The Indian Railways' requires seven lakh tonne of 60 kg rails, but SAIL is at present only in a position to supply 60,000 tonne of the specifications that the Railways demand. The Railways were, in fact, threatening to import their entire requirement of 60 kg rails, but thawed considerably at the meeting with SAIL, mediated by Union steel and mines minister Naveen Patnaik and the Union Railways minister Nitish Kumar.

The Railways will not only buy as much of the 60 kg rails as SAIL can supply, but have accepted the steel ministry proposal to invest jointly in rail-making facilities at Bhilai. A steel maker of international repute will be roped in as an equity-holder in the joint venture.

Steel secretaryAshok Basu, who confirmed that the two ministries had come to terms on the "vexed issue of providing rails," said, the details of the joint venture were yet to be worked out. The new production capacity will be located at Bhilai, where SAIL has its existing facilities for making rails. Till the new rails making facility goes on stream, the Indian Railways will continue to import the bulk of its requirement of 60 kg rails. It will buy most of the 52 kg rails that SAIL can supply, which is the second grade of rails that the Indian Railways purchase from Bhilai.

SAIL is in a position to supply four lakh tonne of the 52 kg rails and had offered 3.3 lakh tonne of the material to its sole customer in the country. Railway minister Nitish Kumar firmly fixed a quota of 2.8 lakh tonne of 52 kg rails from SAIL, and that too, provided the company confirmed to the quality specifications that the Railways were demanding.

SAIL will be free to export the rest of its output of 52 kg rails. Incidentally, Indian Railwaysalso procures wheels and axles from SAIL's Durgapur Steel Plant.

The Railways also agreed to buy 60,000 tonne of 60 kg rails from SAIL, provided the steel maker conforms to the quality specifications that the Railways demand. SAIL, represented by chairman Arvind Pande, assured the Railways that efforts were on to upgradethe quality of rails at the Bhilai Steel Plant. The Indian Railways was represented by the Railway Board chairman.

The public sector steel producer has already invested Rs 150 crore in vacuum degassing and ultrasonic testings. The two facilities are scheduled to go on stream by December next year and should considerable improve the quality of SAIL rails.