Oil cos tell Air India to pay dues or lose fuel supply from October 18

Air India has a week to pay dues of over Rs 5,000 crore

Air India rep Sail bera Representational image | Salil Bera

Issuing an ultimatum to Air India, PSU oil majors on Thursday asked it to make the monthly lump sum payment by October 18 or they will stop the fuel supply at six major domestic airports.

In a letter sent to Air India on Thursday, the three oil PSUs—Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)—said "the outstanding has not come down considerably in the absence of the committed monthly lump sum payment".

PTI has accessed the communique sent by the oil marketing companies (OMCs) to the national carrier.

In August, the three fuel retailers had stated that Air India owed Rs 5,000 crore in unpaid fuel bills with payments being delayed by almost eight months.

On August 22, Indian Oil Corp, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) had stopped fuel supplies to Air India at six airports of Kochi, Mohali, Pune, Patna, Ranchi and Vizag over payment defaults.

However, after the intervention of the Ministry of Civil Aviation, they resumed the fuel supply on September 7.

On October 5, the oil companies had told Air India that if it did not make the monthly lump sum payment, they will stop fuel supply from October 11 at "six major domestic airports". Subsequently, Air India sent a letter on Thursday, requesting OMCs to not stop the fuel supply.

The OMCs wrote back on Thursday itself, stating that "while we are in receipt of your letter dated 10th October 2019, requesting OMCs against stoppage of fuel supply, it has been observed that no timelines have been mentioned with respect to the lump sum payment".

"However, taking into consideration your request, we are deferring our decision to suspend supplies to October 18, 2019," they said.

The OMCs requested the national carrier to adhere to its commitment to make lump sum payment towards "overdue outstanding, failing which we will be reviewing our decision and stop supplies as per above notice".

In Thursday's letter, they mentioned that the "commitment towards daily payment has been mostly adhered to by Air India... the outstanding has not come down considerably in the absence of the committed monthly lump sum payment".

The Centre is planning to initiate the process of divestment of its stake in Air India, which has a debt of over Rs 60,000 crore, from November this year. In 2018-19, the national carrier posted a net loss of around Rs 8,400 crore.