Logistics

Air India defaults ₹4,500 cr fuel bills

PTI New Delhi | Updated on August 23, 2019 Published on August 23, 2019

Oil firms stopped jet fuel supplies to Air India at six airports. File Photo   -  Reuters

Payments to three state-owned oil firms due for over seven months

Air India owes three state-owned oil firms close to ₹4,500 crore in unpaid fuel bills with payments being delayed by almost seven months, forcing retailers to snap supplies, senior officials said on Friday.

Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) on Thursday afternoon stopped jet fuel or ATF supplies to Air India at six airports - Kochi, Pune, Patna, Ranchi, Vizag and Mohali - over payment defaults.

“Air India has a 90 day credit period, which means they have to make payment for fuel they buy today by November 21. But Air India had not been making payments and the credit period was now over 200 days,” a senior official at one of the three state-owned oil firms said.

Total unpaid dues to three fuel retailers stand at close to ₹4,500 crore. “They (Air India) offered to pay Rs 60 crore which is a drop in the ocean of what they owe,” another official at one of the fuel retailers said.

IOC, BPCL and HPCL more than a week back jointly wrote to Air India seeking expeditious clearance of the dues, failing which they will be constrained to take action. “Air India however failed to provide a clear roadmap to clear dues, forcing us to stop supplies,” the official said.

Another official said Air India gets financial support from the government while for oil firms there is no such help. “Aviation Turbine Fuel (ATF) pricing was deregulated in April 2002. And since then we have to run this business without any subsidy support from the government,” he said.

At present, the government only provides some subsidy on LPG to help roll out its ambitious Ujjwala scheme of providing free cooking gas connections to poor. There is also a subsidy on kerosene supplied through the public distribution system (PDS).

A senior Air India official had on Thursday said that oil firms stopped fuel supplies to the airline at Cochin, Visakhapatnam, Mohali, Ranchi, Pune and Patna around 4 pm. Air India spokesperson had on Thursday stated that “in the absence of equity support, Air India cannot handle the huge debt service liabilities.”

“Our financial performance, however, this fiscal is very good and we are moving towards a healthy operating profit. The airline despite its legacy issues is performing very well,” he had added. Air India has debt of over ₹58,000 crore.

Published on August 23, 2019
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