Jet fuel credit runs into Rs 1000cr, PSUs in a fix

Kolkata: It's a Catch-22 situation for oil PSUs Indian Oil, Bharat Petroleum and Hindustan Petroleum. Having given aviation turbine fuel (ATF) to the tune of Rs 1,000 crore on credit to different airlines, the PSUs are now finding it hard to get the dues cleared.
If the oil majors threaten to snap supply, the airlines may switch to Reliance. On the other hand, if they try to put an end to the present practice of supplying ATF on credit and bind the airlines to an agreement on regular payments, the current dues might then have to be written off as bad or toxic debts.
The dues have been mounting since the credit system was introduced in 1992. The airlines have been defaulting on payment but have managed to get ATF supplies. An audit report shows that airlines owe Indian Oil Rs 970 crore as on February 6. Add the debts of the two other oil PSUs and the dues are well over Rs 1,000 crore.
Under the credit system, the oil PSUs make fortnightly bills for ATF supplied to an airline. The sum of the two fortnightly bills every month has to be paid by the airline in four instalments - three instalments of 33% each and the fourth of 1%. The first three must be paid on the 5th, 15th and 25th of the following month while the remaining 1% is to be paid by the 10th of the succeeding month.
16/02/09 Arpit Basu/Times of India

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Categories: Indian Aviation- In General Feb 2009