The Hindu Business Line : IA fleet acquisition programme — `Broad agreement' on sovereign guarantee

THERE is a "broad agreement" in the top echelons of the Government on providing sovereign guarantee for the Rs 10,000-crore fleet acquisition plan of Indian Airlines.

Official sources here indicated that the Prime Minister, Dr Manmohan Singh, and the Finance Minister, Mr P. Chidambaram, have "broadly agreed" to the move of providing sovereign guarantee to the airline.

The latest move comes just 48 hours before the crucial meeting of the Public Investment Board (PIB) which is due to meet here on Wednesday to consider the IA fleet acquisition proposal.

The proposal, which is likely to get the PIB nod, may see a high-powered committee being formed to start price negotiations with the aircraft manufacturer.

Incidentally, the Government has already obtained the green signal from the Chief Vigilance Commissioner to open negotiations with the lowest bidder. "The upper limit on the price has already been set. Now, it is a question of getting the best possible price for the proposed acquisition.

"Once that has been achieved, we will move the Cabinet for getting its clearance.

"Soon after that, the airline should be in a position to start the process for getting the new aircraft," a senior Government official said.

The acquisition programme is to be funded largely through borrowings, officials said while clarifying that it would not be through capital market borrowings.

The IA board had cleared the proposal for acquiring 43 Airbus aircraft at an estimated cost of Rs 10,089 crore in March 2002.

Since then, the proposal has been pending with the Government for clearance.

The previous National Democratic Alliance Government had scheduled the PIB meeting for January this year, but it was called off just days before the Board was to meet.