NEW DELHI’s high-profile invites offer to sell a stake in Air India, failed to attract any single bidder by the end of the period, dealing a blow to PM’s target for offloading stakes in government-held firms.
The government withdrew a plan in March to invest 76 % stake in Air India, offloading about $5.1 billion of its debt, but buyers lacked interest from it.
The top civil servant in the Ministry of Civil Aviation, R.N. Choubey said that Suggesting changing the terms of the sale, the process for which will be re-evaluated in the next two weeks.
“It did not meet the expectation of participation we had,” Choubey said, adding that his ministry thought to give 76 percent management control was “good enough”.
Choubey also replied on Wednesday that the government had no plans to extend the May 31 deadline.
Previously this month the government had introduced some new terms, extending the period to make bids, but still found no bidders for the airlines, which flies some lucrative routes but also is one of the industry’s highest employees-per-aircraft ratios.
Selling the state carrier had been seen as key to Modi’s plans to divest assets and help keep the fiscal deficit at 3.3 percent of GDP, a goal already under pressure from giveaways to farmers and other welfare benefits ahead of a national election in 2019.
Delhi-based independent economist, Renu Kohli, replied that the government would now need to step up elsewhere to meet its divestment target.
“Relative to what we are seeing this year … uncertainty in the financial markets, aggravated distress among banks and rising interest rates and oil prices, it does not seem like a very supportive time for people to come and buy such an asset,” Kohli said, adding that Air India needed a large investment.
The government may look to raise a record 1 trillion rupees ($15 billion) with the selling of state assets in the current fiscal year that started on April 1, and Air India was expected to be a significant contributor.
While the government had not provided any minimum price, according to the reports, banking sources had told Reuters the sale could have fetched between 80 billion and 100 billion rupees ($1.2 billion to $1.5 billion).