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Reverse gear in bus diesel price rule

New Delhi, Dec. 8: Moves are on to allow state government buses to buy diesel at a subsidised rate against the practice of charging them a market price now.

These buses of state transport corporations (STCs) have defeated the Centre’s efforts to reduce under-recovery by purchasing diesel at subsidised rates from retail outlets and not from their depots at market prices — forcing the government to do a rethink.

“A cabinet note is being prepared to exempt state transport undertaking from being charged market price of diesel by the state-owned oil marketing companies,” a senior oil ministry official said.

State-owned refiners such as Indian Oil Corporation will, however, continue to charge the market price from other bulk consumers such as the Indian Railways and the defence forces.

While diesel at retail outlets in Calcutta costs Rs 58.08 per litre, bulk consumers such as STCs have to pay an additional Rs 9.99 per litre.

“Oil marketing companies have also reported that the dual pricing mechanism is not working since STC bus fleets are taking fuel from petrol pumps causing hindrance in the smooth functioning of retail outlets and in the process wasting fuel,” the official said.

The sale of bulk diesel to STCs during April-August stood at 152.55 thousand tonnes, an 87 per cent fall from 1,193.86 thousand tonnes during April-September 2012.

The official said the basic purpose of reducing the revenue loss of PSU refiners by charging market prices from bulk consumers has been defeated as the buses bought fuel from retail outlets at subsidised rates.

According to a study by the petroleum planning and analysis cell, under the ministry of petroleum and natural gas, the share of direct/bulk sales to total sales, which was about 18 per cent in 2011-12 and 16.8 per cent in December 2012, fell to around 10 per cent in October 2013.

“The fall in the share of bulk diesel is mainly because of very limited offtake by state transport undertakings and by industries such as civil construction, cement, mining and steel who have shifted to retail outlets or to alternative fuels,” it said.

Market pricing was putting a strain on the finances of most loss-making state transport corporations, and with the political leadership unwilling to hike fares, the buses just drove to the nearest retail pump station, draining out the revenues of oil marketing companies.

The ministry, favouring the rollback, argued that the buses cause traffic congestion and hamper the smooth functioning of retail outlets.

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