Why did Kerala govt agree to take part in TVM airport bid? Shashi Tharoor interview

Tharoor says Kerala could have opted-out of the privatisation process, like the West Bengal and TN governments did.

The Kerala government and the Centre is at loggerheads once again after the cabinet decided to hand over operations of the Thiruvananthapuram International airport to the Adani Enterprises for a period of 50 years. The tussle between Adani and Kerala CM Pinarayi Vijayan began back in February 2019, when Adani won bids to operate five airports in India which the centre wished to privatise. One of them was the Thiruvananthapuram airport, the bid for which was also contested by the KSIDC, a Kerala-state owned enterprise. 

Though all political parties in the state (other than the BJP) have supported the government in opposing Adani’s bid, Congress leader and Thiruvananthapuram MP Shashi Tharoor has maintained that there is nothing controversial about the bid and what the airport needs to be privatised. The stand of the Congress party however is different and TNM asked the MP a few questions via email on the controversy.

1. You have consistently maintained that you are fine with the current bidding process. The Congress party has however taken a different stand and opposed Adani’s bid for the airport. 

I took my stand when the issue first arose in 2018 and I have not deviated from it. It is not a new stand. In terms of the Congress and privatisation let us not forget that the Congress party initiated the first Public Private Partnership (PPP) airport projects in India in 2006, in Bombay and Delhi. Their success is evident for all to see and led the UPA to involve private operators in many other airports in the country. What is going on now is not a radical departure from established past practices of the UPA.

Two things should also be made clear:  first, the BJP announced the tender, not Congress, and the Government of Kerala chose to participate in the bidding, under rules they agreed to. After losing in the bid process, they started questioning the very game they had chosen to play. Ask them why they joined the process? Second, whoever the winning private party is, the ownership of land and airport, as well as the responsibilities of ATC (Air Traffic Control), Security, Customs and Immigration still remain with the Government agencies. No one is “giving away” the airport, it is an operating contract, that’s all.

2. You have said that the Kerala govt has been defeated in a bidding process that they participated in and if they had any opposition, they should have raised it then. However, the Kerala govt says they were not aware that even companies with no knowledge of airport management are allowed to place bids.

I do not personally buy the state government’s claim. After all, KSIDC (Kerala State Industrial Development Corporation), through which the state government developed its special purpose vehicle (SPV) and participated in the bid, is a consortium of state-owned companies and has no experience of airport management either.

To, therefore, participate in the same bidding process as other competitors, be subject to the same rules and conditions as the others,  and then cry foul play is not an explanation either I or the people I represent are satisfied with. But to return to the point about experience: Did GMR or GVK have prior experience in airport management when they started off in Mumbai and New Delhi? Or for that matter, did the Kerala government have any prior experience when it came to Cochin? Despite whatever may be said about the lack of experience, the results are there for all to see.

3. The CM has alleged that the Civil Aviation Ministry went back on its assurance that the state govt’s contributions to the development of the Thiruvananthapuram airport would be considered as and when induction of a private player is considered for operating the airport. Is this argument justified? 

You will have to ask the Chief Minister and the Union Minister for Civil Aviation on this specific point. The latter has already posted a detailed response on social media and his response seems to suggest that the state government’s version of events is not accurate. 

4. The Kerala govt has had success in management and operation of airports such as Kochi and Kannur in PPP models. In this case, Adani Enterprises has no prior experience of running and managing airports. Do you reckon that it would be in public interest to reconsider the Centre’s decision to lease out Tvm airport operations to Adani?

I believe any private operator, whose sole commitment is the development of our airport is in the best interest of Thiruvananthapuram, because they would naturally have a vested interest in improving the airport in terms of connectivity and facilities,  even for the sole reason of protecting and consolidating their own commercial interests.

If the state government took over, they would have likely handed over the day to day management of the airport to a body like CIAL (Cochin International Airport Ltd), an entity that has prior experience in managing airports. Now logically how reasonable would it be to expect CIAL to put their best foot forward in developing the airport that is their direct competitor in the state? 

5. A section has argued that the contract was won by Adani after bidding and hence deserves to operate the airport. Another section argues that the  SPV in which the state govt owns a major stake must be given the right to first refusal in order to match the highest bidder’s quote. Where do you stand on these arguments?

Look one needs to understand that the state government had multiple options before it. For one it could have chosen to opt-out of the privatisation process altogether, like the West Bengal and Tamil Nadu government did when faced with the same situation with their respective airports in 2006, a time when UPA enjoyed the support of the Left parties. In fact, when AAI had put the Chennai airport up for privatisation, the state assembly actually passed a special resolution against the move, the employees union moved the High Court to get a stay order and ultimately the plans to privatise were not taken forward. Another option is that they could have worked out a deal with AAI where they could have taken over the management of the airport on the basis of a revenue-sharing agreement. Instead, the state government went ahead and participated in the bidding process, even with the advantage of slightly more beneficial terms such as the  Right of First Refusal (RFR) option which would allow the state to retain ownership of the airport if its bid came within 10% of the highest bidder. In spite of these clauses the state only put up a bid of Rs 135, which was almost 20% (19.6%) less than the Adani Group’s bid of Rs 168. To complain now brings us back to the original issue: If you don’t want to accept the result why did you agree to play the game? 

It is also worth addressing the misconception that the state government will remain the majority stakeholder in the SPV. Take the case of CIAL where the state holds about 32% and the remaining shares held by other parties. A similar case can be found with Kannur International Airport Ltd (KIAL) which operates the Kannur airport. Even in the expression of interest that the state government had floated seeking partners for their SPV for the bid for Thiruvananthapuram airport, the state itself was only required to hold a direct stake of 26%.

Source: https://www.thenewsminute.com/article/why-did-kerala-govt-agree-take-part-tvm-airport-bid-shashi-tharoor-interview-131373