Experience Criteria Restricted Us From Getting Competitive Bids: AAI

In the recent privatisation bid for six Airports Authority of India (AAI)-run airports in major state capitals, which was won by ports major Adani Enterprises, the government for the first time received bids from foreign fund managers, Board Member (Finance) S Suresh has told NDTV.

Last week, Adani Enterprises bagged contracts for operating, maintaining and upgrading six airports in a public-private partnership with the AAI for a period of fifty years.

With the six-airport deal, Adani will foray into the airports space. It had bid aggressively for the airports, facing established players such as GMR. With a single swoop, it is set to become the third-largest airports operator in the country, according to research firm ICRA.

"We wanted to bring in more foreign airport operators, but given the business conditions here they weren't very keen to align and come in as second fiddles. This time we even had pension funds to show interest in the airports" Mr Suresh said.

The airports include five in state capitals - Lucknow, Ahmedabad, Jaipur, Thiruvananthapuram and Guwahati.

The fact that experience in the airports space had been key to allotment of these projects, but was dropped as criteria in this privatisation process, has raised questions from rivals and opposition parties.

A CPM leader from Kerala has called for a probe into the bidding process after Kerala Chief Minister Pinarayi Vijayan raised objections to Adani being awarded the Thiruvananthapuram airport despite lack of experience in the airport operations space.

The government says it was essential to remove the experience criteria to receive competitive bids.

The board member (finance) in the AAI told NDTV, "The per pax concession fee model ensured substantial competitive bids. By having a restrictive condition of airport experience we saw it wasn't bringing competitiveness."

Of late, bids for greenfield airports were not competitive and for getting the actual value of asset, condition of an essential airport experience would've been a restrictive factor, Mr Suresh said.

"For Ahmedabad for example, GMR only quoted Rs 85 (per passenger), Adani quoted Rs 177, NIIF quoted Rs 146 and AMP Capital quoted Rs 127; it was quite competitive."

Experience is considered important for greenfield projects. But the six airports the government is privatising are brownfield project, he said.

"Adani has been aggressive because the company wanted to enter the airports space, so they put in the highest bids and got the deal. There was competition," he added.

Asked whether the government will incorporate a review mechanism in the contract with Adani, Mr Suresh said there are enough conditions in the contract and it will not be a cakewalk for Adani Enterprises. "They'll have to fulfil stringent conditions and meet international standards," he said.

On the allegation that the Adani group's proximity with the government helped it get the airports deal, he said, there was no infirmity in the bidding process, if at all there was a point of objection. The courts have cleared the process. None of the political parties are complaining either.

"I disagree that Adani got the airports because of political backing. They're an aggressive party who bid aggressively and won," he added.

In an official statement, Adani said: "The Indian aviation industry is a growing sector with the government's continuing focus on creating world-class airports. For the Adani group, initiatives that contribute to nation-building remain a focus area. We would be aiming to scale up infrastructure to bring these facilities on-par with global standards."

The bids are now pending before the Cabinet, and the contract will be awarded to Adani only after they are accepted by the government.

Mr Suresh said the AAI will look at longer timelines next time on to attract more foreign airport operators. Paris's Charles de Gaulle airport had also expressed interest in the bidding, but couldn't because of the tight timeline.

He added that the experiment by bringing the foreign fund managers has proved beneficiary, because they gave the toughest fight in the bidding process.

GMR and GVK declined to comment on the matter.