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KSRTC's debt equation with IOC remains the same

Special Correspondent

Despite the Government granting Rs.45 crores to lessen its fuel debt burden

KOCHI: Finance Minister Thomas Isaac's announcement on Monday that the Government will chip in Rs.45 crores to lessen the KSRTC's fuel debt burden is not going to alter the bus company's debt equation with its main fuel supplier, the Indian Oil Corporation (IOC).

At best, this is a paper adjustment. Currently, the KSRTC owes Rs.145 crores to the IOC and the fuel company owes the Government Rs.45 crores by way of sales tax arrears.

Now, the IOC will pay the Rs.45 cores due to the Government; the Government will grant Rs.45 crores to the KSRTC; and, the KSRTC will pay back Rs.45 crores to the IOC to clear a part of its Rs.145-crore debt.

The debt equation will remain the same and the KSRTC will still risk getting its fuel supply cut off. For, the IOC has a deal with the KSRTC whereby whenever the fuel bill overshoots the Rs.100-crore mark, the oil company will choke off the supply.

Statement welcomed

IOC officials welcomed the Minister's statement that the fuel company would not henceforth be allowed to delay its sales tax (ST) payments. The IOC had "deferred" its ST payments (it pays around Rs.60-65 crores to the Government every month) because of the KSRTC's inability to pay up its fuel bill.

The officials said the IOC used to "defer" its ST payment on a tacit understanding with the Government and the KSRTC - when the KSRTC crossed the debt limit, the IOC was allowed to defer its monthly ST payment as a quid pro quo for allowing the KSRTC to draw fuel over the Rs.100-crore limit.

"This is a tricky arrangement for us as it will cause us problems in the future," a senior IOC official said.

"We used to pay our ST dues in advance, but because of the KSRTC's inability to pay its bill, we were forced to defer our payment to the Government."

Otherwise, he explained, the IOC would have to cut off fuel supply (after the due reaches Rs.100 cores), which would mean the buses would go off the road, and people would suffer.

Cumulative debt

The ever-in-the-red KSRTC also owes Rs.7 crores to the Bharat Petroleum.

One of the `very sick' bus companies owned by State Governments in the country, the KSRTC's cumulative debt burden now is Rs.1,500 crores.

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