After three state-owned oil firms on Friday announced Air India owed them Rs 5,000 crore in unpaid fuel bills with payments being delayed by almost eight months, forcing retailers to snap supplies, the national carrier’s chairman and MD Ashwani Lohani have issued a statement citing a shortage of funds.
The limitations on fuelling required on Air India by the OMCs at six stations is because of an overall shortage of funds but does not in any way reflect on the operational performance and recent efforts of the airline, Air India MD said.
It is a fact that the large debt servicing affects every single perspective of the working of the airline, and expecting it to service out of its revenues, even the partial but still a huge debt, is indicative of lack of appreciation of working of airlines and also the ground realities challenging Air India, he added.
Thursday afternoon stopped jet fuel or ATF supplies to Air India at six airports – Kochi, Pune, Patna, Ranchi, Vizag and Mohali – over payment defaults. IOC, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL).
“The joint decision to stop fuel supply to Air India from six airports, i.e., Kochi, Mohali, Pune, Ranchi, Patna and Visakhapatnam, was taken by the oil marketing companies in the wake of long-overdue payments to the number of Rs 5,000 crore,” IOC stated in a report issued on behalf of the three firms explaining the constraints that led to taking the hard decision.
IOC said, Air India has a 90-day credit limit, which means the aviation turbine fuel (ATF) it buys on a given day has to be paid for in three months. But Air India had not been making payments and the credit period was now 230 days.
The three firms through a letter dated August 14 suggested the Air India management of their judgment to stop fuel supplies at the six airports with the result from August 22 if dues were not cleared. Air India uplifts about 250 kilolitres (kl) of ATF at the six airports on a daily base.
Another official told Air India receives financial support from the government while for oil firms there is no such help.