New Delhi: The civil aviation ministry has asked the petroleum ministry to persuade state-owned companies not to halt fuel supplies to airlines at short notice as it disrupts flights and causes inconvenience to passengers.
Cash-strapped Air India Ltd and Kingfisher Airlines Ltd have had fuel supplies snapped because they defaulted on payments to Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL).
On 3 February, Air India’s fuel supplies were discontinued at several stations at 2 hour’s notice, said a government official who declined to be identified. “It led to chaos,” the official said.
More than half a dozen flights were disrupted.
Aviation minister Ajit Singh raised the matter on Tuesday at a group of ministers’ meeting headed by finance minister Pranab Mukherjee. Singh asked petroleum minister Jaipal Reddy to look into the issue.
Singh did not deny making the request but declined to comment on the matter. “There are several issues discussed in GoM. We cannot talk about them,” he said on Wednesday.
Reddy could not be reached for comment. A petroleum ministry spokesman declined to comment.
A senior petroleum ministry official, requesting anonymity, said there was little the ministry could do with regard to oil firms. “How can we ask oil marketing companies to do this since aviation turbine fuel (ATF), or jet fuel, is a deregulated commodity?”
Air India’s dues to the public sector oil companies have been escalating. The state-run airline’s outstanding dues, excluding interest, as on 24 January stood at Rs 2,656 crore to IndianOil, Rs 737 crore to BPCL and Rs 725 crore to HPCL, adding up to a total of Rs 4,118 crore. The interest on this till September 2011 adds up to another Rs 582 crore.
The total dues outstanding, excluding three months’ credit without interest, stood at Rs 2,598 crore, said an official familiar with the matter who didn’t want to be named.
Fuel supply to Air India had to be “restricted” on 3 February when the airline defaulted on its payments, the first government official said. The same day, civil aviation secretary Nasim Zaidi had said he had asked the petroleum secretary to maintain fuel supplies to the carrier. “I have spoken to the petroleum secretary not to disrupt (fuel) supplies and he has assured,” Zaidi had said.
The group of ministers (GoM) has decided to allow cash-starved airlines to import jet fuel—a move expected to help the carriers cut fuel costs, which account for about half of the total. The decision, which needs cabinet approval, will allow airlines to avoid various federal and state taxes levied by state-run oil firms, but will require them to set up extensive infrastructure to store and transport the fuel.
It will also hurt oil marketing firms if these structural issues are resolved.
Reliance Industries Ltd has already said it is in talks with airlines to provide them the infrastructure. Kingfisher Airlines has said it plans to import fuel to be able to save costs.
PTI contributed to the story