Govt. left it to Adani to assess total project cost of airports it runs under PPP
New Delhi: The government left it to Adani Enterprises Limited (AEL), a company which is in the eye of a storm following charges of alleged manipulations and over-pricing of stocks by American short seller Hindenburg, to assess the total project cost (TPC) after AEL won the Airport Authority of India’s global tender to modernise and operate six airports under Public Private Partnership (PPP) for a period of 50 years in 2020-21.
A suggestion, however, was made at the Public-Private Partnership Appraisal Committee (PPPAC) that TPC should be estimated upfront, Minister of State for Civil Aviation, General Dr V. K. Singh (Retired) stated in a written reply to a question in Rajya Sabha today. But ultimately it was decided that it was not possible to work out the TPC over the proposed concession period of 50 years as it would depend on the basis of demand to be assessed by the concessionaire (read AEL). It was also noted by the PPPAC that “there is no one size fits all strategy and termination payment have been taken care of in a unique manner and not in terms of TPC”.
It may be mentioned that the Airports Authority of India (AAI) had awarded six airports namely Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru to AEL for Operations, Management and Development under Public Private Partnership (PPP) for a period of 50 years in the year 2020-2021.
In order to ensure more competition and to give more flexibility to bidders, the following conditions among others were stipulated:
- No prior airport experience
- No cap on the number of airports for which a participating entity could bid for
- Per Passenger Fee as bidding parameter instead of revenue sharing.
“The terms and conditions of the transaction of PPP of six airports were decided by the Empowered Group of Secretaries (EGoS) chaired by CEO, NITI Aayog which inter-alia comprised Secretaries of Ministry of Finance (Department of Economic Affairs and Department of Expenditure) also. Therefore, the Ministry of Finance and NITI Aayog were part of the decision-making process and the EGoS finalised the contours of the bidding process for PPP of six airports,” General Singh stated.
After winning the bid in early 2020, AEL set up a subsidiary Adani Airports Ltd to look after its airport business.
Parliament was told by the MoS that the concessionaires were selected through a competitive bidding process by evaluating the technical and financial capacity of the bidders. “The decision of EGoS was considered and after detailed deliberation on relevant issues, Public Private Partnership Appraisal Committee (PPPAC) recommended the proposal,” he disclosed.
It may be mentioned that AEL operates 7 out of the 13 airports that are being operated under the PPP mode. Among these 13 airports, 8 belong to the AAI and the remaining 5 belong to the respective state governments. These 13 PPP airports are Ahmedabad, Bengaluru, Cochin, Delhi, Durgapur, Guwahati, Hyderabad, Jaipur, Kannur, Lucknow, Mangaluru, Mumbai, and Thiruvananthapuram.
As per National Monetisation Pipeline (NMP), 25 airports of AAI have been earmarked for leasing over the 2022-25 period.
The criteria adopted for the Monetisation of airport assets under NMP are as follows:
- Airports having annual traffic above the threshold of 0.4 million passengers (in 2019 and 2020);
- Airports with a sizeable ongoing/proposed capex plan as per the National Infrastructure Pipeline (NIP).
In December 2022, General Singh told the Rajya Sabha that the implementation of PPP at airports “helped AAI in enhancing its revenues and focusing on developing airports at Tier-II and Tier-III cities”.
– global bihari bureau