Transport utilities hit fuel price bump

Fuel prices are making record highs almost daily, so are the losses for city bus transportation undertakings.

The rising price of diesel is making it difficult for the government city bus transport entities to manage the show while keeping the financial health of the organisation intact.

Already, all the city bus transport undertakings are bleeding due to various factors – competition from app-based cab services, rising road congestion, increase in fuel prices, reducing ridership, rising administrative cost, etc.

"What option do we have? What can we do in case of rising fuel prices?" asked Surendra Kumar Bagde, general manager, Brihanmumbai Electric Supply & Transport Undertaking (BEST), which runs city bus service in Mumbai.

"We have to continue with our daily operations as they are," he said.

BEST has a fleet of 3,337 buses, of which 1,977 are powered by compressed natural gas (CNG), 1,354 buses use high speed diesel to ferry commuters and the balance six are electric buses. Hence, not the entire fleet of BEST is impacted by the daily price rise.

For BEST, increase in each rupee in diesel costs translates into additional annual outgo of around Rs 30 crore.

Similarly, other fleets are also impacted. For example, Bangalore Metropolitan Transport Corporation (BMTC) is reeling under financial stress, and fuel price hikes are only making the matters worse. This despite it being the best government operated bus system in India.

According to BMTC's managing director V Ponnuraj, in order to maintain operational efficiency along with balancing increasing financial burden, they are looking at rationalising bus schedules and routes as well as continuing to focus on preventive maintenance.

For BEST, the last fare hike was in April this year, but for BMTC it hasn't been allowed to levy more fares for the last five years.

For an increase of Rs 10 in diesel price, BMTC is incurring an additional expenditure of about Rs 5.6 crore. Thus, the rising expenditures are eating into the revenues. In August this year, BMTC had come up with a proposal to hike bus fares by 15% to 18%, but earlier this month it was reversed by the state government as the increase in tariff was opposed by the passengers.

Other transport undertakings, too, are going through challenging times. The immediate options available at hand are increasing revenue through commercial means like advertisement rights, optimisation of bus services during non-peak hours and redeployment of services to ensure more areas are covered and ridership is increased.

In 2013, city bus transport entities which were procuring fuel directly from the oil marketing companies were categorised as 'bulk consumers', leading to increase in the then diesel price by Rs 11.50 per litre. As a way out, it temporarily stopped procurement of fuel from the oil marketing companies, and buses used to queue up at fuel stations near the bus depots to save this Rs 11.50 per litre hike or to negate the impact of being 'bulk consumer'. Then the retail price of per litre of diesel was in the range of Rs 48 to Rs 50 in different cities.

If the fuel price continues to go north, the last resort would be to pass on the costs to the passengers, say transport experts, as that is the only way left to keep the services running and meeting the rising operational costs. This was tried by BMTC, but was not allowed to do.