Setback for Gautam Adani? Adani Group to pay compensation of Rs 28000000000 to government because….

The hefty to be paid compensation by Adani Group is tied to the revenue shortfalls experienced at some airports during their AAI management amidst the COVID-19 outbreak.

New Delhi: In a matter of huge financial setback for the Gautam Adani- backed Adani Group, the Adani Airports Holdings Ltd, part of the Adani group, is required to pay approximately Rs 2,800 crore to the Airports Authority of India (AAI) in connection with a privatization initiative of 2021. The huge obligation originates from 2021 where the Adani Group acquired three airports – Jaipur, Thiruvananthapuram, and Guwahati. Consequently, due to significant under-recovery at these airports, the initiative has now become a ‘white elephant’ for the Adani Group.

According the AAI rules, if operators find that they’re not making as much money as expected across a five-year span, they can flag it as a problem and seek compensation for the under-recovery. But wait, there a catch as for the next five-year cycle, the Airports Authority of India (AAI) can tweak and adjust their tariffs, so as to ensure their fighting chance of ensuring that they reach the earnings they were guaranteed.

Obligations of Adani Group

As per the report, it’s essential for the Adani Group to take care of their pending payments to the Airports Authority of India (AAI). This also includes repaying the investments made by the AAI from 2019 to 2021. The investments relate to the costs of airport developments within the timeframe from when they first requested for privatization bids up to the point where Adani Group took charge, as per anonymous sources.

Adani-AAI 2021 deal

For the unversed, the Adani Group made a substantial transaction of Rs 2,440 crore to the Airports Authority of India (AAI) back in November 2021. The deal was for acquiring six airports located in Ahmedabad, Jaipur, Guwahati, Thiruvananthapuram, Lucknow, and Mangalore. Both, Adani group and AAI reps, unfortunately, kept mum when asked for comments, as per a report by Money control.

Revenue rules of AAI

In the Indian aviation industry, the revenue that airport operators earn is governed by pre-set tariffs. These tariffs ensure a fixed return over a timeline of five years and are approved by the Airport Economic Regulatory Authority (AERA). Different types of fees, such as those for landing and parking or user development charges, can be levied by the airports.