Oil firms resume fuel supply to Air India after four hours

Airline assures payment today 25 flights delayed across six airports

After stopping supplies to Air India for four hours, the public sector oil marketing companies (OMCs) resumed supply after the airline assured it would make payments on Friday. The non-supply led to a delay of 25 flights across six airports.

“Our oil supplies were cut for over four hours (from 4pm to 8.30pm) and resumed after assurance of a payment by tomorrow. None of our flights were cancelled but 25 flights were delayed at the six airports,” said an Air India official, who did not want to be identified. Oil supplies were stopped at Delhi, Mumbai, Chennai, Kolkata, Trivandrum and Kochi airports.

The OMCs confirmed the supplies had been resumed and said if the payment is not made tomorrow, the airline will be put on cash-and-carry. “If Air India does not pay us by tomorrow evening, we will put it back on cash-and-carry,” said an oil company official, who did not want to be identified.

A Group of Ministers (GoM), formed to monitor the revival of AI, had given a three-month credit period to AI, a shift from the normal credit period of 15 days. This is not the first time OMCs have stopped aviation turbine fuel (ATF) supply to airlines. On two occasions earlier, the OMCs had stopped supplies to AI and Kingfisher Airlines, on account of non-payment of dues.

Today, the companies — Indian Oil Corporation (IOC), Hindustan Petroleum Corporations (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) — stopped supplies after the government carrier did not clear dues for the second fortnight of October, in the range of Rs 268 crore and due on January 22, 2012.

As of November 30, total dues on account of ATF supplied to Air India by OMCs was Rs 4,200 crore. Of this, Rs 3,588 crore is the principal and Rs 582.33 crore is the interest.

Air India, with losses of Rs 20,000 crore and debt of over Rs 43,000 crore, owes Rs 2,380.88 crore in principal amount to IOC, Rs 635.08 crore to BPCL and Rs 573.01 crore to HPCL. Besides, it owes an interest of Rs 423.43 crore to IOC, Rs 92.73 crore to BPCL and Rs 66.17 crore to HPCL.

A GoM working on the revival of AI has also recommended an infusion of Rs 23,000 crore in the airline till 2020-21.