State government has agreed in principle to allow Kerala State Road Transport Corporation to buy diesel from The Kerala State Civil Supplies Corporation (Supplyco), which is likely to adopt the Kozhikode model of fuel supply to the transport corporation.

However, there is no clarity yet on how Supplyco will be able to meet the KSRTC demand because of several constraints, including the fact that the corporation has very limited outlets across Kerala.

The road transport corporation will also have to finalise a deal with Indian Oil Corporation, which runs all the oil depots the transport corporation has at its 68 depots. Transport corporation sources also said that the corporation would have to decide on the fate of its 13 oil tankers it has been using in the past to meet diesel movement requirements of the corporation.

The Kozhikode model of diesel sale to KSRTC, based on rolling payments, has been “working without a hitch for the last one year”, said a senior official of Supplyco on Tuesday. The official said that under the system, Supplyco sells up to 5,000 litres a day to KSRTC on the understanding that the money is paid for the fuel on the following day.

There has been no lapse in payment from the transport corporation so far and supply of larger quantities of fuel could be considered against a one-time advance payment plus the rolling system, the official added.

Minister for civil supplies Anoop Jacob told The Hindu on Tuesday that the government was open to the idea of KSRTC buying fuel from Supplyco and the modalities are being worked out. The minister had, on an earlier occasion, expressed his opinion against any arrangement where the transport corporation could burden the financially constrained Supplyco.

KSRTC requires on an average five lakh litres of diesel a day and stands to save more than Rs. 13 a litre, considering the difference in price between rates imposed by oil marketing companies on bulk and retail consumers.

Supplyco officials said the corporation had been selling fuel to government departments in various places, especially in Thiruvuananthapuram, where it has six of its 14 outlets. Besides the State capital, the corporation has fuel outlets in Kottayam, Kozhikode, Kollam, Alappuzha and Ernakulam districts. Supplyco’s limited number of fuel outlets is the only set back in meeting the demand from KSRTC.

Fuel sales is a Rs. 20 crore business for Supplyco annually and its IOC outlet in Thiruvananthapuram has the distinction of being the pump with the highest turnover in the State. The corporation sells around 2,000 kilo litres of diesel and petrol a year.

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