Indian Oil chairman on Wednesday defended cutting jet fuel supplies to the flag carrier Air India at six airports over non-payment saying that the national oil refiner is not a cash-surplus company.
Last week, Indian Oil Corporation, along with Bharat Petroleum and Hindustan Petroleum, had stopped jet fuel supplies to Air India at six airports--Kochi, Pune, Patna, Ranchi, Vizag and Mohali--over payment defaults, which amounted to around ₹4,500 crore and pending since the past 240 days.
The supplies are yet to be resumed even after a week.
"We ourselves are borrowing around ₹75,000 crore annually; that means we are a net borrower and not a cash- surplus company. To support credit to Air India, we need to borrow from markets," chairman Sanjiv Singh told reporters.
He said IOC provides 90 days credit to Air India but the dues have been mounting and this must be 240 days now.
"So the total dues to us, including interest, is more than ₹2,900 crore. Although we don't take any formal bank guarantee from a public sector entity which we do from private airlines, now we are a little worried and cannot continuously support the airline," Singh explained.
He further said, "the decision to stop the fuel supply was not to cause any discomfort to the passengers but was to primarily indicate that IOC cannot continue to give credit indefinitely."
From IOC's point of view, it is a big call as it is a commitment beyond business and that is why it has been supporting the national carrier so far.
"We feel we have given them the right signal, but this was after a lot of follow-up with them. Unfortunately, we are still not seeing any improvement in Air India which is fighting its own problems as well," Singh added.