3:50 PM
Fare hike may be Rail Minister’s first stop as fuel bill soars
New Delhi, May 18:
The Railways may
have backtracked on its decision to increase fares, but the next
Minister from the BJP-led Government will have to deal with a sharp jump
in fuel costs.
The total fuel cost for the Railways
shot up 28 per cent to ₹28,471 crore in 2013-14 against ₹22,282 crore in
the previous fiscal, according to revised estimates.
Of
this, only the rise in costs till July 2013 (the first four months of
the last fiscal) was factored in the fare hike of October last year.
So,
as on date, 10 months of fuel price hike has not been factored in the
fares. The Railways had put in place a fuel adjustment cost mechanism,
which allows increases in both freight and passenger tariffs in sync
with hikes in fuel cost. But the Railways were refrained from increasing
freight and passenger fares as there were general elections.
Freight
increases have an inflationary effect, while passenger fare increases
are usually resisted by politicians. The Railways transport over 2 crore
people and 2.9 million tonnes of cargo everyday.
Fuel increase break-up
The
total fuel increase was contributed by a 37 per cent hike in the diesel
bill and a 12.5 per cent rise in electricity costs in 2013-14.
Of the total increase of ₹5,125 crore in the fuel bill, almost 77 per cent (₹3,945 crore) was due to high diesel prices.
Of
the total increase in the electricity bill, 5 per cent was due to a
rise in electricity charges, and another 6 per cent was because of
higher traffic movement, said an official.
From the
65,000 route km network, the Railways have electrified 37 per cent of
routes. Every year 1,300 km of network is electrified now. Electricity
traction, while accounting for 34 per cent of the fuel bill, moves 65
per cent of freight and 51 per cent of passenger traffic.
Energy-based divides
Debates
on changing the energy usage mix of Indian Railways usually evoke
strong emotions among railway officials of two departments – electrical
and mechanical.
While officials from the electrical
department support more electrification of the network citing the
bloating costs of diesel, those from the mechanical department feel
there is a strong “electric lobby” comprising electric equipment
manufacturers who push for electrification.
Mechanical
officers say the real costs of electrification are under-estimated and
that from a country perspective, the Railways should use more of diesel
as trains are one of the most energy-efficient users of diesel for the
country.
However, the electrical officers cite the
slow pace of electrification despite the increase in fuel costs to point
out that the “diesel lobby is very active in preventing something that
should be an economically rational move.”
(This article was published on May 19, 2014)
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