BENGALURU: With oil manufacturing companies (OMCs) increasing the price of highspeed diesel (HSD) for bulk purchasers, cashstrapped state transport undertakings (STUs) are in a Catch-22 situation.
While the retail price of diesel in Bengaluru is Rs 85 a litre, STUs, who buy in bulk, are paying Rs 107. 1 a litre. OMCs revise diesel prices for bulk buyers every fortnight. However, retail fuel prices have not been revised since November 4, 2021.
Officials said the cost of HSD per litre rose from Rs 89. 8 on March 1 to Rs 107. 1 on March 16. Hindustan Petroleum Corporation Ltd (HPCL) supplies HSD to all four STUs in Karnataka under a threeyear contract that runs up to August 31, 2023, KSRTC alone requires 5. 3 lakh litres of HSD a day. “We are suffering a loss of Rs 92 lakh a day because of the price hike,” a KSRTC official said. BMTC requires over 2. 3 lakh litres of HSD per day and its daily loss due to price rise is Rs 50. 4 lakh.
“Bulk diesel price was always lower than retail rates, but now it’s higher. We are unable to fill fuel from retail outlets because of the contract with HPCL,” a senior official of an STU said. There was a similar situation in 2013 when bulk buyers had to pay more than retail purchasers.
BMTC officials said their fares have not been hiked since 2014 despite rising diesel prices, increase in employee salaries and a financial crunch. BMTC’s daily ridership has reduced from 36 lakh to 24 lakh after the pandemic, mainly because of the work-from-home arrangement and virus scare.
“Ridership is now picking up, but diesel prices are soaring. Our ticket revenue is in- sufficient to even cover diesel expenses,” said a BMTC official. BMTC had reduced Vajra AC fares by up to 34% from December 17. Officials hinted they might need to cut a few bus schedules if diesel prices rise further.
Multiple issues
The transport department is in a wait-and-watch mode on producing fuel from retail outlets. “But there are multiple issues. One, we will have to scrap the contract with HPCL. Two, OMCs may not allow bulk customers to fill fuel from retailers. Three, retail prices could be hiked because of the ongoing war between Russia and Ukraine. Four, retailers may not be able to cater to our requirements. Five, there are logistical issues as buses need huge parking space at fuel outlets,” an official said.
In 2013, STUs in Karnataka and other states filled fuel from retail outlets where diesel was sold at subsidised rates. “We did this for nearly six months but the price difference was around Rs 10 per litre then. Now it is more. We will have to take drastic steps soon,” said another STU official.
Similar situation
STUs in other states too face the same issue. Kerala State Road Transport Corporation had approached the Supreme Court against the decision of OMCs to sell diesel at higher rates to bulk purchasers. However, the RTC was told to approach the high court.
AP State Road Transport Corporation has decided to purchase fuel from private retail pumps to cut down expenditure. Its Telangana counterpart recently formed regionallevel committees to purchase fuel from retail filling stations near bus depots.
While the retail price of diesel in Bengaluru is Rs 85 a litre, STUs, who buy in bulk, are paying Rs 107. 1 a litre. OMCs revise diesel prices for bulk buyers every fortnight. However, retail fuel prices have not been revised since November 4, 2021.
Officials said the cost of HSD per litre rose from Rs 89. 8 on March 1 to Rs 107. 1 on March 16. Hindustan Petroleum Corporation Ltd (HPCL) supplies HSD to all four STUs in Karnataka under a threeyear contract that runs up to August 31, 2023, KSRTC alone requires 5. 3 lakh litres of HSD a day. “We are suffering a loss of Rs 92 lakh a day because of the price hike,” a KSRTC official said. BMTC requires over 2. 3 lakh litres of HSD per day and its daily loss due to price rise is Rs 50. 4 lakh.
“Bulk diesel price was always lower than retail rates, but now it’s higher. We are unable to fill fuel from retail outlets because of the contract with HPCL,” a senior official of an STU said. There was a similar situation in 2013 when bulk buyers had to pay more than retail purchasers.
BMTC officials said their fares have not been hiked since 2014 despite rising diesel prices, increase in employee salaries and a financial crunch. BMTC’s daily ridership has reduced from 36 lakh to 24 lakh after the pandemic, mainly because of the work-from-home arrangement and virus scare.
“Ridership is now picking up, but diesel prices are soaring. Our ticket revenue is in- sufficient to even cover diesel expenses,” said a BMTC official. BMTC had reduced Vajra AC fares by up to 34% from December 17. Officials hinted they might need to cut a few bus schedules if diesel prices rise further.
Multiple issues
The transport department is in a wait-and-watch mode on producing fuel from retail outlets. “But there are multiple issues. One, we will have to scrap the contract with HPCL. Two, OMCs may not allow bulk customers to fill fuel from retailers. Three, retail prices could be hiked because of the ongoing war between Russia and Ukraine. Four, retailers may not be able to cater to our requirements. Five, there are logistical issues as buses need huge parking space at fuel outlets,” an official said.
In 2013, STUs in Karnataka and other states filled fuel from retail outlets where diesel was sold at subsidised rates. “We did this for nearly six months but the price difference was around Rs 10 per litre then. Now it is more. We will have to take drastic steps soon,” said another STU official.
Similar situation
STUs in other states too face the same issue. Kerala State Road Transport Corporation had approached the Supreme Court against the decision of OMCs to sell diesel at higher rates to bulk purchasers. However, the RTC was told to approach the high court.
AP State Road Transport Corporation has decided to purchase fuel from private retail pumps to cut down expenditure. Its Telangana counterpart recently formed regionallevel committees to purchase fuel from retail filling stations near bus depots.