Picture Credit: Wire.in
On February 25, the Airports Authority of India (AAI) announced that the corporate group led by Gautam Adani had won the bids to upgrade and operate five airports in Ahmedabad, Jaipur, Thiruvananthapuram, Lucknow and Mangalore. The following day, the Adani group won the rights to develop a sixth airport, Guwahati, but the news was overshadowed by the Indian Air Force’s strikes against so-called terror camps in Pakistan.
In the days following the announcement, many objections were raised. The Communist Party of India (Marxist)-headed Left Democratic Front government in Kerala has gone to court. The Union Ministry of Civil Aviation has conceded in the Rajya Sabha, the upper house of Parliament, that the “prescribed procedure (of) public consultation or consultation with the state governments (which) are mandatory for leasing out AAI airports through (the) PPP (Public Private Partnership) mode” were not adhered to.
According to documents accessed by Newsclick, the Modi government violated various laws and procedures while arriving at its decision to privatise the six airports that are currently owned and operated by the AAI. In addition, the recommendations made by the Department of Economic Affairs (DEA) in the Ministry of Finance and the NITI (National Institution for Transforming India) Aayog on the technical, financial and legal aspects of the bidding process were ignored. Instead, conditions were set up that apparently favoured the Adani group.
Towards the fag end of its tenure, the Manmohan Singh-led United Progressive Alliance government had considered privatisation of airports in Chennai, Kolkata, Ahmedabad, Lucknow and Jaipur, but the proposal never came to fruition.
After the Modi government came to power, the proposal was taken up again. The AAI invited bids to upgrade these airports in the PPP mode in December 2014. At that juncture, the AAI’s employees’ unions vehemently opposed the move pointing out that the government had already invested a massive Rs 2,300 crore in modernising the Chennai and Kolkata airports in recent years. The unions also pointed out that each of the airports proposed for privatisation had either added new facilities or were being refurbished at that time at the expense of the exchequer. Thus, it was argued that “handing over” the airports to private firms for development would imply bestowing undue favours on particular private companies.
It was reported in the Economic Times in April 2018 that the Prime Minister’s Office (PMO) had “directed” the DEA in the Ministry of Finance and NITI Aayog to prepare a model mechanism for removing certain airports out of the control of the AAI and handing these over to private players.
This was the first indication that despite the objections of AAI employees, the Modi government was adamant about going ahead with the airport privatisation plan. Further, the Economic Times report made clear that despite the existence of the Ministry of Civil Aviation (MoCA), the initiative was being led by the PMO.
In the monsoon session of Parliament, the Modi government tried to amend the Airports Economic Regulatory Authority of India Act, 2008 (AERA Act, 2008). The AERA is a regulatory body, set up in 2008, that is intended to provide a level playing field among different categories of airports in the country. An analysis by PRS Legislative Research explains the objectives of the AERA in simple terms:
“AERA regulates tariffs and other charges (development fee and passenger service fee) for aeronautical services (air traffic management, landing and parking of aircraft, ground handling services) at major airports.
The bill introduced by the government wanted to completely change the way tariffs were determined. The bill proposed that the AERA would no longer determine tariffs, tariff structures and airport development fees, in cases where these were a part of bid documents on the basis of which private players would be awarded rights to oversee airport operations. Hence, the amendment (if it had gone through) would have weakened the authority of the AERA and enabled private firms to exercise monopoly control over charges that are levied at airports.
The government failed to pass the bill in both the monsoon session and the winter session of Parliament. It was reported that the government had considered promulgating an ordinance, but this did not happen.
With the bill still pending in Parliament, the government invited bids for upgradation of the six airports on December 14, 2018. In apparent violation of the extant law and without changing the AERA Act, private bidders were invited to declare tariffs and passenger charges on the basis of which their bids would be evaluated thereby circumventing the regulatory authority’s powers to determine such charges.
As we shall now see, this decision was taken extremely expeditiously without considering caveats and checks suggested by the NITI Aayog and the DEA in the Ministry of Finance.
On November 8, 2018, a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi gave its “in-principle” approval to a proposal by the PMO to lease six airports for development in the PPP mode.
From here onwards, the decision-making process moved ahead at a lightning speed.
The EGoS met on November 17 and submitted its report on December 4, less than a month after the approval of the Cabinet. Six days later, on December 10, appraisal notes prepared by the NITI Aayog and the DEA were forwarded to the NITI Aayog CEO, the Secretaries to the Department of Expenditure in the Finance Ministry and the Department of Legal Affairs in the Ministry of Law and Justice.
In its appraisal note, the DEA raised several issues. It stated that neither the AAI nor the MoCA had submitted details of the break-up of project costs to the PPPAC for its consideration. Neither had they provided KPIs or key performance indicators, development plans or details of capital works in progress that had been undertaken by the AAI and which the new concessionaire would be required to complete. It was pointed out that without these details comparing technical proposals submitted by bidders would be very difficult.