Rail Budget 2013: Railways to introduce fuel adjustment component to counter diesel price rise

KOLKATA: The Railway ministry will introduce a Fuel Adjustment Component (FAC) to counter the deregulation of the bulk diesel costs. According to the ministry subsequent to increase in the rates of diesel oil in January 2013 itself has added Rs. 3,300 crore to the fuel bill of Railways, taking away a substantial portion of the additional resources targeted. Besides, electricity tariffs are also revised periodically.

The increase in fuel bill during 2013-14 on account of these revisions in 2012-13 alone would be more than Rs 5,100 crore. In the light of deregulation of the HSD oil, Railways' finances need to be rationally insulated and to this end a mechanism to neutralize the impact of fuel prices on operating expenses is required to be put in place. In the Budget 2012-13, my learned predecessor had proposed to segregate fuel component in tariffs as FAC.

As then suggested, this will be dynamic in nature and change in either direction with the change in fuel cost, say twice a year. It is proposed to implement the FAC-linked revision in only freight tariff from 1st April, 2013. As regards passenger fares, since these were revised only in January this year, I do not intend to pass on the additional burden to them now and railways will absorb the impact of Rs 850 cr on this account.