Rlys, RIL slug it out on diesel rates

The railway ministry has said it cannot provide any special concessions to Reliance Industries Ltd in the light of the company threatening to pull out of its contract to supply high speed diesel to the ministry.

According to ministry officials, RIL's grievance regarding non-parity with public sector oil marketing companies needed to be addressed to the petroleum ministry, and not the railway ministry.

RIL had indicated that it may pull out of a contract to supply diesel if its rates were not revised. RIL's argument is that it is unfair to ask oil PSUs and RIL to supply diesel at the same price.

The company says while the PSUs will be compensated for under-recovery on sales "" in the form of subsidy or discount from upstream companies and compensation by way of oil bonds "" RIL does not get any such benefit.

However, the railway ministry says it has no role to play in the matter.

"Nearly 95 per cent of our diesel procurement is from the PSUs. So even if RIL were to pull out, it would not make any major difference to the railways," said an official at Rail Bhavan.

According to the official, it was impossible to revise the rates of diesel procurement only for Reliance.

All their grievances regarding the pricing should be addressed to the petroleum ministry, the official added.

RIL sources claimed that the company had saved Rs 400-500 crore during the last two-and-a-half years due to the higher discounts offered by the company.

Railway officials agree that RIL has indeed infused competition in diesel procurement in the railways and helped cut fuel costs.

"But if the ministry was to get such a benefit only for the initial two years, then what would be the point of allowing private players to participate in such contracts," another official asked.