CIL out­put hits 3-year low, Rail­ways sees idle ca­pac­ity

RAIL­WAYS IS LOOK­ING TO SIGN BIND­ING CON­TRACT WITH BUY­ERS TO GET AS­SURED RAKE OFFTAKE

Resource Digest - - CONTENT -

Coal In­dia Ltd’s dis­mal out­put in Au­gust, its low­est in three years, is bad news not only for the coun­try’s min­ing be­he­moth but also for coun­try’s big­gest trans­porter, In­dian Rail­ways.

With half of its freight move­ment de­pen­dent upon coal trans­porta­tion, Rail­ways is star­ing at goods trains ly­ing idle im­pact­ing its rev­enues.

The prospect of dwin­dling coal de­mand im­pact its own rev­enues is so se­vere that Rail­ways is now work­ing for the first time to get into a legally bind­ing con­tract with buy­ers of coal like power plants and also steel and ce­ment to get as­sured offtake of rakes in ex­change of freight dis­counts, a se­nior of­fi­cial of the Rail­way Board has re­vealed.

“Ear­lier Rail­ways wasn’t agree­ing to any legally en­force­able con­tract. The long term con­tract would be for about 10 years. The draft agree­ment is now ready, based on what the Rail­ways min­is­ter had said in his bud­get speech. It is now go­ing for dis­cus­sion with the in­dus­tries to know any safe­guards that are needed. We hope to sign the agree­ment soon,” the di­rec­tor said on con­di­tions of anonymity.

While this gives Rail­ways an as­sured cargo, it can, in ex­change pro­vide some dis­counts to con­sumers of steel, ce­ment and other com­modi­ties on the freight rates, the of­fi­cial said.

With de­mand for coal fal­ter­ing, it im­pacted de­mand for coal car­ry­ing wag­ons supplied by the Rail­ways, a key com­po­nent of its rev­enues.

In Au­gust, Coal In­dia’s pro­duc­tion touched a nadir, drop­ping 10.4% on year to 32.4 mil­lion tonne against a tar­get of 40.89 mil­lion tonne.

This has led to Coal In­dia go­ing back on its ear­lier pro­jec­tions of wagon de­mand.

“Coal In­dia had pro­jected 245 rakes a day and we are ready with that. But they could do only with 207 rakes a day from April to Au­gust. While the cur­rent sup­plies are higher than pre­vi­ous year’s level of 213 rakes a day, this is much lower than what they had pro­jected at the be­gin­ning of the year,” a se­nior of­fi­cial of the Rail­way Board said.

De­mand for coal car­ry­ing goods trains would go up once the three projects be­ing ex­e­cuted as a joint ven­ture be­tween the Rail­ways and Coal In­dia get ex­e­cuted by De­cem­ber 2018 pro­vid­ing last mile con­nec­tiv­ity to dis­tant coal mines. “The Odisha line would be ready by March this year. The work is now at the last leg. The Jhark­hand project is ex­pected to get com­pleted by June 2018 fol­lowed by the Ch­hat­tis­garh project in De­cem­ber of that year. Th­ese lines are ca­pa­ble of car­ry­ing 30-35 mil­lion tonne of coal if a sin­gle track is laid,” the of­fi­cial said.

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