Bulk diesel price hike forces RTCs to reform

Feb 02 2013, 05:36 IST
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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.

not get any support from the state government in the form of equity contribution, on the other hand the hike in capital cost is not factored into the fare, which takes into account only the cost of wages, spares and fuel. As a result the expenditure on capital become a huge cross to bear, what with the prices of buses going up many times in the last decade or so."

In a recent letter to the state government, the corporation said: "In November 2012, the state government had allowed an increase of 10 paise on every seat for every kilometre. At that time, the cost of diesel was Rs 42.46/litre. But since then the prices of diesel have been revised five times till January this year and the effective increase is Rs 18.11 per litre. However, despite that, there has been no increase in passenger fares. This has put the corporation at a loss of Rs 1 crore daily and if something is not done immediately, the corporation will not be able to sustain the blow."

Following the state government’s decision, over 7500 state-owned buses of the Gujarat State Road Transport Corporation (GSRTC) are now buying diesel from retail stations. By buying in the open market, GSRTC pays Rs 52.74/litre for diesel as against Rs 64.74 for bulk diesel. Despite the cost increase, the Gujarat government is not planning to pass it on to the passengers, a decision that might not be in tune with the state’s reformist credentials. State transport minister Nitin Patel said, "We have taken this decision not to burden passengers with increased fares, but we are open for an increase if the GSRTC proposes one."

A GSRTC official said, “We have to compete with private operators and at this rate, our fuel bills will go up by Rs 1 crore on a daily basis. We can’t afford such a hike, so will enter into a contract with private (retail) pump owners for saving our passengers from a fare hike."

The diesel price hike has hit the ailing Kerala State Road Transport Corporation (KSRTC) hard, leading to a trimming of its services on many routes. As a temporary measure, the state cabinet has now offered to give Rs 14 crore to KSRTC for the next two months to reduce the impact of the additional fuel bill. The state government says it will send a delegation to Prime Minister

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