Air India Owes Rs 5,000 Crore to Oil Companies

Air India has unpaid fuel bills amounting to Rs 5,000 Crore which is creating pressure on oil companies at a time when the demand for fuel is constantly increasing.

Highlights

  • Around 60% of the total unpaid dues are owed to Indian Oil which amounts to around Rs 3,000 Crores.
  • This will lead to a scenario where the retailers might have to borrow money to purchase crude as these unpaid dues will create a huge pressure on these companies, particularly Indian Oil.
  • Moreover, Crude prices have broken the seven-year record as it has reached up to $85 per barrel.

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Air India

As the demand for aviation fuel is expected to rise in the foreseeable future, Air India’s unpaid fuel bills amounting to somewhere around Rs 5,000 Crore is putting pressure on the retailers who will be looking forward to buying the quite costly crude at the time of need. According to the industry executives, the government has not provided any particular time frame for the payment of dues despite the fact that they have announced the take over of the carrier’s Rs 16,000 Crore debt and non-core assets before Tata acquires the airline.

Pressure on the Cash Flow

Out of the total unpaid fuel bills of Air India, Indian Oil makes the majority of it. Around 60% of the total unpaid dues are owed to Indian Oil which amounts to around Rs 3,000 Crores. All the other retailers together sump up to around Rs 2,000 Crores. Indian Oil is currently the country’s largest oil refiner and fuel retailer. It will take quite a long time before new acquitters take over the non-core assets and make payments. This will lead to a scenario where the retailers might have to borrow money to purchase crude as these unpaid dues will create a huge pressure on these companies, particularly Indian Oil.

This comes in at a time when the demand for fuel is at an all-time rise. The demand for petrol has already crossed the pre-pandemic numbers whereas diesel consumption is almost at that mark. Jet fuel sales have also risen up to 75% of what they were in 2019. Moreover, Crude prices have broken the seven-year record as it has reached up to $85 per barrel.

Air India Asset Holding Company is to take over the non-core assets such as land and buildings amounting to Rs 14,178 Crore along with the unpaid dues of air operators and vendors which amounts to nearly Rs 15,834 Crore. This amount is around a quarter of Air India’s total debt at the end of August 2021.

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Anupam is from Bilaspur, Chhattisgarh and is a pursuing freelance digital artist who creates photoshop and 3d artworks. Has always been passionate about writing and pursues it as a passion.

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