Pranab steps in as oil firms put AI on notice over dues

Finance Minister Pranab Mukherjees intervention saved the day for state-owned Air India which was put on limited fuel supply.

Finance Minister Pranab Mukherjees intervention late Friday evening saved the day for state-owned Air India which was put on limited fuel supply by state-run oil firms seeking their dues from the carrier.

Air Indias daily operations were impacted when three government oil marketing companies released a fixed amount of fuel to the airline as per its paying capacity. The move resulted in cancellation of at least six Air India flights during the day.

The airline,which has been defaulting on fuel bills,had been put on a cash-and-carry basis. Indian Oil Corp (IOC),Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL),said that they had restricted the oil supply to the extent of the national carriers ability to make payment in cash,but supplies had not been stopped.

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The airlines woes may not end as it has now been warned by Delhi and Hyderabad airport operators to clear dues to continue smooth operations.

Air India was put on cash-and-carry from December but the airline continued to get fuel more than its daily purchase capacity. Its daily fuel bill amounts to Rs 18.5 crore but it had been making partial payment of Rs 13 crore until early this year.

Later,on insistence of oil firms,it was raised to Rs 16 crore till May 31 under a special arrangement reached with the Petroleum and Natural Gas ministry, said a senior aviation ministry official.

Air India owes about Rs 1,900 crore to IOC which accounts for 63 per cent of its total fuel requirements. Similarly,the total outstanding bill stands at over Rs 300 crore for fuel supplied by BPCL and HPCL.

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To tide over its cash woes,Air India has sought discounts similar to the ones given to private airlines.

… does it (Air India) know that ATF purchases by airlines such as Jet Airways and Kingfisher Airlines are covered by a bank guarantee in case of default? an official asked.

In a contingency plan that was prepared earlier in the day,most flights departing from metro airports were asked to carry fuel for their return leg too.