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.

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 we need to do immediately is to automatically pass through the fuel cost.”

He added that the corporation, on average, has a monthly expenditure of Rs 250 crore, while its average income is Rs 220 crore. UPSTC is deep in the red and faces difficulty even in paying wages. It is taking an overdraft from the banks every month to meet its basic requirements.

Said another UP SRTC official: “We need to replace our fleet of buses and the cost of the buses has gone up exponentially in the last decade or so. While on the one hand we do

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