Oil Companies Warn Air India Of Stopping Supply At Two More Airports Over Unpaid Fuel Bills
An Air India Ltd. aircraft prepares to land at Chhatrapati Shivaji International Airport in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Oil Companies Warn Air India Of Stopping Supply At Two More Airports Over Unpaid Fuel Bills


Flight services of flag carrier Air India, including those for Haj pilgrimage, might be hit partially following a threat by oil marketing companies led by Indian Oil Corporation to suspend fuel supplies at two more airports -- Hyderabad and Raipur-- over non-payment of dues.

The state-owned oil marketing firms have already stopped supplying fuel to Air India flights at Pune, Vizag, Cochin, Patna, Ranchi and Mohali since Aug. 22.

The three OMCs -- Indian Oil Corporation, Hindustan Petroleum Corp Ltd. and Bharat Petroleum Corp Ltd. -- together have around Rs 4,300 crore in dues owed from Air India.

Though Air India is on cash-and-carry mode since April this year and making a payment of Rs 18 crore per day towards daily jet fuel bill, the OMCs have sought clearance of all dues at the earliest.

“The OMCs have asked Air India to make a lump sum payment towards outstanding amount including interest at the earliest, saying if the carrier fails to do so, they will extend the suspension of fuel supplies to Hyderabad and Raipur airports as well from Sept. 6,” a source privy to the development told PTI.

Also read: Air India Owes Rs 5,000 Crore To Oil Marketing Companies, Says Indian Oil Corporation

He said that Air India does not have international operations from the six airports where the OMCs have not been supplying jet fuel to its flights since Aug. 22.

“However, if it is stopped in Hyderabad as well, there will be severe impact on some of our overseas flights as well as Haj operations in addition to domestic operations,” he said.

“Air India’s total fuel bill dues were Rs 4,600 crore as of March 31, which came down to Rs 4,300 crore by July 31,” the source said.

“Also, since April 1 this year, Air India is making a payment of Rs 18 crore per day for daily fuel intake,” the source added.

An Air India spokesperson refused to comment.

The source said so far the national carrier was managing operations from the six airports by rescheduling flights, but if supplies are cut at two more airports, especially Hyderabad, it would have a big impact on its overall operations.

On Wednesday, Indian Oil had defended cutting jet fuel supplies to Air India.

We ourselves are borrowing around Rs 75,000 crore annually, that means we are a net borrower and not a cash- surplus company. To support credit to Air India, we need to borrow from markets.
Sanjiv Singh, Chairman, IOC

He said IOC provides 90 days credit to Air India but the dues have been mounting and this must be 240 days now.

“So the total dues to us, including interest, is more than Rs 2,900 crore. Although we don't take any formal bank guarantee from a public sector entity which we do from private airlines, now we are a little worried and cannot continuously support the airline,” Singh had stated.

Also read: Oil Companies Stop Fuel Supply To Air India At Six Airports 

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.