Airlines like Air India, Jet and Kingfisher Airlines together owe between Rs 1,800 and 2000 crore to the country?s largest fuel retailer, Indian Oil Corporation, on account of their jet fuel (ATF) purchases.

In order to recover the outstanding payments on fuel sales, the three oil marketing companies (OMCs)?Indian Oil, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL)?have finally decided to adopt strict measures, which include asking the airlines to produce bank guarantees for higher amounts, charging interest on the late payments and asking upfront cash for new ATF purchases.

While Air India alone owes Rs 600-700 crore to Indian Oil Corporation, Jet Airways? total outstanding stands at Rs 859 crore. Kingfisher, too, has an outstanding close to

Rs 100 crore.

Jet has on Thursday made a payment of Rs 100 crore, confirmed a senior IOC official. ?They have started making payments. However, still there is a huge outstanding. They will have to pay us the interest on that,? he said.

Currently going through difficult times, the cash-starved OMCs said while they have no immediate plans to cut jet fuel supplies. However, if the outstanding payments were not cleared on time, the OMCs would be left with no option but to take strict measures such as cut fuel supplies.

ATF is being priced at the import parity rates (as if the fuel were to be imported) ever after its pricing was de-regulated on April 1, 2001. Since then, it has been governed by fluctuations in the global market. On the base price, a customs duty of 5%, 8% excise duty besides an education cess of 3% and sales tax at an average of 25 % is levied. State taxes and excise duty amount to about a third of ATF price.

Interestingly, coming to the rescue of his airline companies after petroleum minister Murli Deora charged Jet Airways and Kingfisher Airlines of defaulting in payment of their fuel bills, civil aviation minister Praful Patel said on Friday the delay ?cannot be branded as a default.? Even while petroleum ministry maintained that Jet Airways had defaulted on payment of Rs 259 crore to Indian Oil Corporation after the expiry of the grace period, Patel maintained that Jet Airways still had a 60-day period to make payments.

Petroleum ministry, however, countered Patel saying Jet has failed to make payments even after expiry of the 60-day grace period. ?It is incorrect to say we are terming them defaulters without any reasons. We said they were defaulters because they failed to make payments even after 60-day credit period,? said a senior ministry official.

Jet?s total outstanding to IOC stood at Rs 859 crore of which it had defaulted on payment of Rs 259-crore bills, which were due on September 25 and October 5 after the expiry of 60-day period.

Similarly, Kingfisher owed Rs 110 crore to IOC of which Rs 60 crore remained unpaid after expiry of the credit period. Jet owes Rs 284.3 crore to Bharat Petroleum while Kingfisher owes Rs 246 crore to BPCL and Rs 525 crore to HPCL.

Petroleum minister Murli Deora had personally brokered the 60-day credit deal between Jet?s Naresh Goyal and IOC Chairman Sarthak Behuria. Deora had said on Thursday that he was hurt when Goyal did not keep his word on making the payments on time.

IOC, BPCL and HPCL together lose about Rs 280 crore on sale of petrol, diesel, domestic LPG and kerosene. ?Do you now expect them to sell subsidised fuel to the rich travelling by air?? said a ministry official.

The three companies are still waiting issuance of oil bonds, which are used to compensate for half of the losses they make on fuel sales, for past three quarters.

The combined borrowings of the three, which stood at Rs 48,400 crore in March 2007 and Rs 66,900 crore in March 2008, has increased to Rs 1,10,000 crore as of October.

They lose Rs 2.85 a litre on petrol, Rs 7.26 on diesel, Rs 29.19 on kerosene and Rs 335.03 per LPG cylinder and are projected to lose Rs 1,47,592 crore in revenues this fiscal.