AI OWES ₹3,000 CR IN FUEL DUES TO THREE MAJOR OIL COMPANIES

MUMBAI/NEW DELHI: Air India Ltd owes nearly ₹3,000 crore in jet fuel dues to three state-run oil marketing companies, with payments in some cases delayed by several months, said two people with direct knowledge of the matter requesting anonymity.

The divestment-bound national carrier owes about ₹2,000 crore to Indian Oil Corp. Ltd (IOC), and a total of about ₹1,000 crore to Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL), said one of the two people cited above and who is also a senior official with a state-run oil marketing company (OMC).

“We have however, been supplying fuel non-stop to the national carrier even during the pandemic,” the official said, adding that the OMCS have written to Air India to clear the dues amid rising global crude prices that has increased the cost of operations at state-run refiners.

Air India buys jet fuel worth ₹5-6 crore daily from the OMCS. The airline was earlier given a 90-day credit period but the prolonged delay in clearing the dues has led OMCS to put the carrier on a cash-and-carry basis for fuel supplies. The OMCS have in the past as well, temporarily halted fuel supplies to Air India due to mounting dues, only to resume later after the airline partially cleared its bills.

“There’s a working capital crunch at the airline due to which pending dues towards OMCS are delayed,” said an official with Air India. “However, these dues are eventually paid back. Also, since both Air India and OMCS are owned by the government, such situations are quickly resolved,” the official said.

A spokesperson for Air India said the airline does not comment on its internal matters. Spokespersons of IOCL, BPCL and HPCL also declined to comment.

Air India is expected to post a cash loss of around ₹6,000 crore this fiscal through March, up from ₹3,600 crore last year. Cash loss means an entity is not generating positive cash flow from its operations. Overall, the airline is likely to incur a net loss of ₹9,500-10,000 crore this fiscal, up from a ₹8,000 crore loss recorded in the previous year, Mint had reported on February 8, citing senior airline officials.

To make up for the cash loss, AI has raised about ₹5,500 crore so far this fiscal year, and is likely to raise another ₹500 crore by the end of March.