New Delhi: The petroleum ministry doesn’t favour easing the terms on which jet fuel is supplied to Kingfisher Airlines Ltd, deprived of credit by state-owned oil marketing companies (OMCs) as it battles an unprecedented cash crunch.

Mounting losses: Kingfisher Airlines chairman Vijay Mallya. Kingfisher’s loss in the quarter to 30 Sep has widened to 468.66 crore. By Reuters

“We can’t review our norms (cash and carry). It wouldn’t be possible," said a top petroleum ministry functionary requesting anonymity.

OMCs in the past have temporarily suspended the supply of fuel to Kingfisher Airlines, grounding many of its flights during peak hours.

“We can’t help them or any other airline,"a top executive at one of the OMCs mentioned above said. He too didn’t want to be named.

Kingfisher Airlines has been cancelling several flights daily since 8 November as it fights to overcome the cash crunch. The airline has shut more than a dozen smaller stations across India and asked some employees to search for jobs as it seeks to cut costs and tide over the crisis.

On 15 November, chairman Vijay Mallya told a press conference in Mumbai that he does not owe even “one paisa" to oil companies and was not seeking a bailout from banks. He said he wants fresh working capital of up to 800 crore as jet fuel prices are rising.

Kingfisher’s loss in the quarter to 30 September widened to 468.66 crore from a 230.81 crore loss a year ago as jet fuel costs surged 70%.

An aviation ministry official said the ministry cannot ask the petroleum ministry to extend help to the airline.

“It’s already embarrassing with what we have to do for Air India," this official said, referring to a three-month credit line for the state-owned carrier cleared by a group of ministers recently.

Meanwhile, the Airports Authority of India (AAI) too is seeking permission from “highest levels" to recover dues of 230 crore from Kingfisher Airlines that are not even supported by bank guarantees, unlike dues to oil companies, a senior official said.

“We have to take a call in the next day or two. We have suffered enough," this official said, adding AAI needs approval from the civil aviation ministry to recover its dues from the airline.

In October 2008, the Congress party-led United Progressive Alliance government had eased the immediate financial concerns of loss-making domestic carriers, including Kingfisher Airlines and Jet Airways (India) Ltd, by allowing them to pay dues to oil retailers in six equal instalments.

In another development, the government has no immediate plans to raise the prices of diesel, kerosene and cooking gas.

An empowered group of ministers (eGoM) on the pricing of petroleum products headed by finance minister Pranab Mukherjee has to tackle the politically sensitive issue of an increase in retail fuel prices of diesel and capping the number of subsidized domestic gas cylinders delivered to households. The eGoM meetings have regularly been deferred.

“No meeting of eGoM has been scheduled for prices of controlled commodities," said the petroleum ministry functionary cited above.

In what may provide some respite to the OMCs, the finance ministry has sanctioned an additional compensation of 15,000 crore, which is over and above the 15,000 crore sanctioned for offsetting their losses in the quarter ended 30 June, added the official. The money has been sanctioned, but is yet to be received by the cash-strapped OMCs.