Kerala govt, Centre on collision course over privatisation of airport

State says offer to match Adani's bid was rejected

Kerala Chief Minister Pinarayi Vijayan has written a letter to the Prime Minister, objecting to the Centre’s “unilateral” decision regarding privatisation of Thiruvananthapuram airport.

The state government has said that its proposal to match the offer made by the highest bidder — the Adani group — for Thiruvananthapuram airport was not allowed by the Centre, and therefore the people would oppose the move.

In the letter, the CM said it would be difficult for the local administration to cooperate with the Centre following the latter’s move. “I request your good self to intervene at this stage, so that the decision taken now is reconsidered,” wrote Vijayan.

This comes a day after the Union Cabinet cleared the privatisation of three airports.

Kerala Finance Minister Thomas Issac also weighed in on the issue, saying the state government’s bid was rejected despite the offer to match the Adani group’s bid, which was accepted.

“The PMO’s promise to accept Kerala’s proposal was broken. The people of Kerala will not accept this act of brazen cronyism,” he said.

Kerala, ruled by the Left Democratic Front, if often at odds with the Centre on various issues including GST rates.

While the Centre is reducing the role of government across sectors such as banks, airlines, and airports, the Kerala government is doing the exact opposite by increasing its presence in business. It owns 33 per cent stake in the Kochi airport, while the rest is owned by a group of UAE investors.  

When the Centre had invited bids for the airport in 2018, the state had made an offer but failed. It later asked the Centre to let it match the offer made by the highest bidder, the Adani group. 

The Union Cabinet, however, decided to give the green signal to the highest bidder, on Wednesday. “The Union government took the right stand in terms of the tendering process. As it was an open bidding, the Kerala government had the opportunity to bid higher. Laws can not be changed just for one bidder,” said a Mumbai-based lawyer.

In his letter, Vijayan said the decision was taken “ignoring the repeated requests” of the state to entrust the management of the airport to the special purpose vehicle (SPV) “in which the state government is the majority stakeholder”. 

The state government also said that the Civil Aviation Ministry had, in 2003, given an assurance that as and when the induction of a private player was considered, the Centre would factor in the state government’s contribution to the development of the airport.

Civil Aviation Minister Hardeep Singh Puri said the Kerala government did not qualify in the bidding process. "Winning bid quoted to Rs 168 per passenger, KSIDC quoted Rs 135 per passenger and third qualifying bidder was at Rs 63 per passenger. Thus, despite special provision of RoFR being given to GoK, they could not qualify in international bidding process carried out in a transparent manner", Puri who took to Twitter to clarify the Centre's stand, said.

Puri said before the bidding process began, the Centre and the Kerala government had agreed that if the KSIDC's bid comes within the 10 per cent range of the winning bid, it would be awarded the airport. However, as the difference between Adani's bid and that of KSIDC was 19.64 per cent, the former was qualified as the winner, he added.

(With inputs from Dev Chatterjee)