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PORT MORESBY, Papua New Guinea (April 16, 2001 - The National/PINA Nius Online)---The partial sale of Air Niugini is off again. This is because of "rapidly deteriorating" conditions in the airline industry and Papua New Guinea-related problems, Privatization Commission chairman Ben Micah announced.

He said that the seven airlines that had bid for up to 49 percent of the shares in the airline did not comply with the government's objectives and the base criteria for the sale. He did not elaborate.

Given the circumstances, Mr. Micah said, he had no choice but to refer the matter back to the Cabinet for further consideration. The decision followed extensive discussions among Commission members and their advisers at a meeting in Port Moresby.

"After due consideration, the Commission concluded that none of the indicative bids received on March 20 conformed with the guidelines fixed for sale and we could therefore not proceed with any of them. In the meantime, our advisers will continue negotiations with a smaller number of interested parties.

"In recent months, we have seen Qantas announce a 22 percent lower first half profit, cut several unprofitable routes and even retrench 5 percent of its workforce.

"Air New Zealand barely made any profit at all for the same period after its Ansett subsidiary lost more than A$ 120 million (US$ 61,104,000).

"Obviously this type of pressured environment is not conducive to competitively priced bids or investment in general."

Mr. Micah said that the Indian government had encountered difficulties in securing a cornerstone investor for Air India, while the Thai government has been forced to abandon its plans altogether to sell a strategic stake to an international airline. The Spanish government also recently had to lower the float price for its national carrier, Iberia, by 40 per cent because of lack of investor interest.

He said many of the airlines in the region were suffering badly from a combination of weakening local economies, depreciating currencies and increasing competition.

"We will now await instructions from the government on the course we should move forward with (regarding) this extremely important privatization," said Mr. Micah.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

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