A dip in Global Crude Oil prices resulted in Big Savings for IR on Fuel expenses

Mumbai: A dip in the global crude oil prices over the last six months resulted in big savings for the Indian Railways in the year 2014-15 on fuel expenditure. A cut in diesel prices by the oil marketing companies over the last few months resulted in savings of almost Rs 5,000 crore for the Railways during the year, and brought down the share of fuel expenditure in working expenditure from 31 per cent to 25 per cent.

rail expensesWhile the budget estimate for the year 2014-15 stood at Rs 35,181 crore for the year 2014-15, the drop in fuel prices brought the revised estimate for the year at Rs 30,199 crore, resulting in savings of 15 per cent or Rs 4,982 crore.

As a result of fall in prices and on expectations that they will continue to trade at relatively lower levels, fuel expenditure as a percentage of net working expense that had risen from 25 per cent (a quarter) in 2011-12 to 31 per cent (almost one-third) in 2014-15 (BE), is now expected to come down again to 25 per cent in 2015-16.

The Railway Budget 2015-16 has projected fuel expenditure to amount to Rs 30,295 crore or 25.37 per cent of the net working expenditure of Rs Rs 119,410 crore.

While the price for Indian crude basket stood between $70 and $90 per barrel in 2010, it hovered over the $100 mark between 2011 and 2014 before softening to levels of around $60 per barrel towards the end of 2014.

India being a net importer of oil and the Indian Railways being one of the largest single consumer of fuel in the country, this has come as a huge benefit to both India and the Indian Railways.