OMCs extend deadline, give Air India time till Oct 31 to clear ATF dues

New Delhi: Deferring their decision to cut jet fuel supply, state-run oil marketing companies (OMCs) have now given Air India time till October 31 to make the payments towards clearing past dues. They have also warned Air India that jet fuel supply will be snapped from November 1 without any notice if it fails to do so, a senior official said on Friday. "We have extended the time to October 31. We have told them that without any further notice, we will stop the supply if they don't pay," a source said.

Why have OMCs threatened to cut ATF supply?

Air India owes over Rs 5,000 crores to three state-run refiners — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL). After the three refiners snapped fuel supply in September, the national carrier had agreed to pay for day-to-day fuel purchases on a daily basis and Rs 100 crores every month towards clearing the past accumulated dues. However, it has failed to do so, prompting the three OMCs to issue a notice.

Air India buys more time for festive rush on Diwali

The source said that the airline had written a letter to the state refiners, seeking to buy more time so that no disruption is caused during the Diwali rush. "Air India has written two different letters to us. It has said that there are tremendous bookings on account of Diwali and in case, we take this action of stopping jet fuel supplies, the public at large will be extremely inconvenienced. And people travel quite a bit in the festival season," the source said.

Air India is getting funds from bank to meet working capital expenses

In the second letter that the debt-ridden airline wrote to the OMCs, it has assured that it will make a park payment as soon as funds come in, the source added. Recently, reports in a few sections of the media claimed that Air India was looking to meet its fund requirements by raising loans against the government guarantee for Rs 2,500 crore and run its business smoothly.

OMCs decide against snapping supplies

"We also do not want that in our attempt to streamline things, the general public should get inconvenienced. So, yesterday late evening, we have issued a letter to Air India, saying that we have considered the request and we'll not be suspending supplies from October 18," the source added. However, in the event that Air India fails to make the said payment, supplies will be cut off from November 1 without any notice, OMCs have told the airline.

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