Pay Up Or We’ll Cut Fuel Supply: Oil Companies To Air India
An Air India Ltd. aircraft prepares to land at Chhatrapati Shivaji International Airport in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Pay Up Or We’ll Cut Fuel Supply: Oil Companies To Air India

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Issuing an ultimatum to Air India, state-run oil majors on Thursday asked it to make the monthly lump sum payment by Oct. 18 or they will stop the fuel supply at six major domestic airports.

In a letter sent to Air India on Thursday, the three oil public sector undertakings-- Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. -- said “the outstanding has not come down considerably in the absence of the committed monthly lump sum payment”.

PTI has accessed the communique sent by the oil marketing companies to the national carrier.

In August, the three fuel retailers had stated that Air India owed Rs 5,000 crore in unpaid fuel bills with payments being delayed by almost eight months.

On Aug. 22, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp 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 the fuel supply on Sept. 7.

On Oct. 5, the oil companies had told Air India that if it did not make the monthly lump sum payment, they will stop fuel supply from Oct. 11 at "six major domestic airports". Subsequently, Air India sent a letter on Thursday, requesting OMCs to not stop the fuel supply.

The OMCs wrote back on Thursday itself, stating that "while we are in receipt of your letter dated Oct. 10 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, 2019," they said.

The OMCs requested the national carrier to adhere to its commitment to make lump sum payment towards "overdue outstanding, failing which we will be reviewing our decision and stop supplies as per above notice".

In Thursday's letter, they mentioned that the "commitment towards daily payment has been mostly adhered to by Air India... the outstanding has not come down considerably in the absence of the committed monthly lump sum payment".

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.

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