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A-I divestment hinges on HCI selloff

The civil aviation ministry and the department of divestment may cross swords on Friday at the meeting of Committee of Secretaries on delay in sell-off of Hotel Corporation of India as it could impact the pace of privatisation of the parent corporation-- Air India.

While the CoS is expected to discuss and approve the draft shareholder's agreement for sale of 40 per cent equity in A-I to strategic partners, there is a difference of opinion between the two ministries on the divestment process of HCI.

DoD is believed to have recommended that a provision be made in A-I's shareholders' agreement to take into account the divestment of HCI but civil aviation ministry is understood to be opposing the idea on the ground that this might not be tenable.

The sale proceeds of HCI are slated to go in the coffers of loss-making A-I to improve the carrier's financial viability and, hence, the government is unlikely to hive off the airline's subsidiary for divestment at a later stage.

Officials of either ministry declined comment saying they would rather await the outcome of the meeting of CoS.

However, sources said that DoD was trying to seek clearance of A-I's shortlisted bidders from the Cabinet Committee on Security by the end of the month.

Tata-Singapore International Airlines combine and Hindujas are in the fray for taking management control of the international carrier by becoming a strategic partner.

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