Stopping short of fuel supply cuts to disinvestment-bound Air India, state-owned oil retailers have sought the petroleum ministry’s intervention to recover their dues adding up to over
Rs 3,000 crore, government officials and company executives told The Indian Express.
The national carrier, on its part, has approached the central government to get its dues of over Rs 500 crore cleared. The government owes Air India the money on account of VVIP travel, evacuation operations and other official travel.
Typically, oil marketing companies suspend fuel supply to airlines that have not paid past dues — Air India was subjected to such a move in August 2019.
“Oil marketing companies have approached the petroleum ministry as Air India had stopped paying interest on long-term dues and for ongoing consumption,” a government official said, on condition of anonymity.
Responding to the oil ministry, the civil aviation ministry has requested that oil companies continue supplying fuel to Air India, given that the entire airlines industry is facing financial stress due to the pandemic, the official said, adding that “no one wants to stop the operations” of the national airline.
A senior executive at one of the oil marketing companies said decisions to stop supply to Air India or put it on a cash-and-carry basis are taken after consultations with the petroleum ministry. Air India’s daily fuel bill adds up to about Rs 5-6 crore. The Airports Authority of India (AAI) had in July last year — just over a month after the domestic flight suspension was lifted — warned Air India that it would put the airline on cash-and-carry until it cleared its dues of Rs 1,000 crore at the time.
In August 2019, the three oil retailers had halted supply to Air India at six airports after repeated reminders over non-payment of dues. At the time, Air India had said that “in absence of equity support”, the airline could not service its debt liabilities.
This time, though, punitive action has been avoided as the airline is divestment-bound and any coercive action could potentially impact investor interest.
E-mail queries sent to the petroleum and civil aviation ministries went unanswered. Air India, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp did not respond to requests for comment.
In 2019-20, the airline made a net loss of nearly Rs 8,000 crore, and this is expected to increase to Rs 10,000 crore for 2020-21 (April-March) period, which hasn’t been reported yet. For 2020-21, the airline’s revenues dropped significantly to Rs 12,138.77 crore from Rs 27,546.58 crore in the previous financial year.
In February this year, the then Civil Aviation Minister Hardeep Singh Puri, who is now the Petroleum Minister, had noted in a written reply to the Rajya Sabha: “The amounts due from the Government of India have been accounted for in the profit and loss accounts in the respective years and the outstandings are reflected as receivables in the balance sheet. There is no significant impact of the government outstanding on the losses incurred by Air India. However, regular follow-up for the same are made by Air India/ Ministry of Civil Aviation and normally such dues are cleared from time to time”.