AI divestment: vital questions remain

By T.S. Shankar

CHENNAI, AUG. 2. The recent high-level meeting on the Air India disinvestment issue, convened by the Prime Minister, Mr. A.B. Vajpayee, remained `inconclusive' with many vital questions raised by some Opposition members yet to be answered.

The meeting also discussed the decision taken by the Cabinet Committee on Disinvestment to appoint two more merchant bankers to independently evaluate AI. But, this move was opposed by Mr. Priya Ranjan Dasmunshi, Chief Whip of the Congress Parliamentary Party, in a letter to the Disinvestment Minister, Mr. Arun Shourie.

Mr. Dasmunshi wondered if this appointment did not demonstrate a lack of confidence in the objectivity and impartiality of the present global advisor, J.M. Morgan Stanley.He argued that the Government was desperate to clinch the issue with a single bidder while divesting its stake in the airline.

Reiterating his demand for ``total transparency'', Mr.Dasmunshi observed that changes had been made to the provisions of the Shareholders' Agreement and the Share Purchase Agreement at this late stage of the disinvestment exercise following discussions with the shortlisted bidders to meet their requirements.

``These changes have altered the basic ground rules that were provided to the parties which had originally expressed an interest in participating in the AI bidding. This is an important issue because on the basis of the provisions incorporated in the original drafts of the agreements that were provided by the Government to the parties who had responded to the invitation for Expressions of Interest, several of the parties decided not to continue with the process because the role of the Government post-privatisation as defined in the drafts was not acceptable to them,'' airline sources pointed out.

Several global airlines such as British Airways, Qantas, Air France and Delta seem to have opted out of the bidding process because of their reservations about the onerous provisions of the Shareholders' Agreement and the scope for interference and Government control. In effect, even though the Government will continue to be an equal shareholder as the strategic partner, it has reportedly agreed to ``totally dilute its position and hand over the control of AI to the strategic partner,'' Mr. Dasmunshi noted.

The former Union Minister of State for Civil Aviation, Mrs. Jayanthi Natarajan, has also raised vital issues including the assurance given by the Government for providing protection for 7 years to the chosen bidder of AI in respect of the use of the available bilateral traffic rights. ``What is not clear is why the airline should receive protection even after a strong strategic partner with enormous resources has been selected,'' she said.

Given the controversies that have arisen till now, aviation sources say it could take some time for the AI disinvestment exercise to really take off.

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