Railways to cut tariff on petrol by 25%

In a mid-year revision of freight, the railways are planning to cut the tariff on petrol by 25 per cent, and on steel products by 11.11 per cent. The changes are likely to be announced in the next few weeks.

At present, petrol is in the 240 tariff category. It is carried at 1.4 times its transportation cost to the railways. The railways planned to bring it down to the 180 tariff category where it would earn 80 per cent profit over cost, officials said.

"This will make us as competitive as pipelines in transporting petrol," an official said.

The officials added that the railway ministry has held discussions with oil companies like Reliance, Mangalore Refineries, and Petrochemicals Ltd. It was found that the railways will break even on pipelines in the freight class of 180.

The reclassification of oil products under the category of 180 can lead to a hike in kerosene tariff. Kerosene, at present, comes under the 130 freight category. In the case of steel, the railways enjoy an edge in bulk segments like steel ingots.

In case of steel pipes and rods, however, there is strong competition from road-based operators. In view of this, the ministry has drawn up plans to reduce the steel freight category from 180 to 160.

With the decrease in steel tariff, the railways plan to bridge the cost advantage of roads in case of non-bulk commodities like pipes.

The railways' share in carrying petroleum products has declined over the years. Even in case of iron and steel, the gain has been marginal. In April-February 2004-05, the railway co-efficient for petroleum was 24.77 per cent, against 26.45 per cent recorded during the same period in 2003-04.

The co-efficient for iron and steel was 35.4 per cent during the 11-month period ending February 2005, compared with 34.64 per cent during April-February 2003-04.

If the railways go ahead with this freight revision, it will be the second time since last November that changes will have been made outside the railway budget.

In November 2004, it had raised tariffs by 3.5-7 per cent for cement, iron clinkers and manganese ore.