The railways is at crossroads. While there is a growing realisation that prices of output like electricity need to be rationalised, the spike in coal imports is slowing the national transporter down. In part 3 of the series, FE dwells on the problem stretching the railways
The sharp increase in coal imports to meet the rising demand-supply gap is stretching the Indian Railways. The national transporter, unable to expand its wagon fleet in tune with the demand from bulk industrial consumers, is already being blamed for the excessive coal stock build-up at pitheads. And the demand from coal importers comes on top of this.
India’s coal imports surged from 73 million tonne (mt) in 2009-10 to 135 mt in 2012-13 and the projection for this year is 165 mt. At this rate of import increase, there is bound to be transportation constraints. ?The transportation (demand) for imported coal has gone up drastically. We would be able to handle it only when it is staggered through the year,? railway finance commissioner Vijaya Kanth recently told FE.
Keen to bulk up its finances, the railways has recently implemented a fuel adjustment component (FAC) on freight, which increased coal freight from Rs 685.10 per tonne to Rs 724.80 – a hike of 5.79%. Apart from transportation bottlenecks, this also has hit power and steel companies.
Coal India (CIL), under pressure from the government and the industry to ramp up production to meet sharp increase in demand, is the railways’ single-largest consumer (42% of railways total freight earning come from coal transportation). The national transporter, which itself has limited ability to increase its capital spend due to poor financial position, has embarked on an innovative exercise to meet the rush for railway rakes by coal-consuming industries.
This year the railways has set a target to transport over 500 million tonne of coal.
?It is wrong to say that we are not meeting the transportation demand. The coal stock at the pithead has come down from 75 million tonne to 57 million tonne and it will be further go down in a year or so. We inducted around 15,000 wagons last year and around 11,000 wagons in 2011-12. We have sufficient capacity to handle coal,? a railway board official told FE.
Railways also claim that transporting coal from pitheads to rail head (last-mile connectivity) is the responsibility of CIL. Coal India for long has been claiming that railway has inadequate wagon capacity to carry coal. ?The problem is the last-mile connectivity. To get coal from the pit head to the rail head is the responsibility of Coal India,? a railway official told FE.
The last-mile connectivity problem has also been addressed by the railways by bringing in participative policy that allows CIL and other users to invest in building railway line to provide connectivity. ?Last-mile connectivity has always been a problem but the new railway policy allows industry to invest in rail connectivity,? Rajaji Meshram, senior manager-transport and logistics, told FE.
Railways has made available around 200 rakes a day to Coal India, whereas only 190 rakes are being used on average as the demand of coal by thermal power plants has come down. One rake carries around 4000 tonne coal. ?Power Plants already have coal available for 20-30 days. So, the demand these days has come down,? the official added. Apart from adding wagon capacity of existing rakes reserved for transporting coal, railways has also decided to increase the speed of these trains to reduce the turnaround time and cater to a larger number of consumers.
The average speed of train has increased to 35 kmph now from 25 kmph. Empty rakes now run at a top speed of 100 kmph, which has led to decrease in the turnaround time. We are running long-haul freight trains to solve the problem of line capacity. High capacity wagons with the pay load of 70.8 tonne, which is 12 tonne more than the existing wagons, have been inducted.
In doing so, while the railways has tried to address the concerns of CIL for transporting domestic production, the company’s plan to import coal may continue to suffer as railways doesn’t have enough capacity to carry imported coal.
Out of 200 rakes, railways is loading around 87 rakes of imported per day, up from 66 rakes in 2012-13.
Analysts feel that any further hike would hit the coal-consuming sectors hard but for railways, which earns its major revenues by transporting coal, it will remain difficult to keep the freight tariff untouched.
?Railways doesn’t work in isolation. What do we do if prices of bulk diesel increase? We can’t touch the foodgrains and fertilizer tariff as it would have an adverse impact on the economy,? a rail official said.
(To be continued)
