Govt extends credit to Air India for fuel purchase

New Delhi: Badly struggling state-owned carrier, Air India, managed a substantial relief for itself by securing credit for fuel purchase on a credit basis that will extend to a period of two to three months, instead of paying on a daily basis as it does now.

''Instead of cash and carry, Air India will from now on make payments on the basis of this credit limit of two to three months. So, the tension of making daily payments is now over,'' said civil aviation minster, Vyalar Ravi.

Since December, the carrier had been put on a cash-and-carry basis after serial defaults on payments to oil marketing companies. It is estimated that it owes more than Rs2,000 crore to these public sector companies.

According to market sources, Air India has since been paying Rs16.5 crore on a daily basis for its fuel.

The decision to extend the credit was taken by a group of ministers (GoM), headed by finance minister Pranab Mukherjee.

The GoM meet also reviewed the financial and operational performance of the ailing carrier, minister Ravi said.