The Hindu : National : GoM to hold final round with Airbus

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Friday, Aug 26, 2005

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National

GoM to hold final round with Airbus

Vinay Kumar

Prime Minister to decide on composition

NEW DELHI: The Government on Thursday referred the proposal for the purchase of 43 passenger aircraft at a cost of Rs. 10,000 crores for Indian Airlines to an Empowered Group of Ministers (EGoM) for the final round of negotiations with the European consortium, Airbus Industrie.

At a meeting of the Cabinet Committee on Economic Affairs (CCEA), presided over by Prime Minister Manmohan Singh, it was decided to refer the deal to the EGoM as recommended by the Civil Aviation Ministry.

"Last round of negotiations"

Briefing reporters here, Finance Minister P. Chidambaram said the EGoM would hold "one last round of negotiations" in a time-bound manner. Dr. Singh would decide the composition of the EGoMand the Cabinet Secretary would announce it on Friday.

Asked how soon the deal would be finalised, he said: "Very soon; it could be possibly as short as three weeks."

Replying to queries, the Minister said there was no delay on the part of the Government in processing the fleet purchase plan. "When the United Progressive Alliance Government took over, virtually nothing had happened. We set up a negotiation committee and an oversight committee to go into various aspects. There are still one or two grey areas, which require to be addressed. In order to expedite it, the EGoM will very quickly hold one last mile negotiation with Airbus."

After the EGoM clearance, there would be no need to go back to the Cabinet for approval.

Price factor

The proposal to purchase 43 aircraft was cleared by the IA Board in April 2002. In the past three years, it crossed procedural hurdles such as the pre-Public Investment Board and the Public Investment Board but got stuck recently when the Finance Ministry wanted to know whether IA was getting the best price from the manufacturer. It was of the view that a final round of negotiations could be held to lower the prices.

The Civil Aviation Ministry favoured the setting up of an EGoM or a Committee of Secretaries to hold the last round though IA's Price Negotiation Committee (PNC) already held talks with Airbus.

Several MPs also expressed their doubts over the deal, as Airbus reportedly offered similar aircraft to some South East Asian airlines at a lower price.

Airbus said it could not disclose details of its deals with other airlines on the ground of confidentiality.

Compensation plan approved

New Delhi: The Cabinet on Thursday approved a Rs. 70.28 crore compensation plan for the tsunami-affected farmers of the Andaman and Nicobar Islands, Finance Minister P. Chidambaram said.

``The Cabinet approved payment of compensation to the farmers of Andaman & Nicobar Islands for loss of crops due to tsunami,'' he told reporters after the Cabinet meeting here. The package includes Rs. 9.67 crore special compensation for loss of paddy-vegetable crops and Rs. 60.61 crore for loss of plantation crops.

The Cabinet had earlier considered the proposal of the Ministry of Home Affairs for providing a special package for relief and rehabilitation in the tsunami-affected areas in the mainland as well as the Andaman & Nicobar Islands. — PTI

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