Putting energy reach on track

September 15, 2020 12:53 PM

The Indian Railways will play a defining role in delivering energy security

It is also important to note that in terms of CO2 emission per tonne km, the contributions are 64% by road, 28% by railway and 15% by water.

By Tanmoy Chakraborty

Over coffee, as I sat with a group of old schoolmates, a common friend of ours started narrating the wonderful theme of Hunny Hunt—based on the fictional anthropomorphic comic character Winnie the Pooh. It is a dark trackless ride located at Tokyo Disneyland. It was imagined in 1977. Being a core sector engineer, the conversation took me to my fascination towards supply chain.

The importance of logistics
India spends 13% of GDP on logistics, which is more than the US (9.5%) and Germany (8%), still we hear about the lack of connectivity and increase in logistics costs. The reasons may be attributable to the many challenges and geographic issues; for any nation to leap from developing to developed stage, connectivity is one of the defining parameters. The current government’s direction towards logistics is noteworthy, and yet India has to take even larger leaps now.

The modal mix for cargo transportation is suboptimal and skewed towards roads, which account for 60-65% of the total freight transported—the railways carry 30-35% and the remaining 5% is being fulfilled by air and water. In developed countries, the share of railways is close to 50%, with China at 47% and the US at 48%. It is also important to note that in terms of CO2 emission per tonne km, the contributions are 64% by road, 28% by railway and 15% by water.

Commercial mining and 300 MT steel capacity
The government’s decision to open up the coal mining sector for commercial purposes is no exception as logistics will play a pivotal role in the economic activity in the region. During the current pandemic, we have seen how supply chain acted as a key indicator and a saviour. We have also witnessed how the railways played the most robust carrier. From milk to minerals, grains to granite coupled with passenger movement, the railways kept the wheels of the economy rolling.

We must also keep in mind that India has a plan to reach 300 million tonnes of steel capacity by 2030: This will require approximately 430 million tonnes of iron ore, 160 million tonnes of coking coal, 105 million tonnes of non-coking coal for DRI along with nickel, magnetite, limestone, ferro alloys cumulating to about 100 million tonnes.
To fulfil the logistics connectivity and to give impetus to Swadeshi Coal to reduce import and thus the exchequer bills, the following four action points may be deliberated by a steering committee to implement a logistics plan in line with the gestation period of the mines:

1. Develop a blueprint and implement railway connectivity to all major mineral-bearing areas;
2. Incentivise players who are willing to construct railway siding;
3. Reduce the GST compensation fee as imposed in coal and impose a certain rupee per tonne fee as infrastructure fee to be used by the Indian Railways; the revenue thus generated will help the Indian Railways build infrastructure;
4. Construct ‘mining freeways’ in major coalfields areas where railway connectivity may take a longer time.

It is seen that the track density is not uniformly maintained in coal-bearing states. For example, in the South East Central Railway zone, we find that even though it has only 3.78% railway track km of the Indian Railways, it carries 15.01% of total volume of freight traffic on the Indian Railway. Of course it is tough and takes several hurdles to construct a railway line, but we cannot wait in the policy and decision-making stage.

The railways will play a defining role in delivering energy security. The penetration of railways in coal fields has to be looked at with the same lens as the policy governing commercial mining or a vision to produce 300 million tonnes steel capacity. The density of railway tracks in coal-bearing states must be ramped up. The roles of the NHAI, the PWD and the state governments must be framed along with the gestation period of mines.

The author works with Adani Enterprises Ltd. Views are personal

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