A group of Indian ministers led by Home Minister Amit Shah on Tuesday approved the 100 percent privatisation of national carrier Air India.
The group also discussed a plan to incentivise the prospective buyers of the beleaguered airline, for which bidders are now expected to come forward in response to the Expression of Interest (EoI), which is essentially an invitation to the bidders.
The plan is to mitigate the airline’s $8.45 billion debt so that the prospective buyers find the ailing national carrier lucrative enough to buy the government’s 100 percent stake.
The group of ministers included Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Civil Aviation Minister Hardeep Singh Puri.
“The government is planning to pay off almost a third of the total outstanding amount to airports and other vendors and also waive off the working capital loan. This will leave the prospective buyer a much abated amount, thereby making it an attractive deal to buy out the Indian government’s stake,” said an official who is aware of the development.
The airline owes $3 billion to the airports and other vendors.
“As per the plan, $2.20 billion is the quantum of working capital loan that the Indian government plans to write off. With this, the prospective bidder will have a debt liability of only about $3.25 billion,” said the official.
India is gearing up for the second attempt to privatise the national carrier, which is facing daily losses worth $3.6 million.
Indicating that the airline will remain a going concern until it is sold, last week Indian Aviation Minister Puri said: “Air India is running. Air India will keep on running. But Air India has to be privatised because it is incurring a daily loss of $3.6 million. This is taxpayer's money that can be more profitably spent.”