In what could boost the freight earnings of Indian Railways (IR), the net tonne km (NTKM) of the railways — which has been falling for the past two years — has improved, albeit marginally, this financial year. The long leads, or the average distance travelled by per mt of freight, fell to 560 NTKM during financial year 2016-17 compared with 600 the previous year. This was despite the railways announcing a 7% discount on freight charges last year for long lead coal supply.
However, the policy decision taken last year in October to provide all-rail routes for long lead coal supply to power houses has resulted in a growth of around 4% in NTKM this financial year. “We have seen pick in long lead coal. Andhra Pradesh has already shifted to all-rail routes for hinterland plants. Karnataka’s 50% power plants are on all-rail routes and Tamil Nadu for the first time has started taking all-rail routes for some of its plants,” said a railway official requesting not to be named.
The other improvement has come from iron ore demand from Karnataka. Due to mining restrictions in the state and availability of high-quality iron ore in Odisha, demand has picked up. “Jindal Steel at Toranagallu in Karnataka is transporting iron ore produced in Odisha and they more supply from Odisha,” said the railway official, adding that
Indian Railways transported 3.5 rakes of iron ore per day in August for Jindal Steel alone compared with 2.5 rakes per day earlier. “This is the kind of traffic —1,500 km-plus — we need to improve our NTKMs though we have given concessions on merry-go-round systems as well to attract traffic,” said another railway official who also did not want to be named, adding that the transporter will need an NTKM of at least 610 to meet the freight revenue target for 2017-18.
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The railways had put restrictions a couple of years back in view of some of the saturated capacity and coal rakes used to move from, say, Talcher to Paradip port in Odisha, and then from Paradip to Krishnapatnam in Andhra Pradesh by coastal shipping followed by a small rail route to power houses. “There used to be two small legs of railways and there was a longer coastal shipping, which was cheap as well,” said the second official quoted above, adding that despite state generation companies asking for an all-rail route, the railways was unable to provide service due to capacity constraints.
However, an analysis by Indian Railways showed that, for example, coal movement from Talcher in Odisha to Raichur in Karnataka involving coastal and rail shipping was coming to around `4,100 per tonne of freight cost because of two handling, and through all-rail route it was around `3,000. “This almost translated to 50-80 paisa per unit of electricity cost. So an all-rail route is a win-win for both railways and power producers,” added the second official.