The lack of interest in Air India’s divestment is being interpreted by some officials as a possible tactic to persuade the government to relax conditions to make the national carrier more attractive to bidders, a senior government official said.
This matter was discussed at a meeting in the Prime Minister’s Office on Friday, the person said, adding that any changes will be decided by a committee headed by the finance minister.
“Look at the example of Pawan Hans, where a single-bid situation led to the relaxation of norms. Probably, bidders also feel that the government would take a similar decision in the case of Air India,” said the official.
Norms were changed to suit the demands of prospective buyers and the government issued a new bid document for the state-owned helicopter operator. The last date for submitting expressions of interest (EoIs) is now June 11. There were no bids for Air India by Thursday, the deadline for EoI submission.
Two key concerns are the government retaining a 24% stake in the national carrier after divestment and a bar on operational synergies with the airline business of the buyer.
More clarity will be provided if required, said a top aviation ministry official. It may be difficult to prove that bidders stayed away to get the terms relaxed, he said.
“This is not something that the probable bidders would accept… But the fact is that we received 160 queries on various issues from probable bidders, which is an indication of interest–but there were no bids,” the official said.
The so-called alternate mechanism headed by the finance minister, established to hasten decisions, will take a call on the future course of action.
“Whether we go for rebid or not is a decision that the alternate mechanism will take. We will provide them with all the details on the issue,” added the official.
The government had sought bids for a 76% stake in Air India, which includes a 100% stake in low-fare international subsidiary Air India Express and a 50% holding in ground handling company AI-SATS.
Foreign carriers and private equity investors had shown initial interest in Air India while domestic airlines had pulled out of the race. Among the Indian carriers, IndiGoNSE -3.48 % was the first to have officially shown interest–in Air India’s international operations. Jet AirwaysNSE -3.32 % had earlier said that it was not interested but its chairman Naresh Goyal said in an interview subsequently that it was “open” to participating in the Air India divestment.
The government had extended the deadline for bids to May 31 from May 14 and targeted completion of the sale by December, which seems unlikely now.
Source: Economic Times