The much-hyped Jet Airways-Etihad deal has run into turbulence with the Prime Minister’s Office on Tuesday disclosing that the stake sale matter was still under examination and several issues about the deal have been referred to related Ministries.
With the Foreign Investment Promotion Board (FIPB) and Securities and Exchange Board of India (SEBI) yet to clear the deal, the news of division within the Government over several of its provisions saw the shares of Jet Airways plunge by as much as six per cent.
At the centre of the controversy is the fact that the number of bilateral weekly seats between Abu Dhabi and Delhi were dramatically increased from 13,330 to 36,370 just before the deal.
The Government’s decision to examine the `2,058-crore deal is bound to come as a setback to Civil Aviation Minister Ajit Singh, who has been batting for the deal. Singh did not mince words in slamming his detractors by saying those opposing it were “long on politics and short on facts.”
While a statement by the PMO claimed there were no differences within the Government over the air services agreement between India and Abu Dhabi, it is significant that the Prime Minister has stepped in following objections to the deal raised by Parliamentary Standing Committee senior MPs, Jaswant Singh, Dinesh Trivedi, and Janata Party chief Subramanian Swamy.
Responding to reports over the India-UAE (Abu Dhabi) Bilateral Air Services Agreement and the Jet Airways-Etihad equity proposal, the PMO said these reports are “factually incorrect and baseless.” “As for the equity stake matter, that is a matter still under examination,” it said.
The issues raised over the deal have been referred to the Civil Aviation Ministry, Department of Industrial Policy & Promotion, Department of Economic Affairs and the Corporate Affairs Ministry “for examination and appropriate action as they were concerned with various aspects of the complaints.”
The issues relating to security concerns were referred to the Cabinet Secretary for examination to suggest whether there was a need to look into any issues afresh, the PMO statement said.
Referring to the bilateral agreement, it said “there is absolutely no disagreement within the Government or between the Ministers and the Prime Minister on the matter. The Prime Minister is neither washing his hands off the Bilateral Air Services Agreement nor is the Prime Minister’s Office trying to do a U-turn on the issue now.”
About the stake sale issue between Jet Airways and Abu Dhabi-based Etihad Airways, the PMO said this was a “distinctly different” matter as it was an agreement between two private parties.
“This is a matter between private parties which needs to be approved by the concerned agencies as per the policies and laws in place. This is not an agreement between Governments and there is no question of either backtracking from, or disowning this proposal as this is not an agreement with the Gover nment,” it said in a statement
The statement came as Cabinet Secretary AK Seth held a meeting with the Secretaries of the concerned Ministries and Departments to discuss the issue.
It also said the Prime Minister had directed that the matter be brought to the Union Cabinet “much before any of the letters complaining about the seat entitlement enhancement or the Jet-Etihad equity stake were even received.”
On his part, Ajit Singh strongly defended the deal. “It is such an important deal..., the first big deal in Civil Aviation Ministry. In terms of FDI, it is bigger than any other deal this year. There are so many dimensions to it. Those opposing the deal are long on politics and short on facts,” Singh told reporters here.
Replying to a volley of questions on the objections raised by the MPs and the parliamentary panel, he said: “It is good that the Prime Minister wants the Cabinet to discuss it.”
Asked whether his Ministry could oppose the deal, he said: “There is no question of that.” “The issue is, it’s a political thing. Basically elections are coming. They have been attacking day in and day out, this Minister and that Minister. But I wish that they had checked their facts first,” Singh said.
External Affairs Minister Salman Khurshid has said that the deal was being examined. “The FIPB has to approve any such deal and sometimes they ask for clarifications. I don’t think any deal has been halted. It is being examined as normally any deal has to be examined.”
Countering the charge of a virtual sellout made by the MPs, Singh referred to the Bilateral Air Services Agreement with the UAE in 2007-08 in which both sides agreed to enhance air traffic rights for flying 29,000 seats from 18,000 and later another additional 29,000 seats.
“We gave them additional cities (in India) when Indian carriers were using much less. Swamy was around then. Jaswant Singh was around then, Yechury too was around. Jaswant Singh has a problem. But we are following the same rules that existed when he was the Defence Minister,” he said.
Regarding the bilateral air traffic accord between India and Abu Dhabi, Singh said while Indian carriers asked for additional 55,000 seats, Abu Dhabi had sought 45,000 seats.
“We have given them 36,000 seats. Not only that, they have provided gauge change facility which earlier Emirates and Qatar had refused to give us,” he said, justifying the accord signed just after the Jet-Etihad deal earlier this year.
Referring to objections of Swamy and two MPs on the sale of Jet’s slots at london’s Heathrow Airport to Etihad, Singh said the Government had nothing to do with it as the slots belong to the airports concerned which sell them to various airlines.
Maintaining that the deal was still going through the regulatory process, Singh said: “We too have raised the same concerns. There are rules about control, place of business ... We haven’t given them anything yet.
“It is just going through the regulatory process. Only after they follow all the rules and regulations, and the concerns are addressed, will the FIPB give them clearance. Why are you people so agitatedIJ Why are these politicians so agitatedIJ”
Abu Dhabi’s national carrier Etihad had, on April 24, announced that it would purchase 24 per cent stake in Jet for Rs 2,058 crore, a premium of more than 20 per cent over the prevailing market price of Jet shares.
The FIPB, which clears FDI proposals, had on June 13 deferred a decision on the deal, saying it required more clarity on control and ownership structure of Jet Airways. Jet chairman Naresh Goyal owns a 51 per cent stake in the airline.