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Big relief! Oil companies resume jet fuel supply to cash-strapped Air India at 6 airports

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Big relief! Oil companies resume jet fuel supply to cash-strapped Air India at 6 airports

The three public sector oil marketing companies (OMCs) -- Indian Oil Corp, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) -- have resumed jet fuel supplies to Air India from Saturday evening. The development comes after the government stepped in to mediate talks between the debt-ridden airline and the oil companies.

"Supplies to Air India resumed from Saturday evening," PTI quoted a government official as saying, without divulging details about the talks between the OMCs, Centre and airline officials. The official, however, said the airline had given its consent to payment terms for jet fuel purchases in the future.

The three state-owned companies had earlier said Air India owed Rs 5,000 crore of unpaid fuel bills to them, and that it had not paid fuel bills for the past eight months, forcing them to snap supplies on August 22. The fuel supply was stopped across six airports -- Kochi, Mohali, Pune, Patna, Ranchi and Vizag -- over several payment defaults.

Also read: OMCs stopped fuel supply due to fund crunch not operational performance: Air India Chairman

The overdue amount includes the interest accrued on the outstanding dues. Air India has a 90 day credit period, 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, an IOC statement had said earlier.

OMCs said Air India used to uplift about 250 kilolitres (kl) of ATF at these six airports daily. "The three PSUs had served similar notices on Air India earlier but withdrew them subsequently and continued with ATF supplies on the assurance of Air India management that the outstanding dues will be cleared at the earliest. However, despite repeated follow-up and reminders for payment by the OMCs, no major reduction in the outstandings materialised from the airline till date," the statement added. The state-owned carrier has a total outstanding debt of over Rs 58,000 crore.

Also read: OMCs stop fuel supply to Air India at six airports due to non-payment of dues

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Edited by Manoj Sharma