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

OMCs says Air India has not paid fuel bills for the past eight months, forcing them to snap supplies across six airports -- Kochi, Pune, Patna, Ranchi, Vizag and Mohali

twitter-logo BusinessToday.In   New Delhi     Last Updated: August 25, 2019  | 13:35 IST
OMCs stopped fuel supply due to fund crunch not operational performance: Air India Chairman

After three state-owned companies said Air India owed Rs 5,000 crore of unpaid fuel bills and stopped fuel supply to the airline, Air India Chairman and Managing Director Ashwani Lohani has assured it'll not affect the airline's "operational performance". He said OMCs had stopped fuel supplies due to fund crunch. OMCs earlier said Air India had not paid fuel bills for the past eight months, forcing them to snap supplies.

"It is because of an overall shortage of funds but doesn't reflect on the operational performance and recent efforts of the airline," said Lohani. He also said it was, however, true that huge debt servicing affected every single aspect of the airline's operation.

Air India flights operating from the six airports, where ATF supplies have been suspended, are reportedly tanking up from other airports. Indian Oil Corporation (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) on August 22 stopped jet fuel or ATF supplies to Air India at six airports - Kochi, Pune, Patna, Ranchi, Vizag and Mohali - over payment defaults.

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

"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 tune of Rs 5,000 crore," IOC said in a statement issued on behalf of the three firms.

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, IOC said.

Air India uplifts about 250 kilolitres (kl) of ATF at the 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 said. The ATF prices have dropped from a high of Rs 76,378 per kl in November 2018 to Rs 63,295 per kl currently.

Manoj Sharma with PTI inputs

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