Adani is the highest bidder for 5 airports

Adani Enterprises Ltd. emerged as the highest bidder for five of the six airports offered for bidding by the Airports Authority of India (AAI).

The winner would operate, manage and develop the airports for a period of 50 years. The Cabinet has to accord its approval for the same, according to a senior AAI official.

Error in submission

The AAI opened the financial bids of nine entities on Monday, more than a week after technical bids were opened in a two-phase bidding process. Adani Enterprises was among the 10 companies which had submitted a total of 32 bids for the six airports. One of the bidders didn’t make it to the final round because of an error in its submission.

Bids were invited on the basis of per-passenger fee for passengers handled at the airport. The result for the sixth airport was withheld as per the directions of the Gauhati High Court which said the bid should not be opened until a hearing on Monday. An AAI official said the HC had now permitted it to open the bid on Tuesday, though the final awarding of the airport would be subject to the court’s order.

“The financial bid was opened in the presence of the bidders. Now, we will inform the Ministry of Civil Aviation of the quotes received, which will then move the Cabinet note. As per the original Cabinet decision, after the tendering process, the final proposals have to be brought before it. The letter of awards will be given to the highest bidder subject to the Cabinet’s resolution,” according to an AAI official.

He added that the highest bidder “quoted very aggressively” and the per-passenger fee quoted by it was way above all the other bidders.

Adani Enterprises has offered ₹177 per passenger for Ahmedabad Airport, ₹174 for Jaipur, ₹171 for Lucknow, ₹168 for Thiruvananthpuram and ₹115 for Mangaluru.

The request for proposal document doesn’t bar the Authority from awarding different airports to the same entity. Industry experts estimate that the AAI would be able to garner more than ₹500 crore in the first year alone of awarding the airports to the concessionaires.

“Hitherto, the airports sector in India was predominantly dominated by couple of players. The entry of a private player with deep pockets to manage these operational assets augurs well for the sector and in the days ahead, we should see good competition amongst the players. We expect AAI to get a revenue in the region of ₹525-575 crore in the first year and future revenue would be linked to the traffic growth,” said Jagannarayan Padmanabhan, director and practice lead-transport and logistics, Crisil Infrastructure Advisory.

The government has finally made some headway in partial privatisation of some of its airports after altering the revenue model from a percentage of gross revenue to be given by the concessionaire to per-passenger fee.

The senior AAI official said that this was a more transparent model as often the gross revenue model could be misused by the concessionaire

In 2015, the AAI invited bids for complete privatisation of Kolkata, Chennai, Ahmedabad and Jaipur airports but aborted the process.

This was followed by an attempt to rope in Singapore’s Changi Airport during Prime Minister Narendra Modi’s visit to the island nation in November 2015. However, AAI twice rejected Changi Airport’s proposal to operate and maintain the Jaipur and the Ahmedabad airports on the grounds that it was “unfeasible” and not commercially viable for the government airport operator.

The AAI made yet another effort in 2016 when it placed a request for proposal (RFP) from bidders for operation and maintenance of “select areas” of the Jaipur and the Ahmedabad airports. Following a lukewarm response, several bidding parameters were revised and deadlines extended many times only to lead to just one qualified bidder.

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Printable version | Jun 29, 2022 7:33:03 am |