Oilcos threat to stop fuel supply to Air India

New Delhi: Keeping cashstrapped Air India airborne is now proving to be an uphill task for the government. Almost four months after putting it on cash-and-carry, oil marketing PSUs have warned that jet fuel supply to the Maharaja could soon be stopped unless their daily bill is cleared in full.
According to sources, the Air India-Indian Airlines combine's daily aviation turbine fuel ( ATF) bill has now shot up to Rs 18.5 crore due to successive hikes in crude prices and it has dues of about Rs 2,400 crore. Following mounting dues, AI's credit facility was withdrawn and it was put on cash-and-carry last December.
With oil PSUs say they are under severe stress following recent spike in crude price and that AI must pay up, cabinet secretary K M Chandrasekhar has called a high-level meeting of the aviation and petroleum ministries on Friday. The objective is to find a middle path that could prevent the national carrier from getting grounded and also protect the oil companies' interest.
"AI has been paying Rs 13.5 crore daily while oil companies have warned that their daily bill of Rs 18.5 crore must be cleared or else they will soon stop supply to AI. But the airline is in no position to pay more as sometimes the daily fuel bill itself is more than the daily earning . We are unable to pay salaries on time. The situation is very serious and the cabinet secretary has called a meeting on this particular issue as also the liquidity crisis in AI," said an official.
Aviation minister Vayalar Ravi has taken up this issue with his petroleum counterpart S Jaipal Reddy. But considering spiralling crude prices that have put oil PSUs under severe strain, the oil ministry is yet to relent for AI.
25/03/11 Saurabh Sinha/Economic Times

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Categories: Air India Mar 2011