IOC, BPCL, HPCL resume fuel supply to Air India

New Delhi: Public sector oil companies resumed supply of air turbine fuel (ATF) to Air India on Saturday evening after talks mediated by the government, an official spokesperson said. While refusing to divulge more details of the agreement reached earlier this week, the spokesperson said that the cash-strapped airline has agreed to payment terms for future ATF purchases.

Supply had been cut since Aug 22

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) had snapped fuel supply to the national carrier on August 22. The ATF supply had been stopped at six airports, including Kochi, Mohali, Pune, Patna, Ranchi and Vizag, over payment defaults. A joint statement released by the three OMCs said that Air India owed Rs 4,500 crores in unpaid fuel bills with payments being delayed by almost eight months.

Air India had violated its credit period

As per the agreement with OMCs, Air India has a 90-day credit period. This means that the ATF it buys on a given day has to be paid for in three months. However, Air India had not been making payments, forcing oil firms to snap supplies. Air India uplifts about 250 kilolitres (kl) of ATF at the six airports on a daily basis. ‎Air India has a debt of over Rs 58,000 crore.

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