Road transport corporations face huge losses as oil marketing companies hike bulk diesel rates

Road transport corporations (RTCs), which are run by state governments, are staring at big losses and an undermining of their operational viability owing to the hefty hike in prices of diesel for bulk consumers like them. The oil marketing companies, unable to pass on the recent rise in cost of crude oil purchases for want of a tacit go-ahead from the government, increased the prices to bulk consumers in a bid to reduce the under-recoveries on sale of auto fuels.

To tide over the problem, RTCs are weighing various options including reducing their operations and ramping up retail fuel purchases to the extent feasible. At least one of them – the Kerala RTC – has already approached the Supreme Court seeking relief.

Maharshtra State Roadways Transport Corporation (MSRTC) and Brihan Mumbai Electric Supply and Transport (BEST) undertaking have estimated that their operational expenses will rise by Rs 240 crore and Rs 30 crore annually, just from the Rs 25 per litre hike in bulk diesel price announced by the oil marketing companies (OMCs) last week.

MSRTC requires around 0.3 million litres of diesel per day. It owns a fleet of 14,000 buses, but due to a state-level strike over the last few months, only 5,000 buses are currently run, a scenario would may help it to reduce the impact of the higher fuel cost.

The bulk operators queuing up at retail outlets has led to surge in sales of retail outlets. PSU retailers have sold 3.53 million tonnes of diesel between March 1-15, a sequential jump of 32.8% and 23.7% on year. The Kerala RTC on February 25 appealed to the Supreme Court against an earlier hike in diesel prices by Rs 6.46 per litre. The hike, it said, was expected to increase the liability of financially-stressed roadways by Rs 16 lakh per day.

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