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Rediff.com  » Business » Air India owes Rs 4,277 crore in unpaid fuel bill

Air India owes Rs 4,277 crore in unpaid fuel bill

March 08, 2013 17:57 IST

Air IndiaNational carrier Air India owes over Rs 4,277 crore (Rs 42.77 billion) in outstanding jet fuel bills to state-owned oil companies, the largest overdue payment by any domestic air carrier.

Unlike private carriers such as Jet Airways and Kingfisher Airlines, Air India has not given any security as insurance against default, the Lok Sabha was informed on Friday.

In a written reply to a question, Minister of State forPetroleum & Natural Gas Panabaaka Lakshmi said of the total outstanding of Rs 4,277.11 crore (Rs 42.77 billion) as on December 31, 2012, a sum of Rs 2,639.65 crore (Rs 26.39 billion) is overdue payment.

Overdue payment is the outstanding that has remained unpaid even after expiry of a 90 day credit or grace period provided by the oil companies.

She had in December told the Rajya Sabha that Air India's outstanding was Rs 4,064.77 crore (Rs 40.64 billion), with Rs 2,571.73 crore (Rs 25.71 billion) as overdue payment.

The reply today indicates that Air India's outstanding has risen since then.

The minister on Friday told the Lok Sabha that Air India, the unprofitable state-owned carrier, owes Rs 2,514.97 crore (Rs 25.14 billion) to Indian Oil Corporation, of which Rs 1,703.63 crore (Rs 17.03 billion) is overdue payment.

It owes another Rs 754.75 crore (Rs 7.54 billion) to Bharat Petroleum Corp Ltd and Rs 1,007.39 crore (Rs 10.07 billion) to Hindustan Petroleum Corp Ltd.

Jet Airways owes Rs 910 crore (Rs 9.1 billion) to IOC but of this only Rs 107.52 crore (Rs 1.07 billion) is overdue.

The rest is under 90-day credit period that oil companies extend to Jet and other airlines including Air India.

Lakshmi said Jet ownes Rs 112.06 crore (Rs 1.12 billion) to BPCL, of which Rs 31.29 crore (Rs 312.9 billion) is overdue.

Jet has covered its outstanding with IOC with a Rs 923 crore (Rs 9.23 billion) bank security which can be encashed in case of default in payment.

The outstanding of BPCL has been covered by a Rs 150 crore (Rs 1.5 billion) security.

Kingfisher ran an outstanding of only Rs 66.72 crore (Rs 667.2 million) with HPCL.

All of this is overdue payment but it is covered by a Rs 200-crore (Rs 2-billion) corporate guarantee, she said.

HPCL has steadily encashed bank guarantees provided by Kingfisher to recover its dues.

In her December reply, the Minister had indicated an amount of Rs 79.74 crore (Rs 797.4 million) that the airline owned to HPCL.

Go Airlines had all of its Rs 112.53 crore (Rs 1.12 billion) outstanding with IOC more than covered with a Rs 115-crore (Rs 1.15-billion) bank guarantee.

Spice Jet too had its Rs 91.23-crore (Rs 912.3-million) outstanding covered with a Rs 95-crore (Rs 950-million) bank guarantee.

"In case airlines fail to pay their dues, oil marketing companies take action for recovery of dues in line with the mutually-agreed commercial terms," she said, adding that the oil firms put defaulters on 'cash-and-carry' and recover overdue payment by encashing bank guarantee.

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