Bulk diesel price hike forces RTCs to reform

A A

Deepa Jainani , Sajan C Kumar, BV Mahalakshmi: Hyderabad, Feb 02 2013, 03:19 IST

The fiscally stressed Centre’s recent decision to annul subsidy on bulk diesel has shaken up the perennially loss-making public sector road transport corporations (RTCs) in the country. State governments, the patrons of these entities, which together own 1.5 lakh buses and play a vital economic function by contributing to the mobility of people and goods, have firmed up disparate strategies to salvage the situation. FE has ascertained whether and how the RTCs have taken the sudden 20% hike in diesel cost in their stride (fuel costs account for close to a third of the operational expenses of RTCs, which hardly recover their costs yet dole out a plethora of concessions to commuters at the bidding of populist state governments).

It is clear that the Centre’s decision to allow state-run oil marketing companies to sell diesel to bulk consumers at market prices (that cover the OMCs’ costs and mark-ups) has caught most RTC managements off-guard.

Following the decision, RTCs have approached the state governments for succour and the pleas have been heeded: In some cases, maybe, for the good as the response could be in the form of waking up these entities to market realities, but in most cases, with the likely consequence of an exacerbation of their finances and operational standards.

For Congress-run state governments, the immediate reaction is to give their RTCs the assurance that they would try to get the Centre’s decision revoked or obtain a special waiver.

The Opposition-ruled ones — notably the Gujarat and

... contd.

Ads by Google

Single Page Format

1 | 2 | 3 | Next

Diesel price hike to add 120 bps to FY'14 inflation: Bank of America Merrill Lynch BofA-ML sees diesel price hike adding 120 bps to inflation‘Diesel price hike to add 120 bps to inflation’Diesel prices to be hiked 40-50 paise every month: M Veerappa Moily

Previous Story Quick view Next Story Bharti Q3 net slides as finance costs increase

Reader's Comments| Post a Comment

Be the first to comment.