Adani Group chairman Gautam Adani. Adani Enterprises has broken the duopoly of GMR and GVK as the largest private sector airport operators in India. (HT)
Adani Group chairman Gautam Adani. Adani Enterprises has broken the duopoly of GMR and GVK as the largest private sector airport operators in India. (HT)

Elections 2019: Model code of conduct puts Adani airport plans on hold

  • The government decides against awarding before elections the six airport privatization projects Adani won in an auction in February
  • The decision may have been prompted by the government’s intent to avoid a political controversy before the general elections

New Delhi: Gautam Adani-led Adani Enterprises Ltd will have to wait, at least till the Lok Sabha elections are over, to begin its quest to become India’s largest private airport operator.

The Narendra Modi government has decided not to take to the cabinet a proposal for awarding the six airport privatization projects Adani had won in an auction last month, according to a government official. Cabinet clearance is needed for awarding the airport projects.

The decision to defer handing over the six airports, at present run by the Airports Authority of India (AAI), to Adani may have been prompted by the government’s intent to avoid a political controversy before the general elections. Such large contracts had become a subject of political controversies in the past.

“There is no need to award the projects in a hurry. It can be done in due course," said the government official cited earlier.

Deferring the award of the projects till the election is over will reduce the chance of controversy, considering that all the six projects were won by a bidder who has little experience in managing airports. An email sent to the company seeking comments about the award of the projects remained unanswered till publishing of this story.

With the model code of conduct, which bars the government from taking decisions that could influence voters, coming into effect from Sunday evening when the Lok Sabha election schedule was announced, the chances that the government will approve any new projects are remote.

While the government can seek the permission of the Election Commission to go ahead with decisions so that normal work does not suffer, the option cannot be exercised for privatization of infrastructure facilities, a sensitive subject.

The Adani Group had offered the highest revenue per passenger to be shared with AAI for the airports in Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru and Guwahati to emerge the highest bidder in the auction held by the state-run airport operator in February.

AAI had auctioned rights to manage these airports for 50 years with the view that private investment will help add capacity needed for the fast-expanding market for air travel. India is expected to surpass the UK to become the third-largest air travel market by 2024, according to the International Air Transport Association forecast in 2018.

The opposition Congress has already attacked the government on the purchase of Rafale jets under a deal with the French government, making it a poll issue.

Adani Enterprises reported a consolidated profit of 80.09 crore in the December quarter, a 72% fall from the 286.97 crore it reported in the year earlier.

Rights to develop and manage the six airports for 50 years offer the group the potential to generate non-aeronautical revenue as well as revenue from real estate development. These airports have also shown strong traffic growth. The total traffic at these six airports, including international traffic, stood at 30 million passengers in FY18, a 22% jump from a year ago, according to a report by ratings agency ICRA Ltd.

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