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Post-dismantling of APM -- Rail movement of petro goods in for changes

Our Bureau

NEW DELHI, May 27

RAIL movement of petro products is set to undergo major changes following the scheduled dismantling of the administered pricing mechanism (APM) by April 2002.

To gear itself for the post APM regime, the Railway Ministry has asked the Ministry of Petroleum and Natural Gas to spell out logistics and operational plans in a deregulated scenario.

Under the present dispensation, decisions on the movement of petro-products -- including rail movement -- as well as on the linkages are taken by the Oil Coordination Committee (OCC). The OCC -- an umbrella organisation for the oil industry -- als o reimburses payments made by the oil companies to the respective refineries.

``The Railways may face major problems as linkages are bound to change drastically after deregulation. There is still no clarity on whether the existing hospitality arrangements between different oil marketing companies would continue after the dismantli ng of the APM,'' an official said.

The changes in linkages are bound to impact freight costs and cost calculations for the oil industry. The Railways, however, do not foresee any dip in POL traffic in the near term, although it is bound to lose such traffic with the expansion of the netwo rk of pipelines.

The Railways have targeted a POL traffic of 37.50 million tonnes during 2001-02 as against the revised estimate of 36.50 million tonnes in 2001-02. Although POL accounts for roughly 7.5 per cent of the total targeted freight traffic of 500 million tonnes for the current fiscal, it is a major revenue earner. The projected revenue realisation through POL movement is around Rs 2,837 crore.