Air India Owes Rs 5,000 Crore To Oil Marketing Companies, Says Indian Oil Corporation
The airline has a credit period of 90 days to oil companies.
Air India owes Rs 5,000 crore to oil marketing companies, including the interest accrued on outstanding dues, according to India’s largest fuel retailer.
This comes after state-run oil marketing companies—Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd.—stopped jet fuel supply to Air India at six airports due to mounting outstanding dues from the debt-laden carrier.
“Oil marketing companies have been constrained to suspend supply of jet fuel to Air India and Alliance Air flights at six airports from the evening of 22nd August 2019 due to mounting outstanding dues from the airline and their ramifications for their working capital requirements,” Indian Oil Corporation said in a statement on Friday.
The six airports include Kochi, Mohali, Pune, Ranchi, Patna and Visakhapatnam. On a daily basis, the carrier buys about 250 kilolitres of aviation turbine fuel at these airports
While the airline has a credit period of 90 days to oil companies, the credit period has since crossed the limit and has been at about 230 days for nearly two years.
Oil marketing companies had earlier served notices on Air India but withdrew them subsequently and continued with aviation turbine fuel supplies on the assurance of the airline’s management that outstanding dues will be cleared at the earliest, the statement said.
“Despite repeated follow-up and reminders for payment by the OMCs, no major reduction in the outstandings materialised from the airline till date. That too after the ATF prices have climbed down from a high of Rs 76,378 per kilolitre in November 2018 to Rs 63,295 per kl currently,” it said.
According to Civil Aviation Minister Hardeep Singh Puri, the national carrier’s total debt as of March 31, 2019 stood at Rs 58,351 crore.