The Hindu Business Line : Diesel price hike unlikely to have major impact on rail tariff

New Delhi, Feb. 15 The marginal hike in diesel price is unlikely to have any significant impact on the rail transportation tariffs, though the road transportation tariffs could go up, particularly in the long run.

The one rupee per litre hike in diesel prices effective Thursday midnight is likely to increase the fuel bill of the Railways by about Rs 200-250 crore for an entire year over its annual fuel bill of about Rs 12,300 crore (roughly half of the amount is spent on high speed diesel and another half on electric traction).

Thus, for the remaining part of the current fiscal, the hit on Railways, which hopes to garner gross traffic revenues of Rs 71,318 crore this fiscal, is expected to be marginal.

Road transport

For the road transport sector, there could be an upward revision in the long term though there may not be an immediate impact.

“Business-to-business logistics providers like us have an annual contract with clients. Thus, an upward revision in diesel would surely have an impact in the long term. However, parameters like the time of the year when contracts are to be renewed, the industry vertical which is being targeted, and individual customers would matter when it comes to revising the tariff within the contract,” said Mr Vineet Kanaujia, General Manager-Marketing, Safexpress, which has a fleet strength of 3,300 containerised vehicles on road. In the short run, Safexpress is likely to absorb the Re 1 hike, he said.

Truck rentals

“The truck rentals on trunk routes are unlikely to be impacted given the high capacity created in the trucking sector on the back of sharp dip in the manufacturing sector growth to 8.4 per cent from 14.5 per cent, which resulted in a drop in cargo availability. Anticipating high growth, the trucking sector has witnessed build up of overcapacity in the trucking sector,” said Indian Foundation of Transport Research and Training (IFTRT), a research body, which has over 40 resource persons tracking truck rentals at key locations in the country. However, IFTRT warned that at certain centres, different transport associations have been advocating a five per cent increase in freight rates on account of the Re 1 increase in diesel.

However, even if there is a hike in prices, the truck owners are unlikely to gain. “The truck owners would have to absorb the increase in cost and take a hit. The end-users (customers) would pay the higher freight rates to common carriers and the common carriers are unlikely to pass it on to the truck owners,” said Mr Chittranjan Dass, Vice-President, All India Confederation of Goods Vehicle Owners Association.

More Stories on : Petroleum | Roadways

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page