The Hindu Business Line : Railways gets higher discount for diesel

Even as diesel prices are headed north, Indian Railways has been able to negotiate a higher discount for its high-speed diesel purchase this year against previous year . The Railways recently finalised its annual contract for sourcing high-speed diesel from oil marketing companies at a discounted rate of Rs 1,125.27 per kilolitre.

Oil marketing companies like IOC, BPCL, HPCL and MRPL will offer the discount to Railways over and above the rate of dispatch to their retail outlets.

The discount for 2006 is higher by Rs 90 per kilolitre, as compared to previous year's discount of Rs 1,035.27 per kilolitre. The rate contracts are valid for the calendar year. In 2004, the Railways used to source each kilolitre of fuel at a much lower discount of Rs 600. The Railways procures about two million kilolitres of high-speed diesel every year.

For 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 of the agreed rate. Various Zonal Railways are free to procure diesel from various companies as and when the need arises.

"While IOC, BPCL and HPCL have agreed to provide diesel to us for the entire year at a discounted rate of Rs 1,125.27 per kilolitre, MRPL has agreed to sell us diesel at a marginally higher discount, wherein it has offered to waive off the Central Sales Tax," said Railway Ministry sources.