1. Home
  2. India
  3. Oil PSUs Resume Fuel Supply To

Oil PSUs Resume Fuel Supply To Air India

PTI 10 Aug 2011, 22:40:19 IST

New Delhi, Aug 10: State-owned oil firms today halted jet fuel supplies to cash-strapped Air India for non-payment of dues leading to disruption of some of its flights after cheques of the national carrier bounced.

The Aviation Turbine Fuel (ATF) supplies were resumed after Air India agreed to make the payments tomorrow to the oil companies following hectic parleys by Civil Aviation and Petroleum ministries to find a solution.

Oil industry officials said cheques issued by Air India for its daily fuel purchases, which total about Rs 16.5 crore, bounced, prompting their companies to take such action. The airline is understood to be negotiating with some foreign banks to help make the paymetns tomorrow.

The departure of a couple of flights originating from Kolkata and Chennai were delayed by 30 to 45 minutes.

The supplies were stopped at some stations including major ones like Delhi, Mumbai, Chennai and Kolkata, but were later resumed.

“Indian Oil, Bharat Petroleum and Hindustan Petroleum have from 1600 hours stopped aviation turbine fuel (or jet fuel) supplies to AI,” a senior industry official said.

Air India was put on cash-and-carry mode of debit from December last year on account of non-payment of Rs 2,200 crore dues to the three state-run oil companies. Under cash-and-carry, supplies are made only when cash is paid. The oil companies are understood to have been informed that the airline would be paying its daily dues from tomorrow. Severe cash crunch has led Air India to previously default on payments, affecting its flight schedules.

The officials said that the oil companies had together decided to curtail supplies by 20 units, which would have hit flights from the major metros. Air India officials heaved a sigh of relief after the supplies were restored.

Air India's cheque of Rs 3.4 crore to Bharat Petroleum Corp Ltd (BPCL) and Rs 2.7 crore to Hindustan Petroleum Corp Ltd (HPCL) had bounced. AI also defaulted on payment of about Rs 10 crore to Indian Oil Corporation, officials said.

Air India has to pay Rs. 16.5 crore to oil companies daily as per the agreement between the companies and the national carrier. It gets around 225 kilo litre of aviation turbine fuel daily to meet its requirements.

In June, the oil firms had been directed by the government to meet the carrier's requirements for three months to allow it to carry out its daily operations after Civil Aviation Minister Vayalar Ravi met Petroleum Minister S Jaipal Reddy to sort out the issue.

Due to the fuel-supply restrictions, the airline was then being forced to combine and even curtail between 10 and 15 per cent of its flights on a daily basis. It runs an average of 320 flights daily.

Air India was awaiting release of funds sanctioned by the government as well as some banks, sources said. PTI