Govt to issue Expression of Interest for Air India divestment in two weeks

V Rishi Kumar Ashwini Phadnis Hyderabad | Updated on March 08, 2018 Published on March 08, 2018

RN Choubey, Secretary, Ministry of Civil Aviation (right), with KT Rama Rao, Telangana IT and Industry and Commerce Minister, at the inauguration of the airshow   -  KVS Giri

Will call for rebids for Pawan Hans stake-sale

The Government will call of rebids for the State-owned helicopter operator, Pawan Hans, soon and issue the Expression of Interest for bidders interested in participating in the divestment of Air India in the next two weeks, RN Choubey, Secretary, Civil Aviation, said on Thursday.

Addressing Wings India 2018, the air show organised jointly by the Federation of Indian Chambers of Commerce and Industry and Ministry of Civil Aviation, Choubey declined to get into details of why there was a need to call for bids again for Pawan Hans.

On February 22 this year, Ashok Gajapati Raju, Union Civil Aviation Minister, had said that there was only one effective bidder in the fray.

“There was some expression of interest and one bidder has qualified. It is a single tender. We are wondering what to do. We will take a decision shortly,”the Minister said.

While officially there is no word on why one party remained in the fray to pick up a stake in PHHL, sources indicated that the fact the government was seeking a very high networth of the companies bidding for the state-owned helicopter operator had put off many of the perspective bidders.

Choubey also announced that the government hopes to issue the Expression of Interest which will be circulated among those interested in picking up a stake in Air India. This means there is a delay of two weeks in the entire divestment process as Choubey had earlier said that the EOI will be issued at the end of February.

Jayant Sinha, Minister of State for Civil Aviation, had earlier said that a private bidder will be allowed to pick up 51 per cent or more stake in Air India.

“We are privatising Air India. The term has been used in the Budget. Which means more than 51 per cent stake of Air India is going to be transferred into the private sector. The fact of the matter is we will be transferring control to the private sector therefore the government will be 49 per cent or less,” the Minister said.

A decision on whether there should be a 100 per cent stake sale of Air India is something on which the Alternate Mechanism of Ministers will have to take a call.

Foreign investor holding

On the issue of whether a foreign investor holding a 51 per cent stake in Air India would mean that that the Maharaja will cease to be an Indian carrier as majority ownership is held by a foreigner, the Minister said, “I do not know the exact IATA definition of a national carrier I will not speak on this issue. But Air India will be transferred to the private sector. Just as British Airways, American Airlines, Lufthansa and Qantas are in the private sector, Air India will also be in private sector.”

The Minister added the government is looking at putting up four different entities — the airline, Air India Express and SATS (which will be one equity) and the engineering company, the ground handling company and Alliance. “A bidder will be allowed to bid for any one or all four,” he said.

Apart from IndiGo, a foreign airline has sent a confidential letter showing interest in Air India. The Minister declined to give details of the region or part of the world this airline was from. The successful bidder will be announced by end-June and the entire legal process of privatisation of Air India will be completed by December.

The Cabinet Committee on Economic Affairs had given its approval for the strategic disinvestment of Air India and five of its subsidiaries based on the recommendations of Core Group of Secretaries on Disinvestment on June 28, 2017.

Published on March 08, 2018

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