FCC

Railways extends validity of diesel supply rate contracts

2022-08-02

The Indian Railways has extended the validity of the diesel supply rate contracts it had signed in March 2020 by six months till the end of March 2023, according to people in the know, a move that will protect the national transporter from sharp volatility in oil prices.

These supply agreements have a clause that binds oil companies to supply diesel to the railways at below retail rates.

Typically, a bulk supply of diesel would be available to large buyers like Indian Railways at rates lower than the retail prices. However, present bulk prices are higher as oil companies have not revised retail prices in line with the crude costs.

Retail diesel prices were last revised on May 23, 2022. It is estimated that oil companies are selling bulk diesel to consumers such as transport fleets, shopping malls and factories at Rs 25-40 per litre more than retail prices.

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