Bulk diesel price hike forces RTCs to reform

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SummaryThe fiscally stressed Centre’s recent decision to annul subsidy on bulk diesel has shaken up the perennially loss-making public sector road transport corporations in the country.

increase in the fuel costs again, of Rs.744 crore per annum, adding up to a total annual increase of Rs 1,127 crore within four months, forcing the STUs (state transport undertakings) to the precipice of financial disaster. This government has decided to challenge this dual pricing policy of the central government in the appropriate court as it is against public interest and discriminates against STUs and benefits private operators who continue to enjoy subsidised fuel.”

Legal experts say nothing prevents the states from allowing RTCs to buy diesel from retail outlets. “There is no illegality in it unless the central government clarifies that bulk consumers can’t buy from retail,” said senior Supreme Court lawyer CA Sundaram.

Andhra Pradesh State Road Transport Corporation (APSRTC), which has a fleet of nearly 23,000 buses, is facing an additional annual burden of Rs 720 crore in its fuel expenses following the steep hike in diesel price by Rs 11.89 per litre. Prior to the price hike, APSRTC was hoping to reduce its losses substantially this fiscal, despite an increase of 20% in operational costs. It hasn’t given up yet and is mulling revenue-enhancing measures. Said AK Khan, vice-chairman and managing director, “Though the rate of diesel has increased, necessary alternative steps are being taken to overcome the problem. As part of our strategies, the corporation is in talks with the state government for removal of the VAT (value-added tax) on diesel, MV (motor vehicle) tax and also exemption of toll fees.”

APSRTC’s annual expenditure on diesel was estimated at Rs 3,260 crore before the price hike. As part of increasing revenues, it plans to maintain punctuality in running its services to lure passengers and increase the occupancy ratio to 78% from the existing 74%. A 1 percentage point increase in the occupancy ratio will boost revenue by Rs 60 crore.

Stating that deregulation of bulk diesel prices has hit the corporation hard, UP State Road Transport Corporation managing director Alok Kumar said that there is an urgent need to prioritise public transport.

“We are finding it difficult to meet the costs in the present fare structure. What

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