CAG issues purchase advice based on IA mistakes
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Aviation regulator, the Comptroller and Auditor General (CAG), is investigating Indian Airlines for violating the directions of the Empowered Group of Ministers (EGoM) when purchasing 43 Airbus aircraft back in 2005. As a result of the irregularities, the CAG has advised ministers to make aircraft acquisitions based on the 3G auction model. It also said acquisitions should be linked to “reasonable debt-equity ratio so that borrowings are kept within limits”, reports the Indian Express.
The problem with the order is contractual. AI representatives failed to include specific terms which would commit Airbus to to set up a US$75 million (INR337.1 crore) Pilot Training Centre and a US$100-million Maintenance, Repair and Overhaul (MRO) facility. However the airplane manufacturer is refusing to honour the commitment made in pre-contractual negotiations. Five years on, the MRO facility has not made it off the drawing board.
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