Price of rail ticket and cargo rates may often be revised with changing cost of diesel and electricity in years to come. Railway minister Dinesh Trivedi mooted in his Railway Budget for 2012-13 that rail fares and cargo rates be linked to fuel costs. But, Trivedi has not elaborated any roadmap for adopting the new mechanism.
Trivedi also proposes to set up an independent railway tariff regulatory authority that will fix tariffs both for cargo movement and passenger fares.
“I am contemplating a system of segregating fuel component in the cost associated with passenger services and call it FAC (fuel adjustment component),” Trivedi told Lok Sabha. “The FAC will be dynamic in nature and will change in either direction with the change of fuel cost,” he added. This means whenever there is change in price of diesel and electricity, fares and freight may change. In 2010-11, Railways spent about 25 per cent of their total expenditure of Rs68,079.75 crore for buying fuel to run trains.
Currently, government decides diesel price in the country. It varies with change in international crude oil prices. In a year, Railways consume about two million tonnes of diesel, said an IOC official. India’s largest oil marketer IOC supplies 84 per cent of Railways’ diesel demand. Remaining is supplied by HPCL and BPCL.
“Railways are our direct customers. This means they pay the price of the diesel fixed by government plus other state levies. They do not pay any dealer commission. There is no discount on diesel for them and volumes are decided through tenders from time to time,” the IOC official added.
On the other hand, state electricity regulatory commissions decide the cost per unit of electricity bought by Railways, said Pramod Deo, chairperson of Central Electricity Regulatory Commission.
The electricity bought by Railways is at a discount to the rates applicable for other industrial users, said a railway ministry official.
Industry watchers are also clueless on how fuel price movement will be linked to passenger fares and freight charges. At present, fuel surcharge cost is separately mentioned only for airline tickets in India.