The Hindu Business Line : Rlys to revamp demurrage charges mechanism

It has formed a committee, headed by former Member (Traffic) of Railway Board, Mr Shanti Narain, to curtail the “discretionary powers vested with Railway officials” with regards to waiving demurrage charges.

Demurrage charges are levied on Railway customers if they fail to load or unload the wagons within the prescribed time.

Detention of wagons increases the time taken to load or unload the next wagon leading to increase in the turnaround time and as a result reduces the earning potential of Railways.

Wagon detention

Thus, demurrage charges are levied to discourage wagon detention and improve the turnaround of wagons.

The Comptroller and Auditor General (CAG) had flagged the issue (of waiving demurrage charges for wagon detention) several times earlier even in the 2007 report.

Pulling up the Railways for fixing demurrage charges at relatively low levels, the CAG had said that the Railways lost potential revenues amounting to Rs 1,581 crore during the three year period from 2003-04 to 2005-06.

Pointing out that even the “lower level” of demurrage charges were not completely recovered from customers, the CAG said : A test check of 60 sidings revealed that out of a total amount of Rs 167.4 crore recoverable as demurrage charges (from public as well as private sidings) during the three-year period of 2003-04 to 2005-06, Rs 94.07 crore was waived.

While the percentage of waiver in respect of private sidings was 49 per cent, the waiver in respect of public sidings was to the extent of 60 per cent, it said.

The Railways’ perspective is that the quantum of demurrage waived is based on circumstances such as regularity of loading and future prospects of traffic from a particular customer.

Additionally, if there are customers with large volumes of traffic, demurrage charges are waived to avoid diversion of traffic to road.

Thus, the expert committee formed has been asked to study whether free time of one more hour should be extended at a few terminals during non-peak period on an experimental basis.

It would also explore the possibility of framing guidelines on the extent to which demurrage charges can be waived for power houses.

Coal accounts for over 40 per cent of total freight traffic moved by the Railways.

The committee, which has representation from senior Railway officials, would decide on the issue after taking the views from other Railways users, large industrial houses and other transport experts.

The report has to be submitted over the next one year.