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Wednesday, 11 September, 2019, 18 : 00 PM [IST]

Difficult to support Air India: IOCL

With Air India owing them more than INR 5,000 crore in outstanding dues, state-owned oil marketing companies (OMCs) are finding it tough to keep refuelling the carrier.

OMCs provide 90 days’ unsecured credit to the national carrier, compared with secured credit backed by bank guarantees for other private airlines. However, Air India has not paid the OMCs for eight months against its credit period of 90-days, accumulating dues of over INR 5,000 crore to the OMCs.

Sanjiv Singh, Chairman, IOCL (Indian Oil Corporation Ltd), said, “The commercial conditions differ slightly from airline to airline. Air India, being a public sector [firm], we provide them unsecured credit. For Jet Airways, we provided secured credit. Today, even if Jet is not operational, we have no outstanding dues against the airline. For other airlines, the outstanding is not abnormal and nothing to worry. But for Air India, the dues with interest are over INR 2,900 crore and increasing. That’s why we are little worried about Air India’s outstanding and we find it difficult to support this.”
IOCL itself has a net borrowing of over INR 75,000 crore.

Asked till what point IOCL can continue to refuel Air India, Mr. Singh said, “It’s a big call. When I am looking from Indian Oil’s point of view... it’s not only business alone, it’s commitment beyond business. Air India is a national carrier, India is also attached with Air India. But from a business point of view, only that sentiment can’t take it forward. We are not a cash surplus company. We have to borrow to support to Air India and we can’t continue like this.”

Air India owes about INR 3,000 crore to IOCL alone and the remaining INR 2,000 crore is split between Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL).

“Efforts are going on to recover the dues. They have not exceeded the credit limit of INR 3,000 crore. They are on cash-and-carry mode for further fuel purchases but the outstanding of INR 2,900 crore remains and we are putting pressure to recover the dues,” Sandeep Kumar Gupta, Director-Finance, IOCL told The Hindu.
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