SIA withdrawal, a blow to disinvestment process

By Gargi Parsai

NEW DELHI, SEPT. 2. In the light of the new development which has hit the disinvestment of Air India, the meeting scheduled for next week between the Chairman of Tata Sons Limited, Mr. Ratan Tata, and the Disinvestment Minister, Mr. Arun Shourie, assumes significance. The new Civil Aviation Minister, Mr. Shahnawaz Hussain, today said that he will meet Mr. Shourie next week to review the situation.

In the Tata-SIA consortium - of the 40 per cent stake that Air India's strategic partner could hold - the SIA was to buy 19 per cent stake, although the foreign strategic partner could pick up upto 26 per cent holding. The management control thus was to be with the Tatas.

Sources in the Civil Aviation Ministry said after the formal withdrawal of Hindujas, Tatas remain the sole bidders and that despite the dropping out SIA, the Tata bid was alive. At the moment the assets of Air India are being evaluated for arriving at a floor price after which the financial bid would be called.

The withdrawal of SIA - which is also negotiating for stake in Air New Zealand - has hit the disinvestment process hard, besides the reputation and prestige of the country. Even if the Tatas decide to remain in the fray and do find a foreign airline as a partner, it will take a while, pushing back the whole process several months.

The decision by SIA to withdraw from the bid was taken in its board meeting on Friday and conveyed to the Tatas on Saturday at 10 a.m. (Singapore time). The Tatas conveyed the decision to the Disinvestment Ministry on Saturday. What appears to have upset the foreign airline was the suspicion with which it's partnership was looked at.

Lately, there were protests from politicians against the disinvestment of Air India. Not only initially had the former Civil Aviation Minister, Mr. Sharad Yadav, but the senior Congress leader, Mr. Priyaranjan Dasmunshi, and the Left parties also opposed the privatisation of Air India. Besides, the Parliamentary Standing Committee too questioned the wisdom of privatising the national carrier. But the last straw on the camel's back was the alleged ``forged'' letter from the Cabinet Secretary to the Prime Minister's Office opposing disinvestment, which is now reportedly under investigation by the CBI.

Minister declines to comment

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