Running behind the rake movement estimates for the first nine months of the current financial year, the Indian Railways is engaging with power generation companies in Punjab, Maharashtra, Rajasthan and Gujarat to increase coal demand at long leads. “We are working at how to increase demand from long lead power houses and also carry coal that will be substituted for imports,” said Mohd Jamshed, member traffic, Railway Board.
At the start of the year, the railways had estimated an average 253 trainloads of daily coal movement form mines operated by the Coal India alone, which, however, has been around 210 during the April-December 2016 period.
The movement of imported coal too was down by about 25 rakes per day from estimates of 80 per day moved from ports to the hinterland.
Coal constitutes around 50% of the railways’ freight basket. The national carrier missed its freight movement target by 10.98% from budget estimates during the first nine months of financial year 2016-17 and passenger traffic estimates by 9.14%.
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Overall, including sundry other receipts, the revenue is down 11.25%. “It was assumed that in the initial months, coal movement from Coal India mines will around 240 rakes per day and eventually become 260-265 but that did not happen,” said Jamshed.
Apart from Coal India mines and import slowdown, there were a couple of captive mines in West Bengal that went into crisis and have not operated for almost two years dragging down the raw material movement.
The railways has a target of 1,160 million tonne (MT) of tonnage movement, out of which 578 MT were expected from coal, for the current financial year compared with 1,104 it achieved last year.
Another reason for coal traffic being hit was comfortable inventory situation of the raw material at power houses. As on April 1, 2016, there were an average of 33 days of coal requirement inside the power houses. “Around 60 MT of coal were at pitheads and we had stocked 40 MT inside the power houses,” said Jamshed.
The other significant hit has been from the cement movement which was estimated to be 111 MT and a significant shortfall is expected. This has been mainly due to tepid activity in the real estate sector.
According to a report by consultancy Knight Frank released last week, due to the NDA government’s demonetisation move real estate sales fell 44% year-on-year in the fourth quarter of the calendar year 2016 and new projects were down 61% during the period.
In a bid to increase its freight revenue, the railways took around 15 measures last year. These include withdrawal of dual freight policy for iron ore, port congestion charges and busy season charges, among others.
The railways is banking on the coal targets made by the coal ministry which targets to increase production to 1,500 MT by 2020, almost double from the current level. “If coal production is doubled and if the same ratio of coal is moved by the railways, we will be moving 1,100 MT of coal alone by 2020 which will be a significant boost for the carrier,” said Jamshed.
According to G Raghuram, however, one should not depend on coal alone as the energy sector is going through changes.
“The country is moving towards renewable energy and so the railways should look at other avenues such as movement of manufactured and intermediary goods which are currently been done through the roads,” said Raghuram, a transport economist and professor at Indian Institute of Management-Ahmedabad.
“Coal-linkages were not efficient earlier but now rationalisation is happening and power generation companies are now getting coal from mines nearer to generation sites. This would mean lower coal freight in the future and so over-dependence on coal is not ideal. The railways should look at the container segment which in the future will be a big market,” said Vishwas Udgirkar, partner and lead-infrastructure consulting, Deloitte Touche Tohmatsu India LLP.
The Narendra Modi-led government is targeting to achieve 175 gigawatt (GW) of renewable energy projects by 2022 of which 100 GW will be solar and 60 GW will be wind energy. The current installed capacity wind energy is 26.8 GW whereas as that of solar energy is 7.6 GW.
By- Saurabh Kumar
