Corporation facing crisis following deregulation of diesel price

Waiving of sales tax levied by the State for High Speed Diesel (HSD) supplied by oil marketing companies to the Kerala State Road Transport Corporation (KSRTC) has been proposed to lessen the burden on the loss-making corporation on account of purchasing the fuel at market rates.

The government has hinted to the KSRTC management that it cannot extend financial assistance to the corporation that will have to find Rs.180 crore additionally for the fuel bill annually following the decision of the State-owned oil retailers to sell diesel to bulk consumers at market rates from Friday.

A hike in bus fares cannot be considered as the 14,000-odd private buses will reap profit as they get HSD on subsidised rates. The KSRTC, which has a fleet of 6,153 buses, will have to depend on the oil retailers for HSD as it cannot adopt the strategy followed by private bus operators. The State-owned oil retailers are now billing the KSRTC Rs.60.25 for a litre of HSD compared to Rs.48.72 they were charging till Thursday.

Official sources told The Hindu that the only option before the government to avoid the closure of the KSRTC and to help it tide over the crisis is to waive the 19.8 per cent sales tax being levied for HSD. “The waiving of the sales tax by the government will help the KSRTC to reduce the money spent for a litre of HSD by Rs.10. Still, it will be Rs.1.53 more compared to the price of the HSD being sold for the private buses.”

The suggestion has been put forward by the KSRTC management to the government and a positive action is awaited, the sources said adding that a policy decision was needed for this.

The corporation is yet to find a way to mobilise Rs.35 crore needed to pay the monthly pension to 37,000 retired employees this month.

The corporation has estimated that it will have to find Rs.15 crore every month and Rs.180 crore additionally for the fuel bill annually, if it has to pay Rs.60.25 for a litre of HSD. It owes Rs.11 crore to the Indian Oil Corporation and Hindustan Petroleum towards the fuel bill. Already, the KSRTC has exceeded the credit limit of Rs.7 crore fixed by the IOC and HP.

Plea to Centre

Meanwhile, Chief Minister Oommen Chandy has requested Prime Minister Manmohan Singh to revise the deregulated prices of diesel for the bulk users. “If that is not possible, the least that should be done is to exempt the public utility services – Railways and State Road Transport Corporations – from this hike,” he said in a letter to the Prime Minister.

The KSRTC will have to incur an extra Rs.180 crore on diesel alone, if this hike is not withdrawn, leaving it with no option but to increase the fares or to seek an equivalent subsidy from the State. Mr. Chandy has pointed out that this will annul the whole intention of curtailing government subsidies by shifting the same from the Central to the State governments. There is certainly a case for keeping the prices low for diesel which is used for public transport, he said.


  • RTC exceeds credit limit of Rs.7 crore fixed by IOC, HP

  • Chief Minister seeks Prime Minister’s intervention