Oil firms give in to Centre’s pressure, agree to refuel AI

In a major relief to the national carrier, oil companies have agreed to continue the supply of aviation fuel (ATF) to Air India, after the Centre intervened. An arrangement was arrived at after a couple of meetings were held by the Aviation secretary with representatives from the concerned oil companies recently, say sources.

The Oil Marketing Companies (OMC) were assured that their dues would be cleared soon, in two to three tranches. Air India owes approximately Rs 4,300 crore to three oil companies, viz, Indian Oil, Hindustan Petroleum and Bharat Petroleum.

Since April, the airline has been defaulting on it’s cash-and-carry arrangement, where it pays Rs 18 crore, per day, to these companies for tanking up.

It has requested immediate aid from the government of Rs 2,400 crore to meet operational expenses, and sources say the Centre is amenable to releasing Rs 1,200 to 1,300 crore. OMCs had stopped fuel supply to Air India at six major airports and had threatened to turn off the taps at Hyderabad and Raipur airports if dues weren’t cleared.