Oil companies threaten to cut off ATG supplies to Air India over dues

Oil companies last week sent a notification to Air India for suspending aviation turbine fuel (ATF) supplies to Air India at certain airports including Calicut and Jaipur, according to officials.

Air India owes Indian Oil Corp (IOC) about Rs1,900 crore. which meets 63 per cent of Air India's jet fuel needs. Bharat Petroleum Corp Ltd (BPCL) is to recover Rs300 crore from the carrier while its dues to Hindustan Petroleum Corp Ltd (HPCL) are relatively small.

According to officials, Air India buys jet fuel worth Rs18.5 crore on a daily basis, from the three state oil firms, but pays only Rs13.5 crore.

This has led the oil firms threaten stoppage of supplies of ATF beyond what Air India pays for.

According to an official oil companies incurred huge losses on selling diesel, domestic LPG and kerosene way below their production cost and to expect them to sell ATF at subsidised rates was not acceptable.

Air India sought discounts similar to the ones given to private airlines, at a meeting called in March, by cabinet secretary KM Chandrashekhar.