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Our Bureau

New Delhi, Oct. 21

To amicably resolve the contentious issue of unpaid jet fuel bills of the public sector oil retailing companies by domestic airlines, the Ministers of Petroleum and Civil Aviation have called for a meeting of the industry and officials here on Wednesday.

Indications are that the Petroleum Minister, Mr Murli Deora, and the Civil Aviation Minister, Mr Praful Patel, have been asked by the Prime Minister, Dr Manmohan Singh, to sort out the issue at the earliest.

Mr Deora told newspersons here on the sidelines of an auto event, “We want to help these airlines and so I have called a meeting to explore all the options.” The Finance Ministry representatives are also expected to attend the meeting. Sources told Business Line that the options which could be considered include extending of the current grace period given to domestic airlines to pay their fuel bills and a possible restructuring in the aviation turbine fuel (ATF) duty structure, which is essentially in the domain of the Finance Ministry.

While the PSU retailers have brought down the base price of ATF by almost 20 per cent in the last two months, the airlines still end up paying a higher price. This is since over the base price is added customs duty of five per cent, excise duty at the rate of eight per cent, three per cent education cess and sales tax at an average of 25 per cent. Highest sales tax component on ATF is in Maharashtra.

According to oil industry estimates, Jet Airways, Kingfisher Airlines, and Air India together owe over Rs 2,000 crore as outstanding dues on ATF purchased from the three PSU retailers, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL).

While, Jet’s total outstanding to IOC stood at Rs 859 crore, of which it had defaulted on payment of Rs 330 crore, of this it paid Rs 100 crore on Monday, Kingfisher owed Rs 110 crore of which Rs 60 crore remained unpaid after the expiry of the credit period. Kingfisher has paid Rs 12 crore on Monday of the remaining amount.

Jet owes Rs 284.3 crore to BPCL. Kingfisher owes Rs 246 crore to BPCL and Rs 525 crore to HPCL. Air India, of the total outstanding of over Rs 600 crore, has paid up Rs 330 crore.

“Airlines have to clear their outstanding within the agreed 60-day credit period. Commitments to pay within 60 days have to be met,” Mr Deora said adding that “we know that the airline industry too is going through a tough phase. There are credit problems and we do not want them to go off the skies.”

Meanwhile, the airlines, which are taking a hit on their profitability due to high fuel costs, have been seeking a reduction in the Central and the State duties on ATF, which makes up between 45 and 50 per cent of an airlines’ operating cost. ATF price was de-regulated and is governed by fluctuations in the global oil market.

Mr Vijay Mallya, Chairman, UB Group, has said that “we have not sought a bailout or financial relief from the Government. All we are stating is that if the States continue to charge high sales tax on ATF, then it is not viable for the aviation industry.”

More Stories on : Petroleum | Airlines | Bharat Petroleum Corporation Ltd | Hindustan Petroleum Corporation Ltd | Jet Airways (India) Ltd

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