New Delhi: As the deadline to close the privatisation of six airports approaches, Thiruvananthapuram airport in Kerala is emerging as the site of a pitched political battle between the Bharatiya Janata Party (BJP) government at the Centre and the Left government in Kerala. While the Centre is trying to put the Thiruvananthapuram airport up for privatisation, Kerala state government led by the Left Democratic Front (LDF) is trying to prevail on the Centre to stall the plan. Apart from an aversion to privatisation, the Kerala state government is opposed to the idea of the privatisation of Thiruvananthapuram airport because according to them, it comes at the wrong time. The LDF government has alleged that the land for the airport was given by the state government to the AAI many years ago, and hence it must be allowed to run the airport. With the Sabrimala issue still seething and after Prime Minister Narendra Modi’s last visit to the state where he targeted the Left government for failing to respect Kerala’s culture, it is pertinent for the Left to step in and stall the privatisation plan, or it risks losing its political heft.
The Centre’s offer
The Centre, on its part, has offered the state government a choice — right of first refusal (RoFR) — which is not really a choice. Under RoFR, the Kerala government will be able to match and take over the airport if its bid came within ten per cent of the price quoted by the highest bidder. However, it does not meet the technical criteria for qualification. In order to win the bid, the government will have to tie-up with a private player who can facilitate the government’s ‘eligibility.’ For this, the government will have to float tenders and select a suitable partner but time is running out, since the bidding for the six airports of Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati is expected to be wrapped up by February.
The alternative plan
The Kerala state government has set up a special purpose vehicle (SPV), ‘Trivandrum International Airport Ltd’ to bid on the tender. The SPV comprises of at least 26 percent direct equity from the government and the rest is to be distributed among entities including the Cochin International Airport Ltd (CIAL) and the Kannur International Airport Ltd (KIAL) — the two public-private airport operators in the state, whose combined financial strength would help the state government meet the technical criteria for qualification. However, this attempt is also being read as a charade by the state government aimed at creating an impression amongst its voter base that the CPM tried its best to avert the privatisation of the airport.
The privatisation plan, which has been put on off the backburner after a period of 12 years, has also been met with stiff opposition from the trade unions within the Airports Authority of India (AAI). The unions have alleged that the government has been giving away profit-making airports to the private sector on a platter. However, GS Bawa, an airport economist and former General Manager with AAI, said that whatever decisions are made, they have to be made keeping in mind the business benefits they bring to the table and how well they serve the purpose of social welfare which forms a vital part of public sector undertakings’ guiding vision. “The government needs to do what’s best for the people of the country — privatisation or no privatisation. If there’s a view that privatisation is not bringing benefits to the people and to the business, then there are regulators who would take a call on it, and go back on the plan, if need be. But the idea itself need not be opposed.”
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