Finance and Niti had raised purple flags earlier than Adani’s clear sweep of six airports

BOTH THE FINANCE Ministry and Niti Aayog had placed on report objections concerning the 2019 airport bidding course of, which have been over-ruled, clearing the best way for a clear sweep of six airports by the Ahmedabad-based Adani Group, data accessed by The Indian Express present.
This assumes significance provided that on August 31 final yr, the Adani Group signed one other deal to accumulate a controlling curiosity within the nation’s second largest airport, in Mumbai — the Airports Authority of India cleared that takeover on January 12.
Aviation is one sector the Competition Commission of India has marked for evaluation of market dominance. From operating a personal air-strip Finance, Niti Aayog raised purple flags earlier than Adani’s clear sweep of 6 airports at Mundra, the Adani Group is in the present day the nation’s largest personal developer when it comes to variety of airports dealt with; and the second largest, when it comes to passenger visitors, over a span of simply 20 months.
The seven airports — Ahmedabad, Mangalore, Lucknow, Jaipur, Guwahati and Thiruvananthapuram, alongside Mumbai — collectively dealt with 7.90 crore passengers over the past fiscal (2019-20). This interprets into practically a fourth of the 34.10-crore home air passenger visitors.
In addition to this, the Mundra airport, to the place business flights began in 2018 below the federal government’s regional connectivity scheme, has additionally been cleared to be transformed right into a full-fledged worldwide business airport. Following the GVK deal, Adani additionally has a controlling stake within the upcoming Greenfield airport in Navi Mumbai.Records present that earlier than bids have been invited for the privatisation of the airports at Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram – the NDA authorities’s largest privatisation programme to date — the Centre’s Public Private Partnership Appraisal Committee (PPPAC) mentioned the Civil Aviation Ministry’s proposal for the method on December 11, 2018.
During the discussions, in keeping with minutes of the assembly accessed by The Indian Express, a notice from the Department of Economic Affairs stated: “These six airports projects are highly capital-intensive projects, hence it is suggested to incorporate the clause that not more than two airports will be awarded to the same bidder duly factoring the high financial risk and performance issues. Awarding them to different companies would also facilitate yardstick competition.”
The DEA’s notice, dated December 10, 2018, to the PPPAC was submitted by a director within the division’s PPP cell.
To buttress its argument, the DEA cited the precedent of the Delhi and Mumbai airports, the place GMR, regardless of being the one certified bidder initially, was not given each the airports.It additionally referred to the privatisation of Delhi’s energy distribution. “In the case of Delhi Power Distribution privatisation, the city was carved out into three zones and given to two companies,” it stated.
At the PPPAC assembly, in keeping with the minutes, there was no dialogue on this purple flag raised by the DEA.
On the identical day because the DEA notice, the NITI Aayog additionally raised a separate concern concerning the airport bidding. Said a memo ready by the PPP vertical of the federal government’s key coverage think-tank: “A bidder lacking sufficient technical capacity can well jeopardise the project and compromise the quality of services that the government is committed to provide”.
In response to this, the PPPAC, chaired by the then DEA Secretary SC Garg — the primary notice of objection was, satirically, from his division — stated that the EGoS (empowered group of secretaries) had already determined that “Prior airport experience may neither be made a prerequisite for bidding, nor a post-bid requirement. This will enlarge the competition for brownfield airports, which are already functional”.
Garg, who was transferred from the finance ministry to energy ministry in July 2019 and is now an advisor to Andhra Pradesh Chief Minister YS Jagan Mohan Reddy, didn’t reply to queries on the difficulty.
A yr after it gained the bids for the six airports, the Adani Group signed concession agreements for Ahmedabad, Mangaluru and Lucknow airports in February 2020.
A month later, the Adani Group invoked a Covid19-linked pressure majeure to hunt a delay till February 2021 in taking on the three airports from AAI, citing difficulties within the transitioning processes, notably with regard to the airport workers. The AAI had requested the Group to take over the three airports by November 2020. Three of those six airports — Ahmedabad, Mangaluru and Lucknow — have been consequently handed over to the Adani Group in November 2020. The concession settlement for the opposite three airports — Jaipur, Guwahati and Thiruvananthapuram — have been signed between AAI and Adani Group in September.
Just below six months after it sought extra time from AAI citing the Covid-19 pandemic, the Adani Group went on to accumulate a controlling curiosity within the nation’s second largest airport in Mumbai and the upcoming Greenfield airport in Navi Mumbai from the Hyderabad-based GVK Group.
During the bidding course of for the six AAI-run airports, the Adani Group outbid its rivals, together with skilled gamers comparable to GMR Group, Zurich Airport and Cochin International Airport Ltd along with different infrastructure gamers, by an enormous margin in every of the six bids, thereby profitable the rights to function all six airports for a interval of fifty years.
This is a departure from the privatisation of Delhi and Mumbai airports, the place the concession interval was 30 years, along with the AAI holding 26% fairness in each these airports.
Incidentally, the federal government’s first goal handy the airports over to Adani Group in November 2019 coincided with a clearance from the Competition Commission of India for the group’s acquisition of a minority stake in Mumbai airport from two South African firms Bidvest and Airports Company of South Africa (ACSA).
In its order, the CCI identified the character of an airport’s “geographical monopoly” and stated that the geographic market, on this case, “appears to be as narrow as each of the airport of the parties (i.e. Adani and MIAL), as for providing or availing any services at the airports, the service provider/consumer needs to have access to the facilities / premises of the concerned airport”.
Establishing this, the CCI stated that presence of each the events in the identical line of enterprise was not more likely to elevate any competitors issues “as presently no other airport wherein Adani group has stake operates within the vicinity of MIAL”.
Even as CCI cleared the minority stake buy in Mumbai airport by the Adani Group, issues flagged by the Department of Economic Affairs a few single firm having a major maintain over a number of key infrastructure tasks have been bolstered.
The GVK Group, which had signed an settlement with buyers together with India’s sovereign fund NIIF in October 2019, attempting to fend off Adani Group from stepping into Mumbai airport, gave in and agreed to cooperate with the Ahmedabad-based conglomerate in August 2020.
On August 31, GVK Group signed an settlement to let Adani Enterprises purchase its stake in Mumbai airport and Navi Mumbai airport.
According to a notification by the CCI, the acquisition of MIAL by Adani Group was “deemed approved”, provided that there was no overlap of companies provided by both of the events within the related geographic market. The CCI notification was uploaded in September 2020. The AAI, which holds 26 per cent in MIAL, has additionally accepted Adani Group’s acquisition of the nation’s second largest airport.

Incidentally, only a month earlier than it determined to throw within the towel, GVK Group needed to face the warmth from a number of investigative companies. On July 7, the Enforcement Directorate registered a criticism below Section 3 of the Prevention of Money Laundering Act (PMLA) towards the GVK Group and its chairman GVK Reddy, his son GV Sanjay Reddy and some others, primarily based on an FIR filed by CBI towards them on June 27. The CBI alleged irregularities of over Rs 705 crore within the growth of Mumbai worldwide airport.
E-mails despatched to the Adani Group and the Ministry of Civil Aviation didn’t elicit a response. Sources on the Adani Group stated the bidding was as per specified norms that adopted “due process and due diligence.” Asked concerning the delay in taking on the three airports from AAI, they stated that was on account of “difficulties anticipated in transitioning of airport staff and personnel in the middle of the pandemic”.