Vinayak Chatterjee: That's the question that's going around and you know, I was myself intrigued. I opened the morning newspapers on Feb. 9, and I read that during his Lok Sabha speech on Feb. 8, Rahul Gandhi referred in Parliament to the inappropriateness of the Adani Group winning six airport bids and subsequently, various sections of the media picked up that and phrases like "handed over on a platter" and "given" were liberally used.

I was intrigued as an observer of the infrastructure scene in India for over three decades. I was intrigued by the allegation, because I remember somewhere back in 2018, I vaguely remembered that it was an open bid. So, I did a bit of a deep dive looking at past data. After some clarification, lo and hold, I discovered that the process was as transparent as it could be.

In 2018, 32 bids were made by 10 different entities for the six airports that you have mentioned. The bidding process was conducted in a competitive and transparent manner through the e-tendering portal of the government of India.

The bid parameters interest me. So, the bid parameters often change. For example, when Delhi and Mumbai airport were bid up originally, the revenue share, etc. This time, the bid parameter was which developer will pay the highest per passenger fee and the bid results are in the public domain and therefore available to every member of the media, every Lok Sabha MP to see that for themselves.

Interestingly enough, Adani bid along with 32 others and, lo and behold, they bid the highest in all six. Just to give you an example, in the case of Ahmedabad, Adani bid Rs 177 per passenger, whereas the next highest bid was from the National Investment and Infrastructure Fund, which was Rs 146. So, like this, I have the data with me for all six airports, and in all of them, Adani’s bid was higher than the others and they naturally won the bid.

Vinayak Chatterjee: I don’t think so. If it was so, the bid would have been cancelled by so many authorities that oversee the process. It's the e-global tendering portal of the government of India and it is always observed by CAG, ED. Everybody knows it and it is a public process ...

There were 32 bids but the closest competitors, which is in Jharkhand called H2; the second highest bid were the National Investment and Infrastructure Fund. It was AMP, It was the Kerala State Industrial Development Corp. and it was the Kochi International Airport.

They, as well as the others who participated, not one of them said that the bidding was in any sense inappropriate. They just said, we were taken by surprise that Adani bid so much higher than us. That's all.

Vinayak Chatterjee: This is the one that I find in some senses the most enjoyable to answer. Traditionally in India, the utilities and the infrastructure space were closed to private enterprise since independence. Barring a few historical aberrations, like the historical British hangover companies like the CSE in Kolkata, etc. But the utility in infrastructure space was closed for private participation.

It is only in the early to mid-90s, that it was opened up. Now, in a country where the development of roads, of airports, of ports, was never allowed to be entered by private entrepreneurs, how can you have prior experience?

Here you have Prime Ministers enjoining Indian entrepreneurs and business magnates from the ramparts of the Red Fort to unleash your animal spirits and invest in infrastructure. And if you have a clause in these tenders which says prior experience needed, where do you get the prior experience from?

I mean, it's in some senses a laughable proposition and all the people who won the telecom bids, had they run telecom networks before? People who bid for BOP projects or roads, had they ever participated in privately funded road project on their balance sheets?

So, the list goes on and on. So, it is not conceptually possible to say that prior experience is needed when prior experience was not allowed to be developed. And if such a proposition will need to be set in stone, you would have handed the country's key infrastructure assets to foreign players because they would have had the experience.

Vinayak Chatterjee: How would they know before a bid is opened who would win the bid in a transparent process? So, your question, it says that all six were given to an entity that had not run airports. Before the bid was announced nobody knew, as all you know, somebody could have outbid Adani and they could not have got a single airport.

So, the question is, while these observations are made often routinely on files, because people do raise questions, people do raise points, whether PPP structure has been crafted and that needs to be encouraged but these objections were being overruled based on certain logical points.

First, that these assets were quite small and when you want some of the larger, more credible groups in this country to bid for infrastructure assets, they don't want to become bit players; they will at least want to win a whole bunch, so that they have a cluster and have a footprint.

Secondly, the asset sizes were small. For example, there has been smaller privatisation efforts, which is for example that the Dehradun bus terminus was privatised, the Amritsar bus terminus was privatised, Habib Ganj station in Bhopal was privatised as station redevelopment.

Do you remember the names or any of your viewers remember the names of the people who won those bids? Because they are mid-sized infrastructure developers whose names are not popularly recognised; they are serious players. I have no questions about it.

But when you are looking at long-term concessions at airports, which require significant capex companies of stature, you don't want to limit them in a sector or in a catch-up bids where the assets are smaller, dis-aggregated. You don't want to restrict the number of players there, and therefore, the Empowered Group of the Secretaries in the committees managing the bid, after having seen all these comments and observations, decided that it was in the interest of the country to have no restrictive clause on the number of these six airports.

Now, let's look at the picture in a different way. India today has 137 operating airports. By the time, we hit 2030, we will be having 200 airports. Out of 200 airports, if six of them are in a sense operated by one entity, does this lead to any significant issues of monopoly?

Six out of 200 and somebody would argue that when Delhi and Mumbai were privatised there was a cap on one airport per bidder. When only two of them were privatised, Delhi and Mumbai, remember at the time they together constituted 45% of the air traffic.

Vinayak Chatterjee: I don’t have the exact figure, but I do know that these six airports which we were talking about in the bids, at the time of bidding, they together contributed 9% of the domestic traffic.

So, when you put all these pieces of logic together, and a body of people, the powerful group of secretaries and the people managing the bid came to the conclusion that it did not make rational sense to limit it to one or two per bidder. It would lead to loss of interest; it would lead to loss of aggressive bidding, which the government wanted.

After all, if Adani had bid high, then who is earning? It is the Airport Authority of India, the people of India who are earning per passenger fee, which the developer is giving. So, it didn't make sense to constrain the bid in a sense. They could have had lacklustre interest and very low bids.

So, you have got to weigh all these parameters before you come to a decision and after all the comments were received, I understand that the view formed in the government was not to put any restrictive conditions.

Vinayak Chatterjee: That's a difficult question for me to answer because when business houses are bidding, they're doing so based on a whole bunch of projections and this concession is for 50 years, so, you have to take a 50-year view.

Every day, on the news, you find economists quarrelling as to what the GDP figure will be in the next quarter and people can’t predict and you expect a prediction for the next 50 years.

So, people's view of the next 50 years of how an airport will develop and what will be the sources of aeronautical and non-aeronautical revenue, could differ widely. So, the experts who are advising a particular group to take all of this into cognisance and feel confident about putting in what they would feel is a winning bid. While one or two of these bids seem to be outliers, many of the bids are pretty consistent with the other bids.

The one big outlier is Bengaluru, where Adani’s bid was 156% higher than Cochin International Airport. In all the other cases, in Guwahati airport, their bid was just 3% higher than NIIF. So, for all you know, if they had just got a little this way or that way, NIIF would have been the concessionaire in the Guwahati Airport. In others, it was 21%, 12%, 23%, which I consider as natural in any bid.

Vinayak Chatterjee: Well, technically, I will have to double check the fact because I remember many years ago, when I reviewed the Delhi and Mumbai airports, the concession period was 30 plus 30, which was another 30 years. So, to my mind the Delhi, Mumbai airports were for 60 years and in that context, this bid was for 50 years instead of 60 years.

Vinayak Chatterjee: Conversely, if the performance is very poor, I suppose, then the government has an option to say, 'Look, based on these criteria, we don’t want you to continue, but normally it doesn't happen'. Therefore, people invest and build their assets and their operating procedures based on the total span of the concession period, and to the best of my knowledge, it was 30 plus 30 and this was 50.

Vinayak Chatterjee: There is no boilerplate in concession periods that they go up. Even on PPP projects, when they are put on operating leases can go up to as high as 99 years and could be as low as 15 years or 10 years, and in many cases, five years or 10 years.

So, there is no boilerplate. It is a view that is taken by the people who are structuring a bid to say what is possibly in the best economic interest of the country and what would sustain the interest of the developer and the bidder so that the government and the people of India also get substantially higher bids. So, all these factors are managed before a view is taken. A 50-year period for an airport is not unnatural.

Vinayak Chatterjee: Of course, there is. The concession documents are accompanied by a very detailed schedule of what is called Standard Operating Requirements. You know how many minutes baggage should have been on the belt. If you take your luggage up from the baggage belt, in Delhi airport, for example, look at the TV screen in front of you and you will see a small line that says first bag on the belt and such and such hour and minute.

So, there are very clear guidelines and deliverables across various efficiency parameters at an airport and they are strictly monitored. The developer can be hauled up, can be penalised, and can be fined.

Such provisions exist across different infrastructure sectors. So, it is natural for a concession agreement to be accompanied by clear service delivery standards and for the developer to be held accountable for that.

Vinayak Chatterjee: I would not find it easy to answer this question because I have no insider information or privy to knowledge that is not available in public space.

So, all I know is that I have seen and heard of public statement by the GVK Group Vice Chairman Sanjay Reddy, where he says that there is absolutely no pressure from the Adani Group or anyone else to sell. He goes on to add that it was a friendly and timely private deal in the situation, when GVK was looking to exit and monetise some assets to balance their own portfolio.

So, this is a public disclosure by the vice chairman of the GVK and I have no data points to go beyond this.

Vinayak Chatterjee: Historically, as the PPP process gathered momentum, there were many occasions where ultimately after different bidders got disqualified or people did not bid, the bidder or the bidding authority landed up with a single bid and it often led to huge political controversy.

'A single bid, so how can we do it? Let's rebid it, it is not proper.' So, somewhere along the line, the government had to take the view on how to handle single bids because it was coming up time and time again. So, what it did was that there is a very famous circular called General instructions on procurement and project management, issued by the finance ministry on Oct. 29, 2021.

It is a seminal document, which has been approved by by the CAG and is today enshrined in the general financial rules of the Union of India and gazetted. So, it is as solid as that. This document, which provides the guidelines and what it says on a single bids is very simple, and I am going to read this out for you.

I think it's important for your viewers to hear this because I am reading this from the notification, page 9, para 11.8- 'It has become a practice among procuring entities to routinely assume that open tenders, which results in single bids are not acceptable and to go for retendering as a safe course of action. This is not correct. Rebidding has costs, firstly the actual costs of the retendering. Secondly, the delayed execution of the work will consequently be delaying the work and the attainment of the purpose for which the procurement is being done. Thirdly, the possibility that the rebid may result in a higher bid, lack of competition.'

The statute goes on to say, 'shall not be determined solely on the basis of the number of bidders even when only one bidder submitted. The process should be considered valid, provided the following three conditions are satisfied.'

Number one, the procurement was satisfactorily advertised, and sufficient time was given for the submission of bids, the qualification criteria was not unduly restricted and finally, the prices quoted are reasonable in comparison to market values/terms.

So, as a nation, we have clarified that single bids are perfectly in order with the proviso of these three conditions; they are valid.  There have been instances where signal bids are now projects are being implemented under single bid and one of them, of course, happens to be a project of the Adani Group in Kerala.

Also, I have been tracking some of the single bids. Now it's an open question as to whether the handing over of Air India to the Tata Group can be considered a single bid or not, because technically there was a second bidder. But all of us in the field know who the second bidder was and therefore, there is some lack of credibility in that second bid.

The electricity distribution over large swathes of Odisha were handed over to Tata Power in clearly a single bid situation and there are many other examples. But I am saying there's nothing wrong with it. If it is done with national interest and within the spirit of the guidelines, so be it. It is good for the country.

Vinayak Chatterjee: There isn’t. If one of these airports gets a single bidder and if these three conditions are satisfied, as enshrined in the public policy of procurement which is cleared by government, CAG, everybody, it should be considered valid because it's fully advertised. If the winning bidder is qualified, has not been disqualified, and the values are not so low as to suggest a wide deviation from market practice, a single bid should be allowed.

Vinayak Chatterjee: It's an important topic for which we need to understand the facts, before we make comments which are, shall we say, not founded on the facts of the case.