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Railway budget to up fuel-LPG prices

Chennai, Feb 27 (): The Railway budget has many features that would push up cost of essentials and fuel prices. The latest budget hiked freight rates for transporting diesel and LPG by 8 per cent. This move will result in hike in retail fuel, kerosene and LPG prices.

Freight on diesel was Rs 985 a tonne which was increased to Rs 1,041.80 per tonne hiking by 5.79 per cent. Freight charges for Kerosene went up from Rs 886.30 per tonne to Rs 937.60 a tonne with a hike of 5.79 per cent. Liquefied petroleum gas (LPG) rose to Rs 937.60 a tonne with a hike of 5.79 per cent.

The hikes apart from railway freight charges adds development charge and busy season charges (for getting wagons on priority) which in reality means that actual hike for oil companies would be higher.

The State owned PSU’s have the option to either pass on the increase to the Government to compensate under the recoveries and if the Oil and Finance Ministry refuses to do so then the hike has to be passed on to the consumer. Some cities get their supply of fuel and LPG through road transport since they are located near the refinery. Those States that do not have refinery within their domain has to be getting their supply through railway wagons. As per present oil companies transport 33% of the fuel-LPG and kerosene using the railway network.

The Finance ministry has told the Oil ministry that it would not go in for any more subsidy and this means that about extra costs increased for around 32-33 per cent of diesel, LPG and kerosene transportation will be have to be passed on to consumers.

Oil PSU’s are waiting for the tariff to come from Railways. The new tariff will come through only from April 1, 2013 and that too subject to approval from Parliament. The increase might be slightly reduced due to opposition from political parties.

Railway Minister has stated that the recent increase of diesel price has raised the fuel bill by another Rs 3,330 crores and it was being picked up without passing it to the passenger but added that freight charges would be pegged at the prevailing fuel prices.

Railways have decided to set up solar and wind energy units across the country to feed the network since State Governments are increasing the tariff periodically. The Minister put the 5% increase in freight charges to cover the Rs 5100 crore extra fuel bills that he expects in the 2013-2014 fiscal.