Kerala HC declines to stay OMCs decision to hike price of bulk diesel purchase

PTI, Mar 22, 2022, 12:54 PM IST

The Kerala High Court on Tuesday declined to stay the state-owned oil companies’ (OMCs) decision to hike price of bulk diesel purchases or restrict them from further increasing the rates, but asked them to explain the manner in which their pricing mechanism worked.

The order of the high court came on a plea by Kerala State Road Transport Corporation (KSRTC) challenging the OMCs decision to charge a higher rate from bulk purchasers of diesel as compared to retail prices of the fuel.

While asking Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd to file a statement explaining their pricing mechanism, Justice N Nagaresh said that the OMCs should have given differential treatment to public service utilities like KSRTC.

”You should give some differential treatment to public service utilities. You know how KSRTC is functioning,” the court said.

Alleging ”hostile discrimination” against KSRTC by the OMCs, advocate Deepu Thankan — representing the state transport corporation — urged the high court to either stay the price hike or to restrict any further increase in the rate for bulk purchasers.

Thankan said the corporation was already running under heavy losses and without any interim relief, it would be forced to shut down.

The court declined to pass any interim order in favour of the corporation, saying ”there is no scope for an interim order right now”.

”Let the statement (of the OMCs) come first,” the court said and added that the KSRTC was to blame for running in loss.

The court also pointed out that the transport corporation had sought to be treated as a bulk purchaser and as a result had been enjoying the benefits of discounted prices for some time.

Thankan said that it chose the option to purchase diesel in bulk at discounted prices as it was providing a public service and it had separate fuel pumps for its buses as otherwise traffic snarls would be caused at retail outlets due to queuing up of its vehicles there.

KSRTC, in its plea, has contended that it has to pay more than Rs 27 extra per litre for diesel to the state-run oil manufacturing companies (OMCs) as compared to the rate of the fuel at private retail outlets.

Even the diesel supplied to private bus operators by OMCs was at a lesser rate than that charged from KSRTC, the petition has claimed.

The transport corporation has claimed that it was charged Rs 121.35 per litre for diesel by the OMCs, while the other consumers of the companies were getting it for Rs 91.72 per litre.

”There is no reason forthcoming for supplying the diesel to the KSRTC alone at a higher price. It cannot be said that it is because of the bulk use by the KSRTC, as there is no shortage of petroleum products in the country. There is no valid explanation for treating KSRTC as a separate class,” the plea, filed through advocate Deepu Thankan, has said.

Presently, KSRTC operates 5,481 buses on 3,525 routes every day with a ridership of around 18.4 lakh per day, it said and added that it presently requires around 300-400 kilolitres of diesel per day.

This is lesser than the pre-COVID-19 situation, when the transport corporation was operating 6,241 buses on 6,389 routes every day with an average ridership of 35 lakh per day, the petition said It has contended that permitting OMCs to charge bulk buyers more than retail purchasers would push the already ailing corporation into ”the deep abyss of debt” and will deprive the general public of its services.

The OMCs decision to increase price of bulk purchase of diesel will result in an approximate accumulated loss of around Rs 83 lakh per day for the KSRTC, the petition has claimed.

”The increase in the price of diesel to the KSRTC alone will force them to take a decision to cancel the schedules to manage the cost of services. The increase in price of diesel will directly affect the KSRTC passengers as the KSRTC will have to proportionally increase the tariff rates,” the plea has further contended.

KSRTC, in its plea, has urged the court to direct the OMCs to sell diesel to it at the market rates prevailing at retail outlets and to declare the charging of a higher price from the corporation as ”discriminatory, arbitrary, unreasonable and violative of Article 14 of the Constitution”.