Oil Marketing Companies submit to interim court order but want payment up front

Public sector oil marketing companies on Tuesday decided to restore bulk diesel supplies to theTamil Nadu State Transport Corporations in line with the interim order of the Madras High Court that restrained the Petroleum Ministry and firms from charging STCs a higher price for fuel.

Though temporary (the order is till April 12), the decision could have a ripple effect, as a few other States were said to be have been considering going the Tamil Nadu way to avoid paying the market-linked price necessitated by the dual pricing policy for diesel. Over a period of time, the higher price for diesel would have left STCs with little option but to increase fares.

Confirming their decision to resume supplies to the underground tanks at State bus depots, as had been the norm till the dual pricing policy made buses turn to retail outlets, oil industry officials said withholding supply would amount to contempt of court.

However, the oil companies have decided to make the supply only on getting payments from the STCs. “If they pay, we will supply,” an official said, adding that the billing would be provisional. It would be subject to the final outcome of the court case. “In the event of the court upholding the Centre’s diesel pricing policy, the State transport corporations would have to pay the difference,” an official of Indian Oil Corporation said.

The State’s petition in the Madras High Court said that after the policy came into force on January 18, the price for bulk consumers went up by Rs.11.81 a litre. Besides the cost benefit for the STCs, the decision of the oil companies would ensure timely, uninterrupted supply and avoid trouble for other motorists at petrol pumps when buses come in to fill diesel. For commuters, it would mean saving on time spent waiting for the bus to tank up. Also, the STCs get bulk supplies at lower rates — around Re.1 a litre on such direct sales — than the pump price as there is no dealer commission.

Stating that the STCs had placed a few indents, officials said the oil companies and the Petroleum Ministry were studying the order and the interim order was expected to be challenged. In its petition, the State government said nearly 2 crore people were ferried every day by STC buses. The transport corporations, it said, were operating on several loss-making routes to provide connectivity to people in remote villages.

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