AI allowed to take fuel on credit for three months

A group of ministers (GoM) on Thursday allowed state-owned Air India (AI) a credit limit of up to three months for payment of fuel dues.

The ailing carrier, which is on a cash-and-carry basis, pays Rs 16.5 crore daily to oil marketing companies. “Instead of cash and carry, AI will from now on make payments on the basis of this credit limit of two to three months. So, the tension of making daily payments is now over,” civil aviation minister Vayalar Ravi said after the meeting. Petroleum minister S Jaipal Reddy is also a member of the GoM, headed by finance minister Pranab Mukherjee.

The carrier was put on cash-and-carry mode after its oil dues reached Rs 2,800 crore. Recently, the oil marketing companies stopped supplies to AI for a few hours after cheques given by the airline were not honoured by banks.

This was the first meeting of the GoM attended by the newly appointed chairman and managing director of AI, Rohit Nandan. The meeting was also attended by home minister P Chidambaram, Planning Commission deputy chairman Montek Singh Ahluwalia and civil aviation secretary S Nasim Zaidi.

Ravi said nothing about the turnaround plan was discussed. “A sub-committee of the finance ministry will submit a report on the turnaround and financial restructuring plan next month,” he said, adding the GoM would meet again in mid-September.