New Delhi:Kingfisher Airlines chief, Mr Vijay Mallya, might end up buying more trouble if the Government actually accepts his plea to be allowed to directly import jet fuel.
High infrastructure and product transportation costs could negate the benefits which Mr Mallya is looking to gain from saving sales tax paid on the product.
Reeling under a severe financial crunch, Kingfisher had approached the Directorate-General of Foreign Trade for direct import of jet fuel to save sales tax.
Oil industry officials said that merely importing the product would not be enough. The company will need to spend a significant amount on building port/airport infrastructure, transport, facility to fuel the aircraft, and skilled manpower. For instance, the existing infrastructure, built years ago, had cost the oil companies around Rs 60-100 crore at each centre.
They wondered whether Kingfisher has enough resources, including land, to build the infrastructure. Also, oil industry sources wondered whether Kingfisher would be able to pay for the imports in dollars, when it is unable to clear its mounting domestic fuel bills.
16/11/11 Arun S Richa Mishra/Business Line
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