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ModiLuft owes Rs 53.4 million in fuel dues

Lola Nayar in New Delhi

ModiLuft, the S K Modi-promoted domestic airline which suspended operations in November 1996, owes Rs 53.4 million in unpaid fuel bills to state-owned Bharat Petroleum Corporation Ltd, Parliament was informedon Tuesday.

The airline has recently been re-christened Royal Airways.

"The dues outstanding against fuel bills from ModiLuft were Rs 78.4 million when the airline suspended its operations," Minister of State for Petroleum Santosh Kumar Gangwar said.

Of this, the airline had paid Rs 25 million in April this year. Of the balance, the company has said it would pay Rs 26.7 towards the principal due if it was permitted to pay the balance of principal and interest in six equal bi-monthly installments, Gangwar said.

He said that when the outstanding amount began to increase, ModiLuft had been refused credit and had to make advance payments before getting fuel.

However, the airline was grounded before BPCL could recover its dues.

Currently, he said, four court cases were pending against ModiLuft for recovery of dues. "The present proposal is a consequence of pressure on the airline for settlement of the outstanding amount," the minister said.

The Foreign Investment Promotion Board recently permitted a new shareholding pattern for the airline, with ModiLuft having tied up with the Canada-based Royal Holdings Services Ltd to resume operations. RHSL will hold 56.87 per cent of the equity, pegged at $17.75 million.

The promoters and their nominees will hold 16.37 per cent, banks and mutual funds will hold 0.4 per cent and FIIs 4 per cent. Domestic corporate bodies will hold 3.51 per cent and the public around 17 per cent.

The aviation ministry has, however, said the airline cannot take to the skies unless it clears all its past dues. These include the inland air travel tax that was collected from passengers but not deposited with the government and landing, parking and navigation charges due to the Airports Authority of India.

Indo-Asian News Service

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