Friday, January 22, 2021

Monopolising airports poses financial risk: Experts

Hyderabad: Adani Enterprises has signed concession agreements with the Airports Authority of India (AAI) for all six airports that had been put up for privatisation. The company won the bids in February 2019, despite the Finance Ministry’s Department of Economic Affairs (DEA) and Niti Aayog objecting the bidding process that allowed one player to win all airports, in a sign of crony capitalism.

Experts say this can pose financial risk as the operator’s financial health and the state of the aviation sector will impact all the airports under one company’s management, leaving no room for de-risking it. The International Air Transport Association (IATA) in its research showed that airlines are expected to lose $84.3 billion in 2020. Such scenario will continue to impact the revenues of airports.

Adani had emerged as the L1 (lowest) bidder for AAI-operated airports in Ahmedabad, Guwahati, Jaipur, Lucknow, Mangalore and Thiruvananthapuram in 2019. The group won the concession rights for these airports for 50 years, surpassing contenders such as GMR in the bidding process.

Reports indicate that prior to the bidding, the DEA had suggested in a note that not more than two airports be given to a single bidder due to the financial risk involved. This note, dated December 10, 2018 was not even discussed at the Public Private Partnership Appraisal Committee (PPAC) meeting held on December 11.

Following the Cabinet’s in-principle nod in November 2018 to privatise airports, the PPAC met on December 11 to recommend the proposal for final approval. Three days later, the AAI floated a tender for operation, management and development of the six airports.

DEA noted that these six airport projects are highly capital-intensive and hence suggested to incorporate the clause that not more than two airports will be awarded to the same bidder taking into account the high financial risk. Awarding them to different companies would facilitate yardstick competition.

22/01/21 Telangana Today

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