The Hindu Business Line : Railways to absorb Rs 559-cr impact

New Delhi, June 4 Train fares for passenger and freight movement will not go up immediately on account of Rs 3 increase in diesel price to be effective Wednesday midnight. The high speed diesel (HSD) bill of Indian Railways, which is almost Rs 8,000 crore at present, will go up by about Rs 559 crore for the remaining part of this year because of the price hike. The Railways is the single largest HSD consumer in the country, with an annual consumption of 2.27 billion litres.

The Railways, which uses a mix of diesel and electric traction, moves about half the passenger traffic and 38 per cent of freight traffic using diesel. “There will be no increase in passenger and freight tariffs as of now,” said the Railway Ministry spokesperson adding that impact for the entire year would have been Rs 630 crore but Railways will now have to bear the hike for the remaining ten months.

Avoiding the hit

In fact if the entire year’s impact of Rs 630 crore were to be loaded on the total non-suburban passenger services of the Railways, then each passenger would have to pay an extra Rs 0.009 a kilometre. Thus, for a Delhi-Mumbai journey of about 1,400 km, each passenger would have to pay an extra Rs 10-11 to avoid any extra hit on the Railways’ fuel bill.

Similarly, if the entire hike were to be loaded on to total traffic movement, then for moving each tonne of goods traffic over a kilometre, the Railways needs to levy an extra Rs 0.012 for absorbing the hike. So, for the Delhi-Mumbai journey, each tonne of good would increase by about Rs 17.

DIESEL DISCOUNT

In 2008, the Indian Railways is getting a discount of Rs 150 a kilolitre of HSD from oil marketing firms. Oil marketing companies such as IOC, BPCL, HPCL and MRPL offered this discount to the Railways over and above the rate at which they dispatch HSD to their retail outlets. This is much lower than the Rs 1125.27 per kilolitre discount that it enjoyed in 2007 and 2006.

For HSD procurement, the Railways enters into rate contracts with various oil marketing companies for the year. The rate is generally the same for all companies and when finalised, the Ministry informs all zonal railways about the agreed rate.

Various zonal railways are free to procure diesel from various companies as and when the need arises.

While in the short run Railways will be hit on account of increase in diesel prices, on a long term basis it has planned several steps towards energy cost management. The steps include increasing bio-diesel blending for controlling fuel costs, procuring high powered and more efficient locomotives and increasing electrification while trying to reduce the unit cost for electricity supply.

More Stories on : Petroleum | Railways

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page