Privatisation of Thiruvananthapuram airport

Left and Right lock horns over privatisation of Thiruvananthapuram airport

P Manoj Updated on January 24, 2019

A show down looks imminent in the run-up to the general elections

Amidst the political heat over the Sabarimala issue, another tussle is brewing between the left and the right of the political spectrum with the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government testing the disdain of the Communist Party of India (Marxist) towards privatisation of state-run entities in its own backyard - Kerala.

The Narendra Modi government’s plan to privatise six airports run by the Airports Authority of India (AAI) includes the one at Thiruvananthapuram, the state capital.

The Pinarayi Vijayan-led Left Democratic Front (LDF) government was quick to bite the bait suggesting to the Centre that it was keen on running the airport as a government entity if given on nomination basis (without resorting to tender). One of the reasons touted for this, apart from an aversion to privatisation, was that the land for the airport was given by the state government to the AAI many years ago.

Right of first refusal

The Centre told the state government that this suggestion was not acceptable to it. Instead, the Centre suggested it was agreeable to granting a so-called right of first refusal (RoFR) to the Kerala government to match and take over the airport if its bid came within ten per cent of the price quoted by the highest bidder. The counter suggestion from the Centre has put the CPM-led Kerala government in a fix. Given that, it does not meet the technical criteria for qualification, the state government will have to forge an alliance with someone who will ‘facilitate’ its eligibility to bid.

“The selection of an alliance partner, though, has its pitfalls. Being the government, it cannot afford to pick a partner at random. This will expose it to charges of giving an easy entry to that partner (in all probability a private entity) to run an airport due to the RoFR granted by the Centre. The selection, as a result, has to go through a tendering process,” said an industry source tracking the development.

Qualification criteria

Such a tendering process by the Kerala government - typically long drawn in government - to identify a technical partner to meet the qualification criteria set by the AAI to bid “looks highly improbable due to paucity of time”. “The bids for privatisation of the six airports are expected to be finalised by end of February,” the source said.

The state – the last surviving Communist bastion - has set up a special purpose vehicle ‘Trivandrum International Airport Ltd’ to bid on the tender. The SPV will have at least 26 per cent equity directly from the government and the balance will 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.

The Thiruvananthapuram lobby, though, was against taking CIAL/ KIAL as SPV partners over fears that they would not help in developing the airport to its full potential, he said. Some see this charade as an attempt by the state government to create an impression amongst its followers that the CPM was trying its best to avert privatisation of the airport and an alibi for apology if that happens.

Demonstrations

A whiff of what could happen in such a scenario became clear when unions owning allegiance to the Left parties held demonstrations when one of the potential bidding groups landed for a site visit a few days ago. “This tussle will determine the will of the NDA to follow through with the privatisation of the Thiruvananthapuram airport and the will of the LDF government to block it,” the industry source said. The state government did not respond to an e-mail seeking comment at the time of going to press.