Privatisation: Kerala govt is set to make a dash for Trivandrum airport

Thiruvananthapuram: The Communist Party of India (Marxist)-led Left Democratic Front (LDF) government in Kerala has chosen Kerala State Industrial Development Corporation Ltd (KSIDC) to apply a tender to stave off the Centre's plan to privatise Thiruvananthapuram airport. As was reported by PSU Watch earlier, Thiruvananthapuram airport in Kerala has in recent times been stuck in the midst of a pitched political battle between the Bharatiya Janata Party (BJP) government at the Centre and the Left government in Kerala.

To stall the privatisation of the airport and avail the benefit of the right of first refusal (RoFR) granted to state-run entities in government auctions, the state government has picked KSIDC to apply on the tender. The tender will also enable the Pinarayi Vijayan-led government to pass the eligibility criteria set by the Airports Authority of India (AAI) for bidders through the financial and technical muscle of a broad range of state-run entities under its control, Kerala government officials said. The Kerala government has also roped in KPMG and Amarchand Mangaldas to help put in a bid for the airport in the city.

Kerala govt to form Special Purpose Vehicle

The state government is in the process of forming a Special Purpose Vehicle (SPV) — 'Trivandrum International Airport Ltd'— to meet the terms of the tender conditions. The state government entities will initially own the SPV fully. "If successful in winning the tender, we will induct 1-2 strategic partners by diluting up to 49 per cent stake in the SPV," the official said. "Due to the extremely short timeline in submitting a bid, we are yet to identify the strategic partners which, in any case, is a time-consuming process," the official added. The Kerala government initially told the Centre of its desire to take over and run the airport on nomination basis (without a tender).

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Centre rejects proposal

The Centre declined the state government's proposal and instead insisted that they use the RoFR granted to state-owned agencies in government tenders. This enables them to match and take over the airport if its bid came within ten percent of the price quoted by the highest bidder.

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