Vijay Mallya owes $141.3m but wants credit

Vol 15, PW 3 (11 Aug 11) People & Policy
     

Billionaire liquor baron Vijay Mallya is desperately trying to smooth-talk oil ministry officials into giving him jet fuel on credit for his beleaguered Kingfisher Airlines.

PETROWATCH learns flamboyant Mallya, who is also a MP, met then oil ministry joint secretary marketing Apurva Chandra twice on July 29 and once on August 1, seeking help. Mallya was hoping Chandra could convince state-owned Hindustan Petroleum to restore its 15-day credit for jet fuel purchases to Kingfisher, according to a ministry official.

This was to avoid a repeat of the sorry situation on July 19 when nearly 10 Kingfisher flights from Delhi and Mumbai were grounded for at least an hour because HPCL refused to supply jet fuel on credit. These flights resumed only after Kingfisher hastily paid in cash.

Since July 15, HPCL is accepting only cash payments from Kingfisher. This is hardly surprising: by August 4 the airline owed HPCL a staggering Rs650cr ($141.3m) – more than double its standard credit limit of Rs300cr ($65.3m) for jet fuel purchases.

At the August 1 meeting with Chandra, Mallya justified his demand for more credit by pointing out Kingfisher receives payments in its bank account for the sale of airline tickets only once every 15 days. But the ministry isn’t convinced and doesn’t want to interfere in a ‘commercial matter.

’ “We have no right to say anything to HPCL,” stresses our ministry source. “Only HPCL can decide whether to give credit to Kingfisher or continue to impose a ‘cash and carry’ system.

” Kingfisher, we hear, buys about Rs6cr ($1.3m) worth of jet fuel from HPCL every day. Other state-owned oil marketing companies Bharat Petroleum and IndianOil hardly sell jet fuel to Kingfisher because of frequent payment defaults.

IOC stopped regular jet fuel supplies to Kingfisher more than three years ago and now sells to the company only occasionally, provided payment is in cash.

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