Privatised airports: Chhattisgarh and Jharkhand back TN on revenue share

Tamil Nadu’s proposal is stated in its new industrial policy. “This is very logical. When you give it (land) to a Government of India enterprise, you are becoming a partner and that is your asset. When that asset is being transferred to another party, and especially when that party is a private party — only one partner cannot get the share,” T S Singh Deo, Chhattisgarh’s Minister of Panchayat and Rural Development, Health and Family Welfare and Commercial Tax, told The Indian Express.

“The state government is also a stakeholder and should get its share depending on the capital that was put up at the time of constitution of this project. That is absolutely how things should be,” he said.

Speaking to The Indian Express, Jharkhand’s Finance Minister Rameshwar Oraon said: “The land belongs to the state and the activity also takes place in the state…so in such a situation, if we get the revenue share, our income will also rise. We will support such a demand. All land belongs to the government, it belongs to the state, we have given it to the government…they should share revenue with the state government in case it is privatised.”

However, the Centre is of the view that whenever a new airport is built or an existing one upgraded, the state derives economic benefits from the infrastructure.

“One is the direct economic activity that benefits the entire state. Even within the region where the airport is being developed, there are catchment areas that reap benefits, which the state gets. The land value gets enhanced and it translates into better collections of stamp duties, etc,” a senior official, who closely works on the Centre’s privatisation plans, told The Indian Express.

“For private companies, if such demands result in an additional outgo being created in addition to what they share with the AAI, then it does affect the attractiveness of the project,” the official said.

The AAI, Ministry of Civil Aviation and Niti Aayog did not respond to queries from The Indian Express.

According to the National Monetization Pipeline, 25 airports run by Airports Authority of India (AAI) have been earmarked for asset monetisation by 2025: Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, Raipur, Kozhikode, Coimbatore, Nagpur, Patna, Madurai, Surat, Ranchi, Jodhpur, Chennai, Vijayawada, Vadodara, Bhopal, Tirupati, Hubli, Imphal, Agartala, Udaipur, Dehradun and Rajahmundry.

The Centre has so far privatised six airports, with Ahmedabad, Lucknow, Guwahati, Thiruvananthapuram, Jaipur and Mangaluru being leased out to Adani Enterprises for 50 years.

Typically, state governments acquire land parcels and transfer them to AAI on a 99-year lease for a sum of Re 1, when a new airport is being built or an existing airport is expanded by AAI. The land is acquired, vacated and then transferred to AAI.

In its new industrial policy released last week, the Tamil Nadu government stated: “In the present projects, the land cost forms the major share of the overall project cost. The Airports Authority of India (AAI) is actively pursuing the policy of privatization of Airports. Therefore, a decision has been taken that in the event, the State Government acquires and transfers the lands to AAI free of cost and the AAI or Government of India transfer the assets to a third party, the value realized/revenue accrued thereby, must be proportionately shared with the State Government reflecting the huge investment in land being made by the State Government”.

The policy stated: “It has also been decided that at the appropriate stage, it has to be ensured that the value of the lands should be converted as equity of the State Government in the Airport Project Special Purpose Vehicle or an appropriate revenue sharing arrangement proportionate to investment is arrived at before any asset transfer takes place to a private party.”