Concerns against a entity company - that lacks technical expertise in the field - winning many bids were raised as part of the discussions that took place.

Documents show Finance Ministry flagged issues in handing over 6 airports to Adani
Money Privatisation Friday, January 15, 2021 - 18:27

The Adani Group now has control over eight airports in the country, but it has been revealed that several concerns were raised by the Finance Ministry’s Department of Economic Affairs and policy think tank NITI Aayog regarding the privatisation of these airports.

Records from minutes of meetings of discussions held in December 2018 show that both NITI Aayog and the DEA raised concerns over the bidding process, the eligibility criteria and the fact that many guidelines put in place for PPP projects were deviated from. The concerns were raised about airports in Trivandrum, Ahmedabad, Lucknow, Mangalore, Jaipur, and Guwahati. The Adani Group bid for all six of these projects, and won.

A note on December 18, 2018 from the DEA’s Public Private Partnership (PPP) cell on the privatisation of the six airports had said that the six airport projects are highly capital intensive, and hence there should be a clause stating that no bidder be awarded more than two airports “factoring the financial risk and performance issues”.

TNM first reported in August 2020 about discrepancies in the bidding process as alleged by the Airports Authority of India’s employees union, and flagged by NITI Aayog and the DEA, but the concerns were not addressed.

Concerns against a single group - that lacks technical expertise in the field- winning many bids  were raised as part of the discussions that took place between the Public Private Partnership Appraisal Committee (PPPAC), the DEA, NITI Aayog, Airports Authority of India and the Ministry of Civil Aviation Ministry before granting in-principle approval for privatisation of six airports. The PPPAC is the Union government’s committee that looks into and approves PPP projects.

In its note, the DEA gave the example of the Delhi and Mumbai airports, where even though GMR was the only qualified bidder, both airports were not given to the same company.

The DEA also raised concerns over ambiguity in the project cost details and key performance indicators for prospective bidders. Noting that there have been deviations from the usual bidding process followed, it noted that the Ministry of Civil Aviation has not submitted the Deviation Statement from the documents followed for the preparation of the Bid Documents, and didn’t submit detail financial calculations either to support the rationale behind the financial figures as stated in the PPPAC Memos and Project Report.

In its note to the Department of Economic Affairs, NITI Aayog too had raised concerns regarding a bidder who lacked the sufficient technical capacity. The policy think tank said that a bidder lacking “sufficient technical capacity can well jeopardise the project and compromise the quality of services that the government is committed to provide.”

Adani won the bid based on offering the highest ‘Per Passenger Fee’. This basis for awarding benefits was also questioned by NITI Aayog, stating that the actual payment received by the authority will depend on passenger volume, and will fall during low volume periods,thus causing a loss to AAI. NITI Aayog instead suggested a Gross Revenue Share model. 

However, most of these concerns were not addressed by PPPAC, which said that decisions in most matters were already taken by the Empowered Group of Secretaries.

The Empowered Group of Secretaries (EGoS) was constituted by the Cabinet Committee held on November 8, 2018. The EGoS was to decide on issues beyond the scope of PPPAC.

As per records of discussion of a meeting held on December 11 to grant in-principle nod for the airports, the EGoS had already taken decisions on most aspects of the bidding process – in deviation from the existing norms and guidelines.

While DEA raised concerns over a single entity owning all airports, it was the EGoS that decided that no restriction needs to be placed on the number of airports to be bid for or to be awarded to a single entity. This decision, as per records of the discussion, was taken by the EGoS on November 17, 2018.

Another decision taken by the EGoS was removing prior airport experience as a prerequisite. It is important to note that Adani, which won all six bids, had no prior experience in running or managing an airport.

“It is also pertinent to mention that EGoS had already decided that ‘Prior airport experience may neither be made a prerequisite for bidding, nor a post-bid requirement. This will enlarge the competition for brownfield airports which are already functional’,” the PPPAC wrote in the record of discussion.

Interestingly the EGoS comprises members of the very departments that raised concerns over the privatisation and bidding process. The EGoS was headed by NITI Aayog CEO, along with Secretary of the Ministry of Civil Aviation, Secretary of the Department of Economic Affairs and Secretary, Department of Expenditure.

Questions have been raised by AAI’s employee union and others over why a nod for the privatization of airports was given in a haste manner.

PPPAC guidelines state that ‘in-principle’ approval for a project should be granted within three weeks from submission of the proposal, and another 3 weeks after submission of final documents for the ‘final approval’. However, in the case of privatisation of the six airports, ‘in-principle’, and ‘final approval’ were given together.

In a meeting held on December 11, 2018, the PPAC said that the proposals of the six airports were considered in a ‘limited time’ because of the nature of the project and the ‘tight time-table’ with which the Civil Aviation Ministry was pursuing the case.

As of September 2020, the Adani Group has control of eight airports in the country. While it most recently acquired the Mumbai International Airport and the upcoming airport at Navi Mumbai, there was furore over the conglomerate winning the bids for six other airports for operation and management of development — Trivandrum, Ahmedabad, Lucknow, Mangalore, Jaipur, and Guwahati. The Airports Authority of India is handing over the six airports this month, and two days ago, the Airports Authority of India approved Adani’s takeover of Mumbai airport.

The Kerala government too, has been vocal in its opposition to Adani being granted the bid for the Trivandrum airport and has approached the Supreme Court against the move to give the lease to Adani Enterprises. However, even before Adani had won the bids, both the Department of Economic Affairs and NITI Aayog had flagged the deal, and had registered their opposition against the awarding of bids. 

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