New Delhi: Air India’s unpaid fuel bills of about Rs 5,000 crore is weighing on fuel retailers who need extra cash for buying more dollars to pay for costlier crude at a time when demand is picking up.
Industry executives said they were yet to hear from the government on the timeline for payment, though the Centre has said it would take over the carrier’s total dues of nearly Rs 16,000 crore and non-core assets through a holding company before the Tatas take over.
IndianOil alone accounts for Rs 3,000 crore, or 60%, of Air India’s unpaid fuel bills. Other fuel suppliers together account for the remaining Rs 2,000 crore dues, according to industry estimates.
Such a large amount of dues will be a drag on cash flow of the country’s largest oil refiner and fuel retailer. Taking over of the liability by the proposed holding firm, Air India Asset Holding Company, may guarantee future payment but it will be long before the new entity can monetise the non-core assets it will take over and clear the dues. In the meantime, IndianOil and other suppliers may have to borrow money to buy crude.
Crude prices are ruling at a seven-year high of $85 per barrel, which is telling on the cash needs of oil companies. Fuel demand is also rising at a trot, with petrol demand surpassing the pre-pandemic level, diesel consumption nearing that mark and jet fuel sales at 75% of 2019.
31/10/21 Sanjay Dutta/Times of India
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