Questions for 2020: Air India, BPCL get sold?

Economy


The airline will be tough to sell, unlike the energy giant. GoI is very likely to privatise BPCL in the new year. This will be a decisive step forward in its reform agenda and meet a significant chunk of its disinvestment target. The company offers foreign energy majors easy entry into the lucrative refining and retailing market of a huge energy consuming country.

The process has already gained momentum with the appointment of Deloitte as advisor for the strategic sale. The only obstacle now is employee resistance. But unions are sounding less hostile than they initially did.

Air India is a different story, in terms of being less attractive to investors because of gross mismanagement and heavy losses for years. Foreigners will be discouraged by the rule that limits their stake to 49%, while for domestic airlines, acquiring Air India doesn’t make commercial sense. But the government, which once tried but failed to get rid of the company, seems determined. The case is compelling. It is trying to make it attractive by reducing the debt of the airline. Aviation minister Hardeep Singh Puri has informed Parliament that GoI will have to shut the airline if it does not find takers.

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The government will have to take some innovative and decisive steps to sell the airline.

This story is part of the ’20 Questions for 2020′ package.



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