Monday, January 14, 2019

Kerala writes to Airport Authority of India seeking to withdraw addendum

Thiruvananthapuram: The state government has asked the Centre to reconsider the addendum issued by the Airport Authority of India (AAI) in connection with privatisation of Trivandrum airport. The addendum issued by the AAI  clarified Kerala will have to take part in the bidding as per the request for proposal (RFP) issued by the AAI and can have a Right of First Refusal only if its bid is matched within a range of 10 per cent of the highest bid.

The sources in the Chief Minister’s office made it clear that a formal letter has been sent to the AAI requesting to withdraw the addendum, which is against the interest of the state. However, the state is simultaneously moving ahead with the process of taking part in the bidding in case the Centre turns down the state’s request.

Meanwhile, the state government would pay a sum of `1.45 crore as consultancy fee to the Netherlands-based KPMG, which was roped in by the state government as a consultant for rebuilding the state free-of-cost, for assisting the consortium of companies formed by the state to bid for the Trivandrum International Airport, at a time when there is only little chance for the state to win the bid. An order issued by the state government said in view of tight time schedule for the bidding, it was decided to invite quotes from major consultants in the field.

High-level committee headed by the Chief Secretary scrutinised the quotes received in details and KPMG which quoted `1.45 crore was selected as general consultant (technical & financial consultant). KSIDC is authorised to execute agreement with the KPMG at the earliest and start the process for participation in the bid. According to experts, the state is almost gambling for the airport by competing with global giants after forming a fledgling consortium of companies.

The KPMG’s role involved suggesting a rate to be quoted for per domestic passenger by the state in the bidding after analysing the traffic data and business of the airport in the past, present and future.
The rate it to be suggested should come within the 10 per cent range of highest bid, if only the state will have the chances to win the bid by using ‘right for first refusal’ provision granted by the Centre, said Jacob K Philip, an aviation expert.
 Further, the consultant would help the state to strengthen the consortium of companies by including international partners. So winning the bid by competing with global giants, who have enough expertise and experience, is almost like a gambling as there are a lot of provisions in favour of private players. In the last time, the RFP has suggested revenue sharing model for the private players who won the bid. They will have to pay a stipulated percentage of the total revenue with the Airport Authority of India.
14/01/19 DhineshKallungal/New Indian Express