Snapping ATF Supplies To Air India, Indian Oil Says Doesn’t Have Cash-Surplus
Air India flight A321 sits on the tarmac during the inauguration of the B777-200LR and Airbus 321at Indira Gandhi International Airport in New Delhi, India. (Photographer: Pankaj Nangia/Bloomberg News)

Snapping ATF Supplies To Air India, Indian Oil Says Doesn’t Have Cash-Surplus

Listen to Article

Indian Oil Corporation Ltd. chairman defended cutting jet fuel supplies to the flag carrier Air India at six airports over non-payment saying that the national oil refiner is not a cash-surplus company.

Last week, Indian Oil Corporation, along with Bharat Petroleum and Hindustan Petroleum, had stopped jet fuel supplies to Air India at six airports—Kochi, Pune, Patna, Ranchi, Vizag and Mohali—over payment defaults, which amounted to around Rs 4,500 crore and pending since the past 240 days.

The supplies are yet to be resumed even after a week.

"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," chairman Sanjiv Singh told reporters.

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

Also read: Oil Marketers To Meet Air India Today Over Repayment Of Dues, Says Indian Oil Chairman

"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 explained.

He further said, "the decision to stop the fuel supply was not to cause any discomfort to the passengers but was to primarily indicate that IOC cannot continue to give credit indefinitely."

From IOC's point of view, it is a big call as it is a commitment beyond business and that is why it has been supporting the national carrier so far.

"We feel we have given them the right signal, but this was after a lot of follow-up with them. Unfortunately, we are still not seeing any improvement in Air India which is fighting its own problems as well," Singh added.

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

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.