OMCs mull to stop fuel supply to Air India at two more airports over unpaid bills

Air India's flight services, including those for Haj, are likely to be hit partially following the threat by IOC-led oil marketing companies to suspend fuel supplies at two more airports - Hyderabad and Raipur - over non-payment of dues.

State-owned oil marketing firms have already stopped supplying fuel to Air India flights in Pune, Vizag, Cochin, Patna, Ranchi and Mohali since 22 August.

The state-run carrier owes about Rs 4,300 crore in dues to the three OMCs - Indian Oil Corp, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd.

Though Air India is on cash-and-carry mode since April this year, and has been paying ?18 crore per day towards daily jet fuel bills, the OMCs have sought clearance of all dues at the earliest.

"The OMCs have asked Air India to make a lump sum payment towards outstanding amount, including interest at the earliest, saying if the carrier fails to do so, they will extend the suspension of fuel supplies to Hyderabad and Raipur airports as well from 6 September," a source privy to the development said.

Air India does not operate international flights from six airports where the OMCs have not been supplying jet fuel since 22 August.

"However, if it is stopped in Hyderabad as well, there will be severe impact on some of our overseas flights as well as Haj operations in addition to domestic operations," said the source quoted above.

"Air India's total fuel bill dues were Rs 4,600 crore as of 31 March 2019, which came down to ?4,300 crore by 31 July... Also, since 1 April this year, Air India is making a payment of ?18 crore per day for daily fuel intake."

An Air India spokesperson refused to comment.

So far, the national carrier was managing operations from the six airports by rescheduling flights, but if supplies were cut at two more airports, especially Hyderabad, it would have a big impact on its overall operations, the source added.

On Wednesday, Indian Oil defended cutting jet fuel supplies to Air India. "We ourselves are borrowing around ?75,000 crore annually, that means we are a net borrower and not a cash-surplus company. To support credit to Air India, we need to borrow from the markets," IOC chairman Sanjiv Singh had said.

IOC provides 90-day credit to Air India, but the dues have been mounting, and it must be about 240 days now.

"So the total dues to us, including interest, is more than Rs 2,900 crore. Although we do not take any formal bank guarantee from a public sector entity, which we do from private airlines, now we are a little worried and cannot continuously support the airline," Singh had said.

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

Also read: Air India owes Rs 4,500 crore in fuel dues; hasn't paid in 200 days, say OMCs