Friday, October 7, 2022

OMCs again threaten to cut ATF supply to Air India

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New Delhi: A month after state-run oil marketing companies (OMCs) snapped air turbine fuel (ATF) supply to Air India, they have issued a fresh warning. Sandeep Kumar Gupta, Director (Finance) at Indian Oil Corporation (IOC), said on Tuesday, “Air India had back in June and again in September agreed to pay the three oil marketing companies Rs 100 crore every month to clear past ATF dues. But unfortunately, it hasn’t met its commitment.” The statement comes just a week after IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) served a notice to the national carrier, saying that they would be forced to stop jet fuel supply if payments are not made.

How much does Air India owe?

Air India owes over Rs 5,000 crores to OMCs. It had committed to clear Rs 100 crores every month to clear the outstanding overdue of Rs 5,000 crores. However, it has failed to do so. A source at one of the state-run refiners said that the airline has been clearing the day-to-day payments on a daily basis. The payments committed to clearing the previously accumulated dues has not been coming, he added. In case the national carrier fails to follow good on its commitment, jet fuel supply will be snapped at six major airports — Kochi, Pune, Patna, Ranchi, Vizag and Mohali — from October 18, the source said.

Multiple warnings issued in 2 months. Is this usual?

Earlier, the three OMCs had suspended fuel supply to Air India at the same six airports on August 22 and had resumed it only on September 7. Since then, multiple warnings have been issued, threatening to cut ATF supply. “This is not business as usual. We resort to warnings only when absolutely necessary. Also, it’s not like these warnings are not heeded to. We have been having issues with payment from Air India for the past three years. When we snapped and resumed ATF supply to Air India in September, the airline had committed to clear payments for fuel that is supplied from there on a daily basis. And it has been doing that. The warning issued now pertains to the past overdues,” the source said.

The source said that previously, the OMCs had threatened to cut fuel supply to Air India around October 10 but had not done so, keeping in mind the Dussehra rush at airports.

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