Oil Firms Say Air India Not Honouring Rs 100 Crore/Month Payment Promise
Air India owes Indian Oil Corporation about Rs 2,700 crore in unpaid fuel bills.
State-owned oil companies accused Air India of not honouring its commitment to pay Rs 100 crore every month to clear overdue air turbine fuel outstanding of over Rs 5,000 crore and will be forced to snap supplies at major airports from Friday if no solution is offered.
Indian Oil Corporation., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd., have served a notice on Air India that they will be forced to stop ATF supplies if payments are not made, he said.
Air India had back in June and again in September agreed to pay the three oil marketing companies Rs 100 crore every month to clear past ATF dues. But unfortunately it hasn’t met its commitment.Sandeep Kumar Gupta, Director (Finance), Indian Oil Corp.
The monthly payment was besides the airline being put on cash-and-carry where it was given fuel only against cash payment. "We have said we will stop supplies at major airports. Let's see what is the outcome of negotiations before the Oct. 18 deadline," Gupta said.
Air India owes Indian Oil about Rs 2,700 crore in unpaid fuel bills. This includes Rs 450 crore of interest. It's outstanding towards the three oil firms is about Rs 5,000 crore including interest.
Gupta said the oil companies haven't indicated the airports where supplies will be stopped but they will be major airports, unlike the six small airports where fuel supplies to Air India aircraft were stopped in August.
Supplies were resumed last month after Air India committed to paying Rs 100 crore every month to oil firms to clear past dues, he said adding Air India buys about Rs 13-14 crore worth of fuel every day from Indian Oil, that controls about 50 percent of the market share.
On Aug. 22, Indian Oil, BPCL and HPCL had stopped fuel supplies to Air India at six airports of Kochi, Mohali, Pune, Patna, Ranchi and Vizag over payment defaults.
However, after the intervention of the Ministry of Civil Aviation, they resumed fuel supply on Sept. 7.
On Oct. 5, the oil companies had told Air India that if it did not make the monthly lumpsum payment, they will stop fuel supply from Oct. 11 at six major domestic airports. Subsequently, Air India wrote to them requesting not to stop the fuel supply.
The oil retailers wrote back on Thursday itself, stating that “while we are in receipt of your letter dated 10 Oct., requesting OMCs against stoppage of fuel supply, it has been observed that no timelines have been mentioned with respect to the lump sum payment”.
"However, taking into consideration your request, we are deferring our decision to suspend supplies to Oct. 18," they said.
The OMCs requested the national carrier to adhere to its commitment to making a lumpsum payment towards "overdue outstanding, failing which we will be reviewing our decision and stop supplies as per above notice".
The Centre is planning to initiate the process of divestment of its stake in Air India, which has a debt of over Rs 60,000 crore, from November this year. In 2018-19, the national carrier posted a net loss of around Rs 8,400 crore.