There is a bit of a Jekyll and Hyde character in Kerala Chief Minister Pinarayi Vijayan. On the one hand, he rolls out the red carpet for investors from around the world in order to lure them to put their money in the Left-ruled state, while on the other, he has vehemently opposed the centre’s decision to hand over the management, operation and development of the Trivandrum International Airport to the Adani group. He seems to have made this a prestige issue and has started building resistance against the handover despite the fact that the Gujarat-based Adani group already operates in the state.
It is not only constructing the Vizhinjam International Sea Port in the state capital but is also working hand-in-hand with the state government to meet the deadline for its completion. “No authority can take the airport and hand it over to a private party, ignoring the opinion and demand of the state government. No private player can manage or develop the airport without the cooperation and support of the state government,” Vijayan had warned when the Airports Authority of India (AAI) made the handover announcement. It is a warning that none dare take lightly as the Communists have a track record of scaring off entrepreneurs and warding off investors over the past several decades, a primary cause for the industrial stagnation in the state.
On February 28, a Supreme Court bench headed by Chief Justice of India SA Bobde and comprising Justices BR Gavai and Surya Kant sent back to the Kerala High Court the petition of the state government challenging the proposal of the AAI to grant the Trivandrum airport’s management and operation rights to the Adani group which last won the bid. This came a day after the same bench had issued notice to the centre on the matter.
The state had filed the petition after the High Court had, on December 18, last year, dismissed its plea on grounds that the case involved a dispute between the centre and the state, and only the Supreme Court is empowered to hear such a matter under Article 131 of the Constitution.
The High Court held that the writ petition filed under Article 226 of the Constitution was not maintainable at the instance of the state government. A division bench comprising Chief Justice S Manikumar and Justice AM Shaffique observed that the petitions seeking to quash the Request for Proposal (RFP) were not only premature but also not maintainable
under Article 226 of the Constitution which empowers the High Court to issue directives.
While remanding the plea back to the High Court, the apex court said that the contention with regard to the applicability of Article 131, which relates to disputes between the centre and the states, would remain open for further hearing, if needed.
In its appeal filed in the apex court, the Kerala government said that the High Court had “failed to appreciate that Article 131 of the Constitution does not contemplate any private party being arrayed as a party on one side or other”. It contended that it was apprehending the possibility of privatisation of the airport and had approached the centre as early as 2003. The centre had then categorically stated there were no plans to hand over the airport to any private agency. It was confirmed that any proposal concerning privatisation would be made only in consultation with the state government, taking into account the state’s contribution.
The chief minister had also sent a letter on November 21, 2018, reiterating the necessity to continue the operation of the airport through a Special Purpose Vehicle (SPV) with the state as the chief promoter. However, the proposal was not considered and the centre proceeded in July 2019 with the decision to hand over the airport under the Public-Private Partnership (PPP) model. In November 2018, the centre decided to privatise six airports, including the Trivandrum airport, through the PPP model. In the past, airports in Delhi, Mumbai, Hyderabad and Bengaluru were handed over to private parties. However, most of the privatised airports are operated and managed by two companies—GMR Group and GVK. In order to break this monopoly, the centre allowed companies without any prior experience to bid for the projects.
Adani Enterprise Ltd, which had never operated or managed an airport, won the bids for five out of the six airports—outbidding established players in the sector like GVK and GMR. In the case of the Trivandrum airport, it also outbid the public sector Kerala State Industrial Development Corporation (KSIDC), which bid at Rs 135 per passenger as against Adani’s Rs 168. Upset with the outcome of the tendering process held by the AAI, Vijayan alleged that the Modi-led centre had played a hand in Adani’s victory. “Adani does not know how to operate airports, but he knows Prime Minister Narendra Modi well,” Vijayan said at a function in Kerala.
The chief minister’s scathing remark, experts agree, is partly true. It is argued that KSIDC could have secured the rights had it bid within the 10 percent range of the highest bidder. No other bidder got this concession. The KSIDC did as it represented the state government, expressing its desire to bid for the airport. However, unfortunately, its bid, which was Rs 33 less than the Adani bid of Rs 168, did not fall within the 10 percent range. The decision of AAI to prefer a private party, ignoring the offer of the Kerala government to operate and manage the airport at the same commercial rates as quoted by Adani Enterprises Ltd is “arbitrary, motivated by mala fides, and devoid of public interest,” the state argued.
It further stated that the Kerala government had experience in handling airports as the Cochin International Airport and Kannur International Airport were being operated and handled by companies in which the government is the majority stakeholder. The petition asserted that the state government was ready and willing to form an SPV on the lines of those operating the Cochin and Kannur airports and the same was communicated to the centre and AAI. The petition also stated that since Adani Enterprises Ltd had no experience in handling airports, AAI’s decision would not advance public interest.
The state government also presented the minutes of the second meeting of the Empowered Group of Secretaries (EGOS) held under the chairmanship of the NITI Aayog CEO on December 4, 2018, at New Delhi to discuss the proposal of the Kerala chief minister for de-linking Trivandrum airport from the PPP process involving six airports. The chief secretary of Kerala, while indicating the options of the Kerala government for the proposed PPP of the Trivandrum airport, mentioned that the existing airport had 628.59 acres of land, of which 330 acres were acquired by AAI directly, 258 acres were donated by the then Maharaja of Travancore for the airport and the remaining 41 acres were acquired by the Kerala government and transferred to AAI free of cost.
He argued that instead of privatisation, the airport should be developed in partnership with the state government. This was all the more needed since the state government had already shown its capability by developing Cochin and Kannur airports. At this stage, it was clarified to the state government that there was no outright sale of ownership to any PPP partner and the centre had approved the long-term leasing of the airport for operation, development and maintenance with the ownership being retained by AAl. The airport will come back to AAl on expiry of the lease.
The state government proposed that the Trivandrum airport be transferred to an SPV consisting of the Kerala government, with 26 percent holding; KSIDC, with 10 percent holding; technical partner with 7-10 percent holding; and National Investment and Infrastructure Fund, Kerala Infrastructure Fund Management Ltd and others with 54 percent holding. It also proposed that land be given on a nominal lease for 99 years.
Accordingly, the state government suggested the two options for the consideration of EGOS: AAl may transfer the airport assets and operation to the state government, which will thereafter form an SPV as mentioned above and tie-up with a strategic partner who is a proven “operator” at the international level. Alternatively, AAI may offer Right Of First Refusal (ROFR) to the SPV set up by the Kerala government and the SPV will participate in the bid along with a strategic partner who has experience in airport operations.
However, none of the proposals was even considered. Vijayan has warned the Adanis that they would not find the going easy when it came to operating the Trivandrum airport. He has also said that the other prestigious project of the Adanis, just a few miles from the concerned airport—the Vizhinjam International Port—could be in jeopardy. However, the state government’s stand has not gone down well among the airport users who feel that privatisation of the airport would eventually result in improving the airport infrastructure and bringing it on a par with other airports like Delhi’s Indira Gandhi International Airport and Mumbai’s Chhatrapati Shivaji International Airport.
Thiruvananthapuram Chamber of Commerce President SN Raghuchandran Nair said: “The Thiruvananthapuram airport has already been losing out on passenger traffic and the
amenities are not on a par with other airports. Thus there is no point in opposing handing over of the operations and development of the airport to a private party.” He said that it did not behove the chief minister to threaten the Adanis.
Ranjith Karthikeyan, a chartered accountant and the state convener of the Swadeshi Jagran Manch, said: “If the state government was against the privatisation policy, it should not have participated in the bidding process. They lost out, so they must accept it. The bottom line is better service for the flyers.”
Lead picture: commons.wikimedia.org