Economy Jul 2, 2013
Various government arms are throwing spanner after spanner in the works of Etihad Airways proposal to pick up 24 percent stake in Jet Airways for about Rs 2,000 crore. The latest stumbling block is the Prime Minister's Office (PMO).
According to media reports, the PMO has sent a letter to the civil aviation ministry saying the various issues raised by various ministries, Members of Parliament, the Foreign Investment Promotion Board and Securities and Exchange Board of India need to be discussed.
There have been concerns that the more than three-fold increase in seat entitlements in the Abu Dhabi sector will be beneficial only to Jet and other Indian airlines, mainly Air India, will be adversely impacted.
"The issue will be discussed in a meeting called by the Cabinet Secretary on Tuesday," the Indian Express report quoted a source as saying.
According to the report, clarifications have been sought from the civil aviation, commerce, and finance ministries.
The Times of India report says the PMO had sent the letter soon after the deal was signed.
Among those who have raised concerns about the deal are Jaswant Singh of the BJP, Subramaniam Swamy of the Janata Party, Dinesh Trivedi of the Trinamool Congress and Sitaram Yechuri of the Communist Party of India (Marxist).
Jaswant Singh suspects that the management of the companies and various ministry officials acted in concert as the announcement of a hike in bilateral rights in the Abu Dhabi sector and stake deal between Jet and Etihad came on the same day.
"This is very curious coincidence, leading us to suspect that the entire matter is collusive," theMint quoted from a letter written by Jaswant Singh to the prime minister in late May.
Sebi had earlier objected to the complex structure of the deal and asked Jet to change it. There were media reports that the market regulator may be comfortable with the revised structure of the deal.
After a scam-ridden running for the last few years, the Congress-led United Progressive Alliance is clearly being vary of approving the deal, especially since state-run Air India itself has raised concerns that it would be decimated if the deal goes through.
A Business Line report had earlier said the FIPB, which deferred its decision on the deal in its last meeting, is unlikely to take up the deal in its meeting slated for 5 July as well.
Now, with the PMO also getting into the picture, the deal is sure to get delayed further. And the stock price of Jet, which is down 6 percent today, is clearly reflecting that.
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