A government panel for public-private partnerships ignored guidelines set by the finance ministry’s Department of Economic Affairs and the NITI Aayog for the privatisation of airports, leading to Adani Enterprises winning the bids for six airports, The Hindu reported on Saturday.
The panel allegedly ignored the recommendation to not award the same bidder more than two airports, and the requirements of awarding the contracts to companies with prior experience in managing an airport and those which provide the total cost up front for each project so that their financial capability could be gauged.
In November 2018, the Union Cabinet gave its approval to the privatisation of the management of six airports – Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru. The Public Private Partnership Appraisal Committee met on December 11 to recommend the proposal for final approval and three days later, the Airports Authority of India floated a tender.
In February, the Airports Authority of India said the conglomerate had won the contracts to run the six airports. On July 3, the Union Cabinet approved the leasing out of Ahmedabad, Lucknow and Mangaluru airports to Adani Group. The Cabinet is yet to approve the leasing of the remaining three.
A note prepared by the Department of Economic Affairs that was circulated among participating ministries said the six projects were capital intensive. “Awarding them to different companies would also facilitate yardstick competition,” it added.
The appraisal committee, however, referred to a decision taken by the Empowered Group of Secretaries that said “no restriction needs to be placed on the number of airports to be bid for or to be awarded to a single entity”. This was recorded in the Record of Discussion of the 85th committee meeting, a copy of which was accessed by The Hindu.
The NITI Aayog, in a separate note, raised the need for bidders with prior operation and management experience. The panel again referred to the Empowered Group of Secretaries’ statement that “prior airport experience may neither be made a pre-requisite for bidding nor a post-bid requirement”.
The Department of Economic Affairs also raised the matter of not including the total project cost in the request for proposal document. “It is not advisable to keep the project cost open ended and it is essentially required to frame the eligibility criteria in terms of technical capacity, financial capacity and O&M experience and other financial covenants such as bid security, performance security etc, which are always in percentage terms of the estimate Total Project Cost,” it said.
The department rejected the Ministry of Civil Aviation’s argument that it was not possible to calculate the total project cost for the entire 50 years of lease.