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Explained: What is the row over the takeover of Thiruvananthapuram airport by Adani Group?

The Centre has decided to lease out the operation, management and development of the airport to Adani Enterprises for a period of 50 years — a move being vehemently opposed by the state government.

Written by Pranav Mukul , Edited by Explained Desk | New Delhi | Updated: August 24, 2020 9:02:57 am
thiruvananthapuram, thiruvananthapuram airport, privatisation of thiruvananthapuram airport, airport privatisation, adani thiruvananthapuram airport, indian expressAn Air India aircraft at the Thiruvananthapuram airport in Kerala. (PTI Photo/File)

A political slugfest has erupted between the Centre and the Kerala state government over the privatisation of Thiruvananthapuram airport in Kerala. The Centre has decided to lease out the operation, management and development of the airport to Adani Enterprises for a period of 50 years — a move being vehemently opposed by the state government.

Why is the airport being handed over to Adani Enterprises?

The Centre decided to lease out six airports in the country — Thiruvananthapuram, Ahmedabad, Jaipur, Lucknow, Mangaluru and Guwahati — through public-private partnership (PPP) to Adani Enterprises last year after the company emerged the highest bidder in a global competitive bidding process. Adani Enterprises outbid eight other companies in the process, including GMR Airports, Kerala State Industrial Development Corporation (KSIDC), Cochin International Airport Ltd and Zurich Airport, to win the rights to manage the six of these airports in February 2019.

According to the Ministry of Civil Aviation, other airports like Delhi, Mumbai, Hyderabad, Bengaluru that have been leased out on a PPP basis have witnessed creation of world-class infrastructure in addition to helping Airports Authority of India (AAI) in enhancing its revenues.

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What is Kerala government’s contention?

Kerala’s reservations date back to 2003, when it requested the Centre to include the state government whenever a decision to induct the private sector for managing the Thiruvananthapuram airport was taken. The Centre, at the time, assured the state that it would be consulted during the privatisation process.

Shortly after the Union Cabinet approved leasing out the airport to Adani, Chief Minister Pinarayi Vijayan wrote to 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 for implementation of the decision. Kerala also said its claim to manage the Thiruvananthapuram airport was rejected by the Centre even after it offered to match Adani’s bid.

How has the Centre responded?

The Centre has said that after various discussions and recommendations of an Empowered Group of Secretaries, it was decided, in consultation with the state government, that the latter would participate in the bidding process 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 fell within 10 per cent range of the top bidder. However, according to the Centre, KSIDC’s bid was 19.64 per cent lower than Adani Enterprises’ making it ineligible to exercise the RoFR provision.

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What is the recourse being taken by the state?

On Thursday, a day after the Union Cabinet’s go-ahead to lease the airport out to Adani, an all-party meeting of the state opposed the Centre’s decision and sought revocation of privatisation of the Thiruvananthapuram airport to Adani.

Further, a petition was filed in the Kerala High Court last year, which was dismissed in December following which a special leave petition was filed in the Supreme Court. While both the High Court and the apex court did not grant a stay on the privatisation process. The Supreme Court remitted the matter back to the HC, which is yet to give its final decision.

The Centre has said the Union Cabinet’s approval was subject to the outcome of the writ petition. It also said that if the petitioners succeed and outcome of litigation leads to annulment or cancellation of bidding process, then Adani will handover the possession of airport back to AAI, which will be entitled to refund of the amount paid and additional investments made in the assets.

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