Private aviation companies such as Kingfisher Airlines may not get any respite on the payment mechanism of jet fuel they source from public sector oil retailers.

The Petroleum Minister, Mr S. Jaipal Reddy, said “at present, there is no proposal for reconsidering the credit facility for supply of fuel to private aviation companies.” He gave this information in Lok Sabha on Thursday.

High domestic jet fuel prices have been denting the finances of most airlines. The public sector oil retailers – Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation – sell jet fuel at a market price. The end price in India becomes steep because of the State taxes involved.

The Minister said that the oil companies sell jet fuel to private airlines based on mutually agreed commercial terms. Credit supplies are extended to the airlines and the airlines make payments depending upon the agreed commercial terms.

“In case airlines fail to pay their dues, the oil companies take action for recovery of dues in line with the mutually-agreed commercial terms. The defaulting airlines are also put on ‘Cash and Carry' and interest is recovered on overdue payments,” the Minister said.

The oil retailers encash bank guarantee and post-dated cheques for recovery of their outstanding dues, wherever applicable, based on the commercial terms agreed between them and airlines. In some cases, the oil retailers also resort to the legal route by filing suit against defaulting airlines in the court of law for recovery of dues.

> richam@thehindu.co.in

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