New Delhi: In a major relief for Air India, Petroleum Ministry on Thursday decided to grant two to three months credit to the troubled airline for jet fuel instead of making daily payments.
The national carrier had been put on cash-and-carry mode by public sector oil companies since last December as it owes more than Rs 2,000 crore to them.
Air India has been paying Rs 16.5 crore a day for lifting aviation turbine fuel (ATF) for its day-to-day operations.
The decision on providing fuel credit was taken by a Group of Ministers, headed by Finance Minister Pranab Mukherjee, which also reviewed the latest financial and operational performance of the ailing carrier, Civil Aviation Minister Vayalar Ravi told reporters.
"Instead of cash and carry, Air India will from now on make payments on the basis of this credit limit of two to three months," Ravi said, adding, "So, the tension of making daily payments is now over".
The meeting was also attended by Petroleum Minister S Jaipal Reddy, Home Minister P Chidambaram, Deputy Chairman of Planning Commission Montek Singh Ahluwalia and Civil Aviation Secretary S Nasim Zaidi.
It was the first meeting of the GoM which was attended by the newly appointed MD of Air India Rohit Nandan.
The cash-strapped and debt-ridden national carrier has outstanding loans and dues of Rs 67,520 crore, of which Rs 21,200 is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 is vendor dues and an accumulated loss of Rs 20,320 crore.
"A sub-committee of the Finance Ministry will submit a report on the Turnaround and Financial Restructuring Plan next month," the Minister said, adding that the GoM will meet again in mid-September.
"All attempts to strenghthen Air India with some financial support to improve its cash flow will be made by the government," Ravi said.
Asked by when the turnaround and financial restructuring plans would be approved and implemented, Ravi said, "You can't put a date on it. Air India is in a bad shape".
Two weeks ago, oil companies had stopped ATF supplies to Air India but resumed it within an hour, following directives by the government.
Earlier, the oil PSUs had slashed supplies in May-June that had forced the cash-strapped carrier to cancel as many as 147 flights and incur a loss of Rs ten crore.
The GoM meeting on Thursday came days after the government drew flak from the Opposition, following which it removed Arvind Jadhav as the Air India chief and installed another career bureaucrat Rohit Nandan.
Earlier on Thursday, the Minister said in Parliament that the government has made a provision of Rs 705 crore in the first supplementary demand for Air India. An amount of Rs 500 crore was released in July on ad hoc basis.
Another Rs 373 crore due on account of operating VVIP and evacuation flights by the national carrier would be released once the supplementary demand is passed by Parliament, Ravi said.
The GoM, at its last meeting on July 18, had approved additional equity infusion of Rs 1,200 crore and payment of another Rs 532 crore for operating VVIP and rescue flights. It had also approved the setting up of strategic business units in Air India for ground handling and engineering.
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