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.
