Supply diesel to KSRTC at existing market rate: Kerala HC to oil companies

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The Kerala High Court, in an interim order issued on Wednesday, ordered four public sector oil companies to supply high speed diesel to the Kerala State Roads Transport Corporation (KSRTC) at the existing market rate available at outlets by retail.

Judge N Nagaresh’s bench delivered the order on a plea bargain offered by KSRTC, which challenged the rise in diesel prices of Rs 25 a liter for bulk buyers slapped by oil companies since February this year.

The tribunal said: “Regardless of the mechanism adopted by the oil companies interviewed to set prices for the bulk supply of consumer pumps, on the face of it the price collected is very exorbitant. If it is under an agreement, the same prima facie is an extremely unreasonable condition of negotiation.

Initially, the price at the consumer pump was lower than the price of diesel at the retail point of sale. Since February 2022, oil companies have levied a much higher rate. At present, the price of high speed diesel for other consumers is around Rs 91.72 per litre, while KSRTC is required to pay at the rate of around Rs 121.35 per litre. KSRTC, which is going through a serious financial crisis, needs 300 to 400 kiloliters of high-speed diesel per day.

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In its petition, KSRTC sought an interim order to levy the price of high-speed diesel at the same level as the existing market rate available to retail outlets. The oil companies resisted the request for an interim order saying that the KSRTC’s request is not admissible because the matter at issue falls within the scope of the contract and there is an arbitration clause in the agreement. Subsidies and concessions are matters of policy and the court will not intervene, the oil companies argued.

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