₹82 crore saving for MSRTC, ₹304 crore loss to state: Fadnavis seeks middle path

There are two options before the government. The first is to accept the bids with the proposal to source diesel from neighbouring states, which will help MSRTC save ₹82 crore annually. However, it will result in a loss of ₹304 crore to the state

Mumbai: The Maharashtra State Road Transport Corporation (MSRTC) has approached Chief Minister Devendra Fadnavis over a diesel procurement plan that could save the transport body ₹82 crore annually but trigger a ₹304 crore loss to the state exchequer. Fadnavis has asked the finance department to find a middle path.

₹82 crore saving for MSRTC, ₹304 crore loss to state: Fadnavis seeks middle path

The issue stems from bids floated to procure 41 crore litres of diesel for MSRTC’s 14,320 buses. Of the five oil companies that responded, four proposed supplying fuel to 94 depots from Gujarat and Goa, where VAT rates are lower than Maharashtra’s 21%. For Gujarat, the rate is 14.90%, and it stands at 18.09% in Goa.

While the move would reduce fuel costs, it would divert tax revenue to neighbouring states. The transport department, led by minister Pratap Sarnaik, has written to the CM, seeking intervention.

“There are two options before the government. The first is to accept the bids with the proposal to source diesel from neighbouring states, which will help MSRTC save ₹82 crore annually. However, it will result in a loss of ₹304 crore to the state. The second option is to procure the entire supply from within Maharashtra, thereby retaining VAT revenue. This, however, would lead to a loss of ₹82 crore for MSRTC, though it would save around ₹40 crore in transportation costs. The first option is unlikely to lead to litigation, whereas the second may, as oil companies favour the former,” the letter states.

MSRTC has warned that rejecting the proposal may lead to higher fuel costs and loss of an enhanced discount. Officials said they are exploring a solution that balances savings and revenue protection.

“The Finance Department is expected to propose a via media through which the government does not lose revenue and MSRTC continues to receive diesel at a discounted rate,” an official aware of the development said.