity can well jeopardise the project and compromise the quality of services that the government is committed to provide,” the government think tank’s memo mentioned.

But the PPAC rejected this objection, saying the empowered group of secretaries had already decided that “Prior airport experience may neither be made a prerequisite for bidding, nor a post-bid requirement.” The, the committee said, was to enlarge the competition for brownfield airports, which are already functional.

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