IR gets set to cut Fuel Cost – introduce Vendor-managed Depots, review Electricity Contracts

New Delhi: To control fuel costs, the Railways plans to have vendor-managed fuelling depots for high-speed diesel and is also reviewing contracts with the electricity authorities to lower peak demand.

“We are going to have vendor-managed railway fuel depots. Till now, the depots were being manned by us, which added to our staff cost. We hold the inventory and pay in advance. Now, this is going to be changed. The pilot project is on in Jaipur and is being undertaken by Bharat Petroleum Corporation Limited,” Sanjoy Mookerjee, Financial Commissioner, Railway Board, told.

To save costs of high-speed diesel, the Railways is also improving the driving skills of its locomotive pilots to improve fuel consumption.

“To control storage capacity, we are now making ‘just in time’ kind of inventory so that the cost of storage reduces substantially,” added Mookerjee.

Electricity consumption

On electricity consumption, the Railways is reviewing its contracts with the electricity authorities to reduce the assured amount that it pays, keeping in mind the operations of each sector.

“Earlier, we used to pay for peak load, even if we were not using it. Otherwise, we had to pay a huge penalty. That is now going to be reviewed on a real-time basis, based on the loading of each section. That should give us a substantial reduction in peak load payments. Depending on the time table every year, we need to reorient the peak load and bring it down,” said Mookerjee, adding that this process will save funds.

For instance, if the peak load drawn by trains in certain sections was 100 MW, we found the average usage was 50-60 MW. The Railways also gets rebates of 1-2 per cent on making electronic payments, as some electricity authorities provide such rebates.

To save on electricity costs used for running trains, the Railways already has a deemed licence.

“We are getting rates which are almost half of what we were getting earlier. Reliance Power (ADAG) has given us a rate of ₹3-4/unit for North Central Railway, whereas we are paying more than ₹6/unit. The Ratnagiri power – a GAIL and NTPC joint venture — for which we have now contracted will help us save ₹300 crore this year.


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