Anil Ambani nets 5 Maha airports for only Rs 63 cr

Cost of land, property pegged at Rs 339 cr

Ayaskant Das | New Delhi | 26 October 2009 |

It’s one more case of the family silver being sold for a song. Only this is the government handing over lucrative property to big business houses - in this the Anil Ambani group - at throwaway price.

A blatant example of government flouting all norms to help big business came to the fore recently when the Maharashtra government handed over five local airports in the state to the Anil Dhirubhai Ambani led Reliance Airport Developers Limited (RADL) for the paltry sum of Rs 63 crores on a 95-year lease. Eyebrows were raised over the pricing of the deal as the existing value of only land and property housing these airports is an estimated Rs 339.16 crores. The deal was said to have been finalised in a hurry, just before the Assembly elections in the state.

The Ashok Chavan-led Maharashtra government cleared the privatisation of five airports – Baramati, Nanded, Latur, Osmanabad and Yavatmal – just 10 days prior to the model code of conduct coming into force in Maharashtra. The state went to polls on 13 October 2009.

Three of these airports belong to the Maharashtra government while the other two belong to the Maharashtra Industrial Development Corporation (MIDC). The Maharashtra state Cabinet, which seemed to be in a real hurry, gave the green signal to MIDC for leasing out the airports to RADL.

Despite several departments of the state government raising objections over the paltry sum at which the airports, which are spread out over a cumulative area of 601 hectares, were being leased out, the state government went ahead with its decision in favour of RADL.

How transparent was the deal? Well, the government of Maharashtra has certified the transparency of the process in which the Anil Ambani owned RADL reportedly won the bid from among eight bidders. The government has put forward the argument that Rs 63 crores was the highest amount offered for the airports.

The same facts have been corroborated by the MIDC.

When Current tried to contact the Chief Executive Officer of MIDC, K Shivaji, and the Joint Chief Executive Officer of MIDC, Nirmal Kumar Deshmukh, both were unavailable for comments. However, another official of MIDC, Anand Kale, an area manager, said MIDC had little or nothing to say on a matter concerning the lease of airports. “Though the bidding is done by MIDC, the entire process of selecting the bidder is decided by the state Cabinet,” he pointed out.

The Maharashtra Cabinet reportedly held seven meetings between June and August 2009 to push through the lease. Kale said, “The government releases a referendum after taking a decision on such matters and the MIDC has nothing to do other than abiding by this government referendum.”

Various departments in the government seemed miffed with the whole affair. The revenue department of Maharashtra pointed out that the lease period should not have exceeded 30 years as per government rules and that the government needed to have recovered costs incurred by it on the airports before privatising the same. The planning department of the state also observed that since the total asset value of the 601 hectares was Rs 339.17 crore (including cost of land and property), it was not advisable to hand over the property for a mere Rs 63 crore and that too for 95 years.

However, the outgoing Maharashtra government ignored all objections raised by its departments. The state government’s argument has been that the leasing of the airports formed part of its programme to allow private players to develop loss-making airports in smaller towns. But two of the airports operate regular flights and the government had spent Rs 339 crores over a period of more than a decade for the upgradation of these airports.

As per reports, the Nanded airport was extended at a cost of Rs 110 crore in 2008 while Rs 25 crores were spent by the MIDC to fix Latur airport. What was the hurry in leasing out the airports for such a paltry sum when the government could have waited for a higher bid? Kale, speaking on behalf of MIDC, refused to comment on it.

The money, which RADL has paid for the lease of the airports, is nothing but a song.

If the amounts spent on the upgradation of the airports are taken into account, Anil Ambani’s company stands to gain mega bucks.

While the MIDC has absolved itself off all responsibilities saying it has merely acted on behalf of the government, the state Cabinet itself stands dissolved following the Assembly elections. Who will answer for such blatant flouting of government rules and misuse of taxpayers’ money?