Govt may curb bids by single entity for privatisation of 11 airports: Report

India is reportedly considering capping bids by a single entity in the planned privatisation of 11 airports. This move aims to address concerns over market concentration and the risk of monopoly in the civil aviation sector following last year’s crisis at IndiGo, which affected the entire industry.

According to a report in The Economic Times, officials involved in the process have started discussions on framing bidding rules to encourage competition and prevent crucial infrastructure from being controlled by a single enterprise. These talks come ahead of one of the largest airport privatisation exercises in the country. However, some officials believe that a strict cap might make bidders more cautious and reduce auction proceeds, the report stated.

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In the 2018 privatisation round, which had no such limit, Adani Enterprises was the highest bidder for all six airports on offer, sometimes quoting double the tender amount of the second-highest bidder. Jeet Adani, director at Adani Group, has indicated that the group will aggressively pursue all 11 airports in the new round, intensifying the debate over whether a cap should be imposed, the report added.

One proposal under consideration would allow a single entity to be awarded a maximum of two blocks, equivalent to four airports. If the same entity tops the bid for a third block, the second-highest bidder would have the option to match the price. Officials from the civil aviation and finance ministries and Niti Aayog are working on the framework, the report added. The final decision will rest with the Public Private Partnership Appraisal Committee, which approves large-scale infrastructure privatisation.

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For the first time in this privatisation exercise, smaller airports will be bundled with larger ones in similar regions to attract private investment for less commercially attractive facilities. Under this plan, Varanasi will be paired with Kushinagar and Gaya, while Amritsar, Bhubaneswar, Raipur and Trichy will be grouped with Kangra, Tirupati, Aurangabad and Hubli respectively, it stated.