HPCL defies govt order, extends credit facilities to Kingfisher

New Delhi: Cash-strapped Hindustan Petroleum Corporation (HPCL) has extended credit facilities to Kingfisher Airlines up to June 30 without a bank guarantee, defying a government instruction.
The state-owned oil firm has also ignored an oil ministry order to recover old dues from Kingfisher by invoking the Rs 250-crore corporate guarantee given by the airline’s group company United Breweries & Holdings.
“Its surprising, despite poor financial condition, HPCL is extending credits. Dues of Kingfisher alone could be more than the company’s net profit (in 2008-09),” a government official said requesting anonymity.
On March 4, 2010, old dues of Kingfisher was around Rs 602 crore while its net profit in 2008-09 was around Rs 575 crore. HPCL is yet to declare its annual financial results for 2009-10. Kingfisher has so far paid about Rs 63 crore to HPCL against its dues.
A spokesperson of HPCL said: “The company is following MoPNG (ministry of petroleum & natural gas) instructions.” Rejecting HPCL’s comment, a senior oil ministry official said: “We never instructed HPCL to extend credit to Kingfisher. On the contrary, we asked it in March to supply ATF (aviation turbine fuel) to Kingfisher only on cash-and-carry basis.”
20/05/10 Rajeev Jayaswal/Economic Times

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Categories: Kingfisher May 2010