New Delhi: When the government decides to sell its shares in Air India, it is not clear whether it must be completely out of national operators or remain a shareholder.
This chose to maintain several shares and the result was a disaster because the government failed to get any response.
However, what it does is to make it clear to the center that private players may not be interested in buying public sector companies if the government maintains shares and has nominations on the board.
Learning from the canceled AI transaction, the government decided not to entirely out of the airline but also used the model for other PSU on the privatization list, both Bharat Petroleum or Shipping Corporation.
But the privatization of AI – in a pipe for almost two years – also expected to set templates for other government disinvestment projects.
For example, even before the privatization process for AI begins, the government is clear that it does not want to provide land and real estate together with the company.
So, this asset is occupied into a separate company.
A similar strategy is being followed for other companies managed by the state.
Furthermore, this airline is one of the biggest beneficiaries of government guarantees and is a problem that has resulted in several rounds of discussion between the Ministry of Finance, the Department of Investment and Management of Public Assets (Depam), the Ministry of Civil Aviation and EY, transaction advisors.
Some guarantees are very important for AI to borrow from the market to buy aircraft and raise funds later, especially considering the dangerous financial position.
Then, there are complicated problems about how to deal with post-disinvestment work benefits.
The government has chosen a simple formula – paying the benefits to privatization, both retirement or medical facilities.
In fact, the Civil Service Ministry has written to airline management to start the separation process for PF.
Separately, it has been assigned to work on medical benefits for employees.