Oil companies say Air India not fulfilling Rs 100 crore per month payment promise

State-owned oil companies on Tuesday accused Air India of not fulfilling its commitment to pay Rs 100 crore every month to clear overdue ATF outstanding of over Rs 5,000 crore and will be forced to snap supplies at major airports from Friday if no solution is offered.

“Air India had back in June and again in September agreed to pay the three oil marketing companies Rs 100 crore every month to clear past ATF dues. But unfortunately it hasn’t met its commitment,” said Sandeep Kumar Gupta, Director (Finance), Indian Oil Corp.

OC and two other oil marketing companies, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), have served a notice on Air India that they will be forced to stop jet fuel (ATF) supplies if payments are not made, he said.

The monthly payment was besides the airline being put on cash-and-carry where it was given fuel only against cash payment.

“We have said we will stop supplies at major airports. Let’s see what is the outcome of negotiation before the October 18 deadline,” Gupta said.

Air India owes IOC about Rs 2,700 crore in unpaid fuel bills. This includes Rs 450 crore of interest. It’s outstanding towards the three oil firms is about Rs 5,000 crore including interest.