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Updated: August 19, 2011 10:04 IST

GoM wants fuel for AI on credit

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A file photo of Civil Aviation Minister Vayalar Ravi. Photo: C. Ratheesh Kumar
The Hindu
A file photo of Civil Aviation Minister Vayalar Ravi. Photo: C. Ratheesh Kumar

It will reduce uncertainty of fuel supply

The Group of Ministers (GoM) on Air India has asked the State-run oil marketing companies to start providing Aviation Turbine Fuel (ATF) to the carrier on credit once again. Cash-strapped national carrier had been put on notice by the oil companies, which are adhering to cash and carry system as of now.

The group, which met on Thursday under the chairmanship of Finance Minister Pranab Mukherjee, is likely to finalise the financial restructuring and turnaround plan by next month. It had asked a Committee of Officers/Secretaries to give views on the plan. The committee is expected to give its report by the first week of September.

“The Petroleum Ministry will ask the State-run oil marketing companies to immediately switch AI from cash-and carry to credit system for two to three months,” said Civil Aviation Minister Vayalar Ravi.

Shifting to normal credit will reduce uncertainty of fuel supply on day-to-day basis. At present, the daily oil bill of the carrier is about Rs. 16.7 crore. According to sources, the current problem is that as soon as the bill amount reaches Rs.14 crore or Rs.15 crore by 2 p.m., the computer stops generating invoices, which results in supply being stopped. On a few occasions in the recent past, the debt-laden national carrier was forced to cancel and delay its flight on account of fuel supply being stopped.

The public sector oil marketing companies such as Indian Oil (IOCL), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) placed Air India under cash and carry scheme from December 7, 2010. As on 30th June, 2011 total dues outstanding to IOCL was Rs.1,558.18 crore, while the outstanding against HPCL was Rs.342.27 crore. The carrier owed BPCL Rs.432.65 crore.

Why doesn't govt take over all the loans air india has from the indian banks who are charging higher rates so that air india can make long term payments to the govt at moderate rates over a longer period of time.this will not only not bring in the good money chasing bad money as many experts have pointed out but will also be a big step in reviving the national flag it is it is a matter of simple book entry transaction s banks and air india are govt owned organisations.other wise cash and carry basis only shows the govt in poor light as two brother s fighting for their father's property..tut...tut

from:  Prafull
Posted on: Aug 19, 2011 at 10:17 IST
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