Adani group may face several hurdles ahead

THIRUVANANTHAPURAM: Though the Union cabinet decided to lease out Trivandrum International Airport for operation, management and development to Adani Enterprises Ltd, the takeover won’t be a cakewalk for the company.
Among the hurdles before the company is the ‘state support agreement’ a crucial element to complete the takeover procedures. With chief minister Pinarayi Vijayan himself announcing non-cooperation with the centre’s decision, chances are high that the state may abstain from signing the agreement.
Also, petitions filed by state government and Airport Authority Employees’ Union against the takeover are pending before the high court.
After the airport’s privatization was proposed in a meeting convened by empowered group of secretaries in December 2018, the state government proposed that an SPV formed by the state be allotted the operation and management of the airport or the state should be given right to first refusal.
In his letter to PM Modi on Wednesday, the CM also mentioned the assurance given by the ministry of civil aviation in 2003 that when induction of a private player is considered, the central government would factor the contributions made by the state government to the airport development. Later, the empowered group of secretaries declared that state representatives will be allowed to participate in the selection process, or they can opt for right for the first refusal, if the quoted bid is near to 10% of the highest bid.
As the bid quoted by KSIDC for the government was around 19% below the bid quoted by Adani group, the criteria could not be met, and the centre went on with the tender procedure.
When the bid was finalized in favour of Adani group, the state government and Airport Authority Employees’ Union then approached the high court. The state government had stated that it owned the right over the 258.06 acres allotted to the airport and has experience in managing Cochin and Kannur airports, while the highest bidding companies do not have any such an experience.
The tender document did not have a condition requiring the bidder to have prior experience in airport management, so the plea was dismissed by the court. Subsequently, they filed a petition at Supreme Court and the court remanded back the case to high court.
The state also has the option of persuading the group to back out, as it has a higher stake in Vizhinjam port and is unlikely to displease the government as the investment and prospects in the project is much higher than the profit from managing a medium-sized airport.