Railways to import crude oil directly

This is an initial step towards the aim of saving Rs 35,000 cr on Railways' fuel bill over the next decade

Indian Railways plans to import 500,000 tonnes of crude oil directly, for the first time in its history, as an initial step towards the aim of saving Rs 35,000 crore on its fuel bill over the next decade.

State-run Indian Oil Corporation (IOC) will refine this imported crude at its Vadodara refinery.  “We will have to pay some refinery charges to IOC. It will also market other refined products. We want to save Rs 1,500 crore per annum on the fuel bill through direct procurement of diesel,” said a senior railway official, who does not want to be named.

Railways consumes around 2.8 billion litres of diesel a year, costing Rs 18,000 crore, and 17.5 billion units of electricity, costing Rs 12,300 crore.  Currently, nearly 30 per cent of the fuel bill goes into paying state taxes. “It is proposed to procure power through the bidding process at economical tariffs (rates) from generating companies,power exchanges and bilateral agreements,” minister Suresh Prabhu had said in his Budget speech.

By an order by the Central Electricity Regulatory Commission in November 2015, the railways are authorised to undertake transmission and distribution of electricity as a deemed licensee under the Electricity Act.  “The impact of procuring power as a licensee will bring savings of more than Rs 4,000 crore per annum against the business as usual approach,” the official added.

However, to get a deemed distribution licence, the railways also need no-objection certificates from states, which some of the latter are yet to give.  As part of this plan, IR has contracted for about 500 Mw of power from Ratnagiri Gas & Power (RGPPL) for consuming in Maharashtra, Gujarat, Madhya Pradesh and Jharkhand, at Rs 4.70 per unit. In addition, through Railway Energy Management Company (REMCL), they've contracted 50 Mw thorough open tendering at Rs 3.69 a unit. According to railway sources, Rs 1,300 crore of savings has already been achieved, with 730 Mw from RGPPL, Adani, Tata Power and NTPC.

The average rate has been reduced from Rs 7.07 a unit to Rs 4.61 a unit,with a savings of Rs 2.46 a unit in four states — Maharashtra, Gujarat, MP and Jharkhand.    For the southern states of Tamil Nadu, Telangana and Andhra Pradesh, a tender for procuring 400 Mw has been finalised by REMCL, which will save another Rs 400 crore.
SAVINGS MODE ON

• Indian Railways consumes around 2.8 billion litres of diesel costing Rs 8,000 crore per year
   
• It also consumes 17.5 billion units of electricity, costing about Rs 12,300 crore annually
   
• Through open access of electricity and crude oil imports, it plans to save Rs 35,000 crore on fuel bill in next 10 years
  

 

According to railway sources, savings worth Rs 1,300 crore have already been achieved, with 730 Mw power from RGPPL, Adani, Tata Power and NTPC