Oil PSUs decide not to supply fuel to Air India on credit
In a major snub for the bleeding national carrier Air India (AI), state-owned oil companies led by Indian Oil Corporation (IOC) have said they would not risk supplying fuel to the airline on credit considering the financial mess the carrier was in. Anupama Airy and Tushar Srivastava report.delhi Updated: Aug 10, 2011 23:59 IST
In a major snub for the bleeding national carrier Air India (AI), state-owned oil companies led by Indian Oil Corporation (IOC) have said they would not risk supplying fuel to the airline on credit considering the financial mess the carrier was in.
AI owes R2,300 crore to oil firms (IOC, HPCL and BPCL), which had put it on cash and carry last December. It buys fuel worth R18.5 crore but makes a daily payment of only R16 crore.
“Air India is not regular with even these daily payments,” the chief of an oil company told HT seeking anonymity. “Almost every other day, they (AI officials) request us to hold on to the cheques for a day or so before depositing them.”
Chairman and managing director, IOC, RS Butola said his company will not supply fuel on credit to AI till the national carrier clears R1,950 crore of dues. Moreover, he said unlike other airlines, which gave bank guarantees, AI refuses to do so.
Miffed oil firms had cut off fuel supplies to AI in May, resulting in a loss of R10 crore for the airline.
The crisis reached a flashpoint again on Wednesday as oil companies threatened to snap fuel supplies to AI after cheques issued by the airline bounced.
While AI denied the cheques had bounced, oil company officials said AI cheque payments on Monday and Tuesday bounced, thereby forcing the oil firms to set a deadline of 4 pm Wednesday for AI to deposit the money, but it failed.
But intervention from the aviation ministry saved the day. Oil firms have been assured that a payment of R30 crore would be made by Thursday.