KSRTC Challenges Hike In Diesel Prices For Bulk Purchasers: Kerala High Court Issues Notice

The Kerala State Road Transport Corporation has moved the High Court challenging the decision of State-owned Oil Marketing Companies to increase the price of diesel sold to the Corporation, which is allegedly much higher than the market price. 

Justice N. Nagaresh on Friday issued notice to the Centre and the oil companies in the matter.

The primary grievance of KSRTC is that the decision of the Oil Marketing Companies to increase the price of diesel sold in bulk only to the Corporation is discriminatory, arbitrary and violative of Article 14 of the Constitution of India. 

"Supply of HSD (High Speed Diesel) to the KSRTC alien at a higher price than available in the retail outlets for others would amount to discrimination and thus violative of Article 14 of the Constitution. The increase in the price of HSD to the KSRTC will force them to cancel the schedules to manage the cost of services," the plea reads.

The petition filed through Advocates Deepu Thankan, Ummul Fida, Lakshmi Sreedhar, R. Rajanandini Menon and Shahnas K.P has argued KSRTC required around 300-400 litres of diesel on a daily basis.

Petroleum corporations offer exclusive storage and handling facilities to bulk customers like the petitioner, which are commonly called consumer pumps. Being a bulk consumer, KSRTC has 72 such consumer pumps across the State. 

Although the State was in charge of fuel prices in the beginning, it was entirely deregulated in 2002 with petroleum corporations being empowered to fix the prices.  According to the petitioner, this led to the oil companies fixing the tariff on unreasonable grounds.

Meanwhile, in 2013, the subsidy granted to KSRTC was withdrawn, and a non-subsidized market-determined price was fixed for the corporation. 

It was pointed out that the diesel available at consumer pumps were sold at lesser prices than at the retail outlets initially. However, this gap started gradually decreasing in January 2022.

The complication arose when the price of diesel at the consumer pumps unexpectedly skyrocketed in February 2022 from Rs. 88 to Rs. 121. Aggravating the situation, it was noticed that this price was Rs. 21 higher than the price of diesel sold at the retail outlets.

This implies that private bus operators who are competitors of the petitioner operating with the same fare tariff fixed by the State were getting diesel at lesser prices. 

It has also been pointed out that the Petroleum and Natural Gas Regulatory Board Act, 2006 was introduced to prevent exploitation of consumers in the deregulated scenario, no action has been taken by the Centre yet to bring all petroleum products under the Act despite several recommendations. 

Notably, the petitioner had approached the Apex Court earlier this month with a similar plea. However, while orally criticising the State's policy, the Supreme Court had granted KSRTC liberty to approach the High Court.

Case Title: Kerala State Road Transport Corporation v. Union of India & Ors.