IOC encashes Rs 50 cr Kingfisher bank guarantee

State-run Indian Oil Corp (IOC) has encashed a Rs 50 crore bank guarantee after a cheque issued by Kingfisher Airlines towards fuel dues bounced.     

IOC encashed the bank guarantee Kingfisher had given for buying aviation turbine fuel or ATF for its fleet of 75 aircraft, 10-days back, industry sources said.     

As on April 20, the private air-carrier owed IOC about Rs 160 crore in fuel bills. It sent a cheque of the amount to IOC but the cheque bounced, forcing IOC to encash the bank guarantee.     

Besides IOC, Kingfisher owes HPCL -- its largest ATF supplier -- Rs 336 crore and BPCL another Rs 290 crore.     

When contacted, a Kingfisher spokesperson said: "It is not Kingfisher Airlines' policy to discuss its relationships with suppliers in the public domain... Kingfisher Airlines is operating its full schedule of flights daily."

Industry sources said the company had put Kingfisher on cash-and-carry about 2-3 month back after the airline failed to honour its commitment of making timely payments for past fuel dues as had been agreed last year.     

Both IOC and BPCL have stopped credit to Kingfisher and are asking the airline to make payments for every refueling. HPCL, however, continues to give some credit to the airline.

They said Jet Airways, the other private carrier, which was part of the bailout package, has been clearing its dues regularly. Its outstanding to IOC was just Rs 30 crore and it owed another Rs 80 crore to BPCL.