Centre plans to divest its entire stake in Air India
The Core Group's recommendations in turn will be placed before the Alternative Mechanism†(Group of Ministers).
New Delhi: The government is understood to be examining the option of offering the entire 100 percent stake in national carrier Air India to a successful private bidder instead of the earlier envisaged 76 percent. This follows the shock to the government and the huge setback to the privatisation process for national carrier Air India wherein no initial bids (EoIs) were received from bidders for acquisition of stake in Air India on May 31.
Following the failure on May 31 when the deadline expired for submission of EoIs, Government sources had said the Government was now likely to re-work terms of proposed sale of stake in the “Preliminary Information Memorandum (PIM)” issued in March this year to make the national carrier more attractive to potential buyers.
A new PIM could now be floated following the failure of the ongoing process. The reasons for the debacle were to be examined by an “Evaluation Committee” — headed by a senior official of the DIPAM — which is to submit its recommendations. These will then be placed before the Core Group on Disinvestment headed by the Cabinet Secretary.
The Core Group’s recommendations in turn will be placed before the “Alternative Mechanism” (Group of Ministers).
Private firm Ernst and Young was appointed the “Transaction Adviser” (TA) for the process. The feedback from the TA on what discouraged potential bidders is also likely to be placed before the government.
The government is now examining in detail why the EoI process was not found attractive by bidders despite the government offering 76 per cent stake in Air India and complete management control to the winning bidder.
The government currently owns 100 per cent stake in Air India. The government is understood to be examining whether to offer more stake in Air India beyond 76 per cent stake as speculation is rife that potential bidders may prefer picking up the entire stake.
The government had earlier extended the EoI submission deadline from May 14 to May 31 this month while the deadline for intimation to QIB was extended from May 28 to June 15 this year.