Petroleum minister Jaipal Reddy has written to the civil aviation minister Vyalar Ravi asking that Air India make a minimum daily payment of R16.5 crore for aviation turbine fuel (ATF) supplied by public sector oil marketing companies.
Reddy has said that if Air India fails to make this minimum payment on daily basis then from next month the oil cos would not supply ATF on credit . The move is expected to add to the woes of already stretched finances of the national carrier.
According to official sources, Air India is currently lifting ATF worth R18.5 crore daily but paying only R13.5 crore due to severe cash crunch. The airline owes a total of R2,400 crore to the oil companies
?The petroleum minister has stated that the airline needs to pay higher than what it is currently paying as oil marketing companies (OMCs) have their own constraints,? official sources told FE.
Given the poor financial condition of Air India the civil aviation ministry is expected to seek more time for the carrier to pay the additional amount.
Despite the budgetary commitment for equity infusion of R1,200 crore by the government the airline is yet to receive the fund. Sources said that finance ministry is awaiting the final financial restructuring plan from the carrier before releasing the much-needed cash.
The government has so far cleared R2,000 crore in financial assistance to the carrier to help it stay afloat. Air India had earlier presented its case for equity infusion to the extent of R5,000 crore.
The airline has an accumulated loss of over R13,000 crore and is banking heavily on the government for the bail-out.
The civil aviation minister Vayalar Ravi had last month said that the airline was earning R36 crore a day against an expenditure of R57 crore, making a daily loss of R21 crore. The airline?s finance have been under strain for quite some time now as a result of significant outgo of cash for fleet acquisition.