Oil PSUs stop ATF supply to AI, resume after hectic parleys

New Delhi, Aug 10 (PTI) State-owned oil firms Wednesday
halted jet fuel supplies to cash-strapped Air India for non-
payment of dues leading to disruption of some of its flights
after cheques of the national carrier bounced.
The Aviation Turbine Fuel(ATF) supplies were resumed
after Air India agreed to make the payments Thursday to the
oil companies following hectic parleys by Civil Aviation and
Petroleum ministries to find a solution.
Oil industry officials said cheques issued by Air India
for its daily fuel purchases, which total about Rs 16.5 crore,
bounced, prompting their companies to take such action.
The airline is understood to be negotiating with some foreign
banks to help make the payments Thursday.
The departure of a couple of flights originating from
Kolkata and Chennai were delayed by 30 to 45 minutes.
The supplies were stopped at some stations including
major ones like Delhi, Mumbai, Chennai and Kolkata, but were
later resumed.
"Indian Oil, Bharat Petroleum and Hindustan Petroleum
have from 1600 hours stopped aviation turbine fuel (or jet
fuel) supplies to AI," a senior industry official said.
Air India was put on cash-and-carry mode of debit from
December last year on account of non-payment of Rs 2,200 crore
dues to the three state-run oil companies. Under cash-and-
carry, supplies are made only when cash is paid.
The oil companies are understood to have been informed
that the airline would be paying its daily dues from Thursday.
Severe cash crunch has led Air India to previously default on
payments, affecting its flight schedules.
The officials said that the oil companies had together
decided to curtail supplies by 20 units, which would have hit
flights from the major metros. Air India officials heaved a
sigh of relief after the supplies were restored.
Air India's cheque of Rs 3.4 crore to Bharat Petroleum
Corp Ltd (BPCL) and Rs 2.7 crore to Hindustan Petroleum Corp
Ltd (HPCL) had bounced. AI also defaulted on payment of about
Rs 10 crore to Indian Oil Corporation, officials said.
Air India has to pay Rs 16.5 crore to oil companies
daily as per the agreement between the companies and the
national carrier. It gets around 225 kilo litre of aviation
turbine fuel daily to meet its requirements.
In June, the oil firms had been directed by the
government to meet the carrier's requirements for three months
to allow it to carry out its daily operations after Civil
Aviation Minister Vayalar Ravi met Petroleum Minister S Jaipal
Reddy to sort out the issue.
Due to the fuel-supply restrictions, the airline was
then being forced to combine and even curtail between 10 and
15 per cent of its flights on a daily basis. It runs an
average of 320 flights daily.
Air India was awaiting release of funds sanctioned by
the government as well as some banks, sources said.