TIL Desk/Business/New Delhi/The railways will soon be reaching an understanding with Indian Oil Corporation (IOC) for refining crude oil imported by the transport behemoth itself — a move that is likely to save Rs 2,000-2,500 crore a year on taxes for the ailing transporter. The railways consumes about 2.8 billion litres of diesel in a year, costing Rs 18,000 crore, and 17.5 billion units of electricity, costing Rs 12,300 crore.
“As an initial step, we have invited bids from consultants to work on the plan. We have received three bids. We are planning to import 500,000 tonnes of crude oil directly and will give it to IOC for refining. Our savings will be on account of taxes,” said Ravindra Gupta, chief administrative officer, Indian Railways Organization for Alternate Fuel (IROAF).
The three players that have submitted bids are Price water house Coppers, KPMG and Sahi Tejarat, an overseas agency. Once the railways increases crude procurement, oil marketing companies are likely to loose a bulk customer. It is the aim of Petroleum Minister Dharmendra Pradhan and Railway Minister Suresh Prabhu to transform the railways into a contract manufacturer, and a series of meetings have already been held in this regard, Gupta said.
