BOTH THE FINANCE Ministry and Niti Aayog had placed on file objections relating to the 2019 airport bidding course of, which had been over-ruled, clearing the best way for a clear sweep of six airports by the Ahmedabad-based Adani Group, data accessed by The Indian Express present.
This assumes significance provided that on August 31 final yr, the Adani Group signed another deal to acquire a controlling interest within the nation’s second largest airport, in Mumbai — the Airports Authority of India cleared that takeover on January 12.
Aviation is one sector the Competitors Fee of India has marked for overview of market dominance. From operating a non-public air-strip Finance, Niti Aayog raised crimson flags earlier than Adani’s clear sweep of 6 airports at Mundra, the Adani Group is at present the country’s largest private developer in terms of number of airports dealt with; and the second largest, when it comes to passenger visitors, over a span of simply 20 months.
The seven airports — Ahmedabad, Mangalore, Lucknow, Jaipur, Guwahati and Thiruvananthapuram, alongside Mumbai — collectively dealt with 7.90 crore passengers over the past fiscal (2019-20). This interprets into almost a fourth of the 34.10-crore home air passenger visitors.
Along with this, the Mundra airport, to the place business flights began in 2018 beneath the federal government’s regional connectivity scheme, has additionally been cleared to be transformed right into a full-fledged worldwide business airport. Following the GVK deal, Adani additionally has a controlling stake within the upcoming Greenfield airport in Navi Mumbai.
Data present that earlier than bids had been invited for the privatisation of the airports at Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram – the NDA authorities’s greatest privatisation programme to date — the Centre’s Public Non-public Partnership Appraisal Committee (PPPAC) mentioned the Civil Aviation Ministry’s proposal for the method on December 11, 2018.
Throughout the discussions, in keeping with minutes of the assembly accessed by The Indian Specific, a word from the Division of Financial Affairs mentioned: “These six airports initiatives are extremely capital-intensive initiatives, therefore it’s recommended to include the clause that no more than two airports might be awarded to the identical bidder duly factoring the excessive monetary threat and efficiency points. Awarding them to completely different firms would additionally facilitate yardstick competitors.”
The DEA’s word, dated December 10, 2018, to the PPPAC was submitted by a director within the division’s PPP cell.
To buttress its argument, the DEA cited the precedent of the Delhi and Mumbai airports, the place GMR, regardless of being the one certified bidder initially, was not given each the airports.It additionally referred to the privatisation of Delhi’s energy distribution. “Within the case of Delhi Energy Distribution privatisation, town was carved out into three zones and given to 2 firms,” it mentioned.
On the PPPAC assembly, in keeping with the minutes, there was no dialogue on this crimson flag raised by the DEA.
On the identical day because the DEA word, the NITI Aayog additionally raised a separate concern relating to the airport bidding. Stated a memo ready by the PPP vertical of the federal government’s key coverage think-tank: “A bidder missing ample technical capability can properly jeopardise the venture and compromise the standard of companies that the federal government is dedicated to offer”.
In response to this, the PPPAC, chaired by the then DEA Secretary SC Garg — the primary word of objection was, mockingly, from his division — mentioned that the EGoS (empowered group of secretaries) had already determined that “Prior airport expertise might neither be made a prerequisite for bidding, nor a post-bid requirement. It will enlarge the competitors for brownfield airports, that are already purposeful”.
Garg, who was transferred from the finance ministry to energy ministry in July 2019 and is now an advisor to Andhra Pradesh Chief Minister YS Jagan Mohan Reddy, didn’t reply to queries on the difficulty.
A yr after it gained the bids for the six airports, the Adani Group signed concession agreements for Ahmedabad, Mangaluru and Lucknow airports in February 2020.
A month later, the Adani Group invoked a Covid19-linked force majeure to hunt a delay till February 2021 in taking on the three airports from AAI, citing difficulties within the transitioning processes, significantly with regard to the airport workers. The AAI had requested the Group to take over the three airports by November 2020. Three of those six airports — Ahmedabad, Mangaluru and Lucknow — had been consequently handed over to the Adani Group in November 2020. The concession settlement for the opposite three airports — Jaipur, Guwahati and Thiruvananthapuram — had been signed between AAI and Adani Group in September.
Slightly below six months after it sought extra time from AAI citing the Covid-19 pandemic, the Adani Group went on to amass a controlling curiosity within the nation’s second largest airport in Mumbai and the upcoming Greenfield airport in Navi Mumbai from the Hyderabad-based GVK Group.
Throughout the bidding course of for the six AAI-run airports, the Adani Group outbid its rivals, together with skilled gamers reminiscent of GMR Group, Zurich Airport and Cochin Worldwide Airport Ltd along with different infrastructure gamers, by an enormous margin in every of the six bids, thereby successful the rights to function all six airports for a interval of fifty years.
It is a departure from the privatisation of Delhi and Mumbai airports, the place the concession interval was 30 years, along with the AAI holding 26% fairness in each these airports.
By the way, the federal government’s first goal handy the airports over to Adani Group in November 2019 coincided with a clearance from the Competitors Fee of India for the group’s acquisition of a minority stake in Mumbai airport from two South African firms Bidvest and Airports Firm of South Africa (ACSA).
In its order, the CCI identified the character of an airport’s “geographical monopoly” and mentioned that the geographic market, on this case, “seems to be as slim as every of the airport of the events (i.e. Adani and MIAL), as for offering or availing any companies on the airports, the service supplier/shopper must have entry to the amenities / premises of the involved airport”.
Establishing this, the CCI mentioned that presence of each the events in the identical line of enterprise was not more likely to elevate any competitors issues “as presently no different airport whereby Adani group has stake operates throughout the neighborhood of MIAL”.
Whilst CCI cleared the minority stake buy in Mumbai airport by the Adani Group, issues flagged by the Division of Financial Affairs a few single firm having a major maintain over a number of key infrastructure initiatives had been bolstered.
The GVK Group, which had signed an settlement with buyers together with India’s sovereign fund NIIF in October 2019, making an attempt to fend off Adani Group from stepping into Mumbai airport, gave in and agreed to cooperate with the Ahmedabad-based conglomerate in August 2020.
On August 31, GVK Group signed an settlement to let Adani Enterprises purchase its stake in Mumbai airport and Navi Mumbai airport.
In response to a notification by the CCI, the acquisition of MIAL by Adani Group was “deemed authorized”, provided that there was no overlap of companies supplied by both of the events within the related geographic market. The CCI notification was uploaded in September 2020. The AAI, which holds 26 per cent in MIAL, has additionally authorized Adani Group’s acquisition of the nation’s second largest airport.
By the way, only a month earlier than it determined to throw within the towel, GVK Group needed to face the warmth from a number of investigative businesses. On July 7, the Enforcement Directorate registered a criticism beneath Part 3 of the Prevention of Cash Laundering Act (PMLA) in opposition to the GVK Group and its chairman GVK Reddy, his son GV Sanjay Reddy and some others, primarily based on an FIR filed by CBI in opposition to them on June 27. The CBI alleged irregularities of over Rs 705 crore within the improvement of Mumbai worldwide airport.
E-mails despatched to the Adani Group and the Ministry of Civil Aviation didn’t elicit a response. Sources on the Adani Group mentioned the bidding was as per specified norms that adopted “due course of and due diligence.” Requested concerning the delay in taking on the three airports from AAI, they mentioned that was on account of “difficulties anticipated in transitioning of airport workers and personnel in the course of the pandemic”.