Explained | Tamil Nadu’s demand for revenue share from privatised airports

The story so far: Earlier this month, the Tamil Nadu government issued a policy note which stated that the State government should claim compensation from the Centre in case of privatisation of an airport or transfer of its assets to a third party. Therefore, a decision has been taken that in the event the state government acquires and transfers the lands to the Airports Authority of India free of cost and the Airports Authority of India or the Government of India transfer the assets to a third party, the value realised/revenue accrued thereby, must be proportionately shared with the State government reflecting the huge investment in land being made by the State government.” The value of land, at an appropriate stage, should be converted into equity of the State government in the airport’s special purpose vehicle or an appropriate revenue sharing arrangement should be arrived at before the airport is transferred to a private party, it adds. The Tamil Nadu government said the policy decision was taken considering the State’s investment in land assets before the transfer to AAI. “So long as it is in the government sector, things are moving in a particular way, the Government of India would be making some revenue and there would be something spilling over to the state government and there would be a benefit to the public, so that is fine,” the minister said, and added, “Now when you are selling it to a third entity which is a private party, then you are selling the assets of the company, which include apart from the infrastructure, the land also.