Diesel dip

Written by Saikat Neogi | Updated: May 9 2013, 07:46am hrs
After the government discontinued the subsidy offered to bulk diesel and allowed oil companies to raise diesel prices by a small quantum periodically, the aggregate losses of state road transport corporations (SRTCs) would rise almost 70% to R5,442 crore from R3,206 crore in 2011-12, as they are the second-highest consumers of bulk diesel and account for 14% of the total diesel consumption in the country. Even without factoring in the diesel price hike, a fare hike of around 11% is required for SRTCs to break-even. After factoring in the fuel price hike, SRTCs will have to raise fare by 18% to break-even, which will translate into a hike of R2.32 paisa per passenger km.

A research note by India Ratings & Research, a Fitch group company, says the West Bengal government will have to do a steep 136% hike in passenger fare to break-even. Interestingly, Orissa SRTC will be the only one that will make of profit of R10 crore without even hiking the fare, now as the state has been marginally increasing the fare and the fleet has better fuel efficiency. In fact, of the 33 reporting SRTCs, only 14 have improved on fuel efficiency ranging from 0.01 km per litre in Karnataka, Rajasthan and Nagaland to 0.14 km per litre in Bihar and Mizoram. Also, the cost of fuel as a proportion of total costs varies significantly across different SRTCs, ranging from 8.4% for Mizoram and 51.4% for Orissa. A staggered price hike will only save the beleaguered SRTCs from going bankrupt.