Financial Daily from THE HINDU group of publications
Monday, Sep 06, 2004
Industry & Economy - Petroleum
Oil product movement from North-East Railways on the fast-track
Cumulatively, the growth in average daily loading in April-August in the North-East was 26 per cent. During the same period, the growth in the eastern region, also covering the North-East, was 17 per cent. A total of 45 "Rhino" (BTPN) rakes are deployed in the North-East for transportation of petroleum products out of the region.
For a region (the North-East) afflicted with myriad problems such as difficult topography, inadequate communication facilities and critical law and order situation, such an achievement is considered creditable. But, then, there are certain favourable conditions from both demand and supply points of view. First, the demand for wagons for transportation of petroleum products out of the region is high for a variety of reasons. Second, the Railways too could meet the high demand by supplying rolling stock.
Now let us first look at the demand side. There are several reasons why the refineries located in the North-East need more wagons to send their products out of the region by rail.
Only around 20 per cent of their production is consumed within the region. Which means the balance has to be sold outside the region and for transporting the bulk of the production, rail is the most preferred mode.
The road network in the North-East leaves much to be desired. But there are other reasons also. By virtue of a Central government decision, the production of the refineries located in the North-East enjoys 50 per cent excise relief. This has been of great help to the north-eastern refineries so much so that Bongaigaon Refineries and Petrochemicals Limited finds it economically viable to process Ravva crude produced in far off Andhra Pradesh which is brought in by a combination of sea route and pipeline network.
Also, there is a 6 per cent railway freight concession on inter-State movement of petroleum products produced in the North-East.
There being no product pipeline in the region, but only of crude, the rail movement becomes all the more essential. Above all, there has been no no increase in railway freight for petroleum products ever since it was rationalised in the Railway Budget for 2003-04.
Second, the supply side: The average lead being 1,000 km, it is natural that the Railways will be interested in placing more wagons for movement to and from the north-east, more so when there is demand. And the Railways does provide the required number of wagons to meet the increased demand through better management of rolling stocks.
The real-time monitoring of the wagon movement has been possible because of the online freight information system entailing better pipeline management and terminal management and, as a cumulative effect of all this, better turnaround of wagons and consequently higher wagon availability.
But there are several constraints also. First, the line capacity is extremely limited and there has been no no significant addition to the Railways' existing infrastructure in the region.
As it is the railway network in the north-east is saturated with single line network running from New Jalpaiguri (northern part of West Bengal) to Bongaigaon (Assam) and there being no separate freight corridors, the same single line network is used for both passenger and goods trains with passenger trains always getting priority.
More important, the region being deficit in essential items such as foodgrains, salt, edible oil, cement, iron and steel, the rail transportation of these items into the region from the rest of the country always gets high priority.
Also, the region is surplus in petroleum products which in any case have to be evacuated out of the region by rail. But the wagons used for outward movement of petroleum products cannot be used for inward movement of essential items.
The pipeline is not yet a major threat to the Railways in the North-East but the day is not far off when the threat will be a reality. There is a proposal to lay a product pipeline between the Numaligarh Refinery (Assam) and Siliguri (northern part of West Bengal). Once the laying of the pipeline network is complete, the Railways will face problems.
For example, in Visakhapatnam, there was a 6 per cent drop in the average daily wagon loading of petroleum products from April to August compared the same period last year, largely due to switchover of the traffic from rail transportation to the pipeline mode.
A BTPN rake costs the nation nearly Rs 10 crore and can be in operation for at least 30 years. The same national resources will be spent on laying the pipeline. One wonders if creating a second set facility when one set of facility already exists for the same purpose is judicious.
There have been umpteen rounds of debates over this issue over the years. However, the pipeline lobby in the oil companies being very powerful always holds sway and gets away with their schemes.
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