State government files a writ petition in the High Court

The Madras High Court on Thursday granted an interim injunction till April 12 restraining the Petroleum Ministry and oil companies from charging a higher price for diesel for State Transport Undertakings (STUs) in Tamil Nadu than the price charged for private retail customers.

Thanks to the court order, transport corporation buses need not queue up in front of retail outlets to fill diesel at least for a month. Justice S. Rajeswaran passed the interim order on a writ petition by the State government, represented by its Principal Secretary, Transport, Braj Kishore Prasad, who is also the Chairman of all the STUs.

When the matter came up, counsel for the Petroleum Ministry took notice.

The Judge ordered notice to Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation returnable by April 12.

The petitioner submitted that the Tamil Nadu State Transport Corporations carried nearly two crore passengers every day. The STUs continued to operate on a large number of loss-making routes because of the obligation to provide transport facilities to people in remote villages.

The transport corporations were incurring losses continuously. For 2011-12 alone, they had incurred a loss of Rs.1791 crore with a cash loss of Rs.1392 crore.

The principal reason for the accumulated losses was due to provision of transport facilities to people at affordable rates notwithstanding the fact that diesel price was increased from time to time. Nearly 35 per cent of the total loss by transport corporations was due to increasing cost of fuel.

The Secretary submitted that prior to January 18 this year, diesel price was fixed at Rs.49.72 per litre for STUs, whereas for private retail customers it was Rs.50.72. Transport undertakings consumed 12.75 lakh litres of diesel per day. The total cost incurred was Rs.8.57 crore. After introduction of dual pricing policy from January 18, the concession given to STUs was withdrawn. Transport corporations, which were bulk purchasers, were loaded with higher cost than retail customers. This policy was discriminatory.

A Petroleum Ministry notification of January 17 said that bulk consumers of diesel such as STUs and railways would no longer be eligible for subsidy and would have to pay “non-subsidised market determined prices.”

Accordingly, for private retail consumers, the price was increased by 55 paise per litre. For bulk consumers, the price went up by Rs.11.81 per litre. Following this, the additional cost the STUs would incur was about Rs.743 crore per year. The price increase was an all time high. The dual pricing policy insofar as it treated the Tamil Nadu STUs as bulk consumers was arbitrary, unreasonable and unfair.

  • “The transport corporations are incurring losses continuously”

  • “Nearly 35 per cent of the total loss is due to increasing cost of fuel”