Karnataka RTCs face rising costs as material prices surge after US-Iran tension

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The three state-run road transport corporations in Karnataka are facing growing financial pressure following sharp increases in fuel and material costs linked to supply chain disruptions caused by the US-Iran tension.

According to officials, prices of key inputs used in bus operations, including spare parts, petrochemical products, liquid urea, aluminium sheets, lubricants and rubber for tyre retreading, have risen by 10 per cent to 30 per cent over the past few months. Supply shortages have also affected the availability of several materials.

At the Karnataka State Road Transport Corporation (KSRTC), monthly spending on materials has increased from around INR 450 million (USD 4.75 million) to INR 540 million (USD 57 million), adding nearly INR 90 million (USD 952,000) to operating costs. The corporation is also spending an additional INR 5 million (USD 53,000) every month on diesel after fuel prices rose by INR 8 (USD 0.085) per litre. As a result, KSRTC’s overall monthly expenditure has climbed from about INR 2.05 billion (USD 21.7 million) to INR 2.25 billion (USD 23.8 million) in just three months.

The Kalyana Karnataka Road Transport Corporation (KKRTC) is also feeling the impact. Its buses consume around 324,000 litres of diesel every day, and monthly fuel expenditure has increased from INR 855.3 million (USD 9 million) to INR 933 million, creating an additional burden of nearly Rs 80 million (USD 846,000).

Similarly, the North West Karnataka Road Transport Corporation (NWKRTC) is spending about INR 90 million (USD 952,000) more on fuel each month, taking its total fuel bill to INR 880 million (USD 10 million). The corporation earlier spent around INR 80 million (USD 846,000) per month on spare parts and other materials but now requires an additional INR 20 to 30 million (USD 212,000 to  317,000) for the same items.

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The three corporations together use nearly 8,000 types of materials and spare parts sourced through a tender process. Around 550 to 600 items are required regularly. Many of these products are supplied through domestic and international supply chains, which have been affected by the conflict, leading to shortages and higher prices.

Transport corporations usually procure materials well in advance through contracts that can cover up to a year. However, officials said disruptions over the past four months have made it difficult for suppliers to maintain deliveries at previously agreed rates.

NWKRTC Managing Director Priyanga M said several suppliers have been unable to supply materials at quoted prices because of the steep increase in costs, while some have stopped deliveries altogether. The corporation has therefore issued fresh tenders with revised rates. She added that spare parts are being sourced from both government agencies and private suppliers to ensure uninterrupted bus operations. Prices of computers and other equipment have also increased, adding to the financial burden.