The Railways, the largest consumer of diesel in the country, is weighing the option of saving on fuel costs by importing crude for captive use. The proposal, still in its nascence, is to either set up a refinery or block refining capacity.

The idea has been mooted at a time when the Railways has not benefitted from low global crude prices as a large part of its diesel bill accrues to the government as taxes.

“We would like the Railways to benefit from the low crude oil prices. We are considering options such as having a refinery or booking refinery capacity from which the high speed diesel is consumed by us, with the remaining products being used for other purposes,” Hemant Kumar, Member-Mechanical, Railway Board, told BusinessLine recently.

Kumar added that the proposal will have to be discussed with the Petroleum Ministry first before being firmed up, and that Railways would want a long-term view of the taxation regime before taking such a plunge. “What are the long-term taxes? What happens if the GST regime were to be implemented? We have to take these into account before finalising the issue,” Kumar said.

The Railways procures diesel from depots across the country. As a result, prices vary based on State taxes. That said, Kumar added that over 30 per cent of the Railways’ fuel bill is routed for taxes.

Stating that it was difficult to exactly estimate the present diesel bill, he added that it was in the range of ₹17,000-₹18,000 crore for 2014-15. He added that Railways could save about ₹4,000 crore in current fiscal if the crude oil rates were to remain in the same price band. The Railways consumes about 2.8 billion litres of diesel every year, while the Indian crude basket stands at $34.01 (₹2,251.79) a barrel, dropping from $57.91 (₹3,674.97) a year ago.

(With inputs from Debabrata Das)

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