IOC, BPCL, HPCL directed to supply subsidized diesel to state transport corporations

The Kerala High Court has also directed oil distribution companies like Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation to supply diesel to the Kerala State Transport Corporation at subsidized rates.

The Madras High Court had, yesterday, asked the companies to supply subsidized diesel to the local transport corporation.

KSRTC is currently getting diesel at nearly Rs 65 per litre, while private buses get it at about Rs 51 per litre.

The two judgments are likely to negatively impact the health of the oil companies substantially since state-owned transport corporations across the country will also find it easier to get subsidized diesel.

The KSRTC operates nearly 5,000 passenger buses in the state.

Replying to the petition by the KSRTC, the Indian Oil Corporation (IOC) requested the High Court to direct the Kerala government to reduce sales tax on the commodity. Reducing the VAT on diesel would have also brought relief to the State Transport Corporation, the oil company had argued.

The case will continue to be heard by the court, and the current judgment is subject to modifications later. It is not clear whether the oil companies will appeal the order.

The central government allowed the oil companies such as HPCL, BPCL etc. to raise diesel prices for bulk users, including factories and transport corporations, in an effort to keep diesel subsidies under check. The oil companies had warned that oil subsidies would reach about Rs 2,00,000 crore — about three times last year’s number — unless prices were increased.

The government has a stated objective of removing subsidies on diesel in two years.