AI to get indemnity offer over Cairn claim
The government is set to absolve bidders for Air India from any liability arising out of a lawsuit filed by Cairn Energy, which has claimed the staterun airline’s assets over a long-running tax dispute with the government, according to people familiar with the matter. The government will offer socalled indemnity to the financial bidders of Air India, the people said, asking not to be identified as the matter is confidential.
The Centre is set to absolve bidders for its loss-making flag carrier from any liability arising out of a lawsuit filed by Cairn Energy Plc, which has claimed the state-run airline’s assets over a long-running tax dispute with the government, according to people familiar with the matter.
Prime Minister Narendra Modi’s administration will offer so-called indemnity to the financial bidders of Air India Ltd., which the government has repeatedly tried to sell without success, the people said, asking not to be identified as the matter is confidential. In the latest attempt, a group of bureaucrats cleared a final sale purchase agreement on Saturday, and that plan is likely to be approved by a group of ministers this week, they said.
The government expects to receive financial bids by September 15, junior Civil Aviation Minister VK Singh told parliament in July. Air India, unprofitable since a 2007 merger with state-owned domestic operator Indian Airlines Ltd., has total debt of 600 billion rupees ($8.2 billion) and loses 200 million rupees every day, straining government finances even as the South Asian nation’s budget deficit widens.
A Finance Ministry spokesperson declined to comment.
Potential bidders for the airline -Tata Group and Spicejet Ltd. -- may welcome any assurance from the government on not having to encounter any surprises on further liabilities.
Cairn, which last year won an arbitration award for $1.2 billion plus interest over a controversial retrospective tax demand from the Indian government, has called Air India “an alter ego” of the country in a US court, and held it responsible for the government’s liabilities, including any arbitration awards.