×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Ministry intervention sought to make airlines pay interest

Ministry intervention sought to make airlines pay interest
Comment E-mail Print Share
First Published: Wed, Feb 04 2009. 10 55 PM IST
Updated: Wed, Feb 04 2009. 10 55 PM IST
New Delhi: The ministry of petroleum and natural gas wants its civil aviation counterpart to ask airline firms to pay state-owned oil marketers interest on credit to buy jet fuel.
The interest that the three airlines—Jet Airways (India) Ltd, Kingfisher Airlines Ltd and National Aviation Co. of India Ltd (Nacil), which operates Air India—have to pay is around Rs111 crore as on 31 December, said an official of Indian Oil Corp. Ltd (IOC), who declined being named.
The government had eased the immediate financial concerns of the loss-making domestic carriers by allowing them to pay up in six equal instalments the dues amounting to Rs2,962 crore owed to the oil retailers in October.
Nacil, Jet and Kingfisher owed Rs886 crore, Rs1,057 crore and Rs983 crore, respectively, to IOC, Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) at the time of the arrangement. Of the Rs2,962 crore, a payment of Rs2,131 crore was overdue.
“No airline is paying the interest accrued on this outstanding amount. We have taken up the issue with the airlines and even the (oil) ministry has written to the civil aviation ministry. This interest is charged on any delayed payment beyond 90 days,” the IOC executive said.
While Jet owes Rs5 crore, Rs1 crore and Rs5.5 crore to BPCL, HPCL and IOC, respectively, Nacil owes Rs25 crore, Rs4 crore and Rs25 crore to these firms as interest. Kingfisher owes Rs19 crore, Rs20 crore and Rs6 crore to BPCL, HPCL and IOC, respectively.
“Though we have been receiving EMIs (equated monthly instalments) from the other two airlines, Kingfisher has defaulted on payments. Between the three OMCs (oil marketing companies), they (Kingfisher) owe Rs1,000 crore,” the IOC executive said.
“At the time of the meeting between petroleum minister Murli Deora and civil aviation minister Praful Patel, the question of interest was not raised explicitly. While our OMCs are of the view that this interest should be paid, the airlines maintain that this issue was not raised,” A petroleum ministry official, who declined being identified, said. “However, we have conveyed this point to the civil aviation ministry and we have been assured that the issue will be sorted out commercially.”
The arrangement was decided at a 22 October meeting of Deora, Patel, senior officials of both ministries, OMCs and airline executives, including Kingfisher chairman Vijay Mallya, Jet’s executive director Saroj Dutta and Air India chief Raghu Menon.
“We do not default on payments and we have paid by the schedule,” said a Jet Airways spokeswoman on Wednesday, without elaborating on interest dues.
Kingfisher Airlines didn’t reply to emailed questions. A senior Air India official said that since it is a state-owned company, like the oil marketers, the issue of payments will be settled between the two ministries.
A New Delhi-based aviation analyst said airlines should not be allowed to finance their operations on taxpayers’ money, and since they have already got a relief, they should follow basic credit rules.
“You (airlines) wanted a moratorium on the principal (amount) and not on the interest. You got it,” this analyst said, asking not to be identified because of the sensitivity of the issue.
utpal.b@livemint.com
Comment E-mail Print Share
First Published: Wed, Feb 04 2009. 10 55 PM IST