It took just two years for Gautam Adani to become India’s largest private airport operator. That too during the raging days of the Covid-19 pandemic
Hyderabad: It takes decades for any business group to become a country’s largest airport operator. Ask the GMR Group, who entered the airports space in the early 2000s and took the proverbial slow and steady path to become the country’s largest airport operator. On the other hand, it took just two years for Gautam Adani to surpass them and become India’s largest private airport operator. That too during the raging days of the Covid-19 pandemic, when the aviation sector across the world went through the largest turbulence it ever saw.
When other airport operators faced severe fund crunches and devastating losses, the Adani Group was flying high, taking over eight airports, including the upcoming Navi Mumbai International Airport, all in just two years.
How could a business group achieve that, that too in a timeframe that included one of the most debilitating financial crisis the country saw as the pandemic tightened its grip on the markets? The answer is quite obvious. A friend who was always there for Adani’s needs was his friend in deed here too. The Modi-led Centre conceived and pushed through as well, with unprecedented speed, a proposal to privatize the six airports at Ahmedabad, Jaipur, Thiruvananthapuram, Lucknow, Mangalore and Guwahati. The paperwork was done in barely three months, from December 2018 to February 2019.
The paperwork, however, was not entirely in black and white. There were a lot of shades of grey as the government violated various laws and procedures while pushing through the proposal. That was not all. Recommendations made by the Department of Economic Affairs (DEA) in the Ministry of Finance and even the NITI Aayog on the technical, financial and legal aspects of the bidding process were completely ignored.
The DEA in fact, had recommended that prior experience in related sectors must be considered, that any single bidder should not be awarded more than two airports to avoid financial risks and to promote comparison of performance. It also recommended that a license model be followed instead of a lease. The NITI Aayog too agreed with these recommendations. But to no avail.
There were various anomalies even in the eligibility terms and conditions set by AAI for bidders. The whole exercise appeared intended to eliminate competition and favour the chosen few, or the Chosen One.
According to available information and media exposes, in April 2018, the Prime Minister’s Office (PMO) directed the DEA and NITI Aayog to prepare a model mechanism for removing certain airports out of the control of the AAI and handing these over to private players. The new model concession agreement would take into account all eventualities, including real-estate development on airport land, which was the first indication that despite the objections of Airports Authority of India employees, the Modi government was adamant about going ahead with the airport privatisation plan. Media reports revealed that despite the Ministry of Civil Aviation being in the picture, the entire initiative was led by the PMO.
How it happened: In apparent violation of the existing law and without amending the Airports Economic Regulatory Authority of India (AERA) Act of 2008, private bidders were invited to declare tariffs and passenger charges on the basis of which their bids would be evaluated, thereby circumventing the regulatory authority’s powers to determine such charges. This is where the caveats and checks suggested by the NITI Aayog and the DEA were thrown in the wind.
Violations of laws or regulations were not the only route for the Adani flight. There was pure misuse of Central investigation agencies by the Modi government as well.
Sample this. GVK, with a 50.5 percent stake, was successfully managing the Mumbai International Airport Pvt. Ltd (MIAL), the second busiest in the country, since 2011. South African investor Bidvest had a 13.5 percent stake in MIAL. GVK had a RoFR (right of first refusal) too on their stake.
In mid-2019, Adani signed an agreement with Bidvest to acquire its stake in MIAL, ignoring GVK’s RoFR. GVK moved the court on this, and in October 2019, signed a deal with the Abu Dhabi Investment Authority and Canada’s Public Sector Pension Investment Board to bring in funds to buy out Bidvest.
Pretty normal business strategy, right? But Modi and Adani had other ideas.
In June 2020, in a surprise move, the CBI filed an FIR alleging fraud by promoters of the GVK group. CBI’s charge sheet alleged that the promoters had swindled Rs.700 crore between 2012-2018, enriching themselves with inflated contracts and paying several people who were not employees of MIAL.
GVK’s immediate reaction was one of surprise. “MIAL would have provided every assistance, had the agency sought an explanation on any document even if a preliminary enquiry had been initiated. MIAL is a transparent and responsible corporate entity which is committed to cooperate with the agency in its investigation to arrive at the truth,” it said.
The FIR but was just the beginning. In July, the CBI raided several premises of the GVK group, mounting more pressure on the group, which by the next month relented and agreed to sell its entire 50.5 percent stake in MIAL to Adani, who went on to buy another 23.5 percent from the other investors, including Bidvest. Khel khatam!
And that is how Adani became India’s numero uno private airport operator.