The Hindu Business Line : Rlys declines to cut tariffs for iron ore exporters

Global rail freight
In Australia, Brazil and China rail freight is around Rs 0.43/tonne per km, whereas in India it is nearly four times higher at Rs 1.81/tonne per km.

Phalguna Jandhalya
Mamuni Das

New Delhi, Jan. 11

Indian Railways appears to be in no mood to pay heed to demands of iron ore exporters to reduce tariffs. The exporters have written to the Railways seeking relief from several rounds of upward revision of tariffs brought about through various surcharges.

In a letter that calls for reduction in fares, the exporters have warned that they would shift to other modes of transportation such as slurry pipelines and expressways in the long run, if Railways were to continue increasing freight rates of iron ore frequently.

When asked if Railways is considering a reduction in total tariffs for iron ore exporters, the Railways Member Traffic, Mr V.N. Mathur, replied in negative. However, he declined to comment on whether the Railway Budget would bring in any good news for them.

The Federation of Indian Mineral Industries (FIMI) has claimed that rail freight in Australia, Brazil and other developing countries such as China is around Rs 0.43 per tonne per kilometre (km), whereas in India it is nearly four times higher at Rs 1.81 per tonne per km.

In the first eight months of 2007-08 fiscal, Railways has increased the rail freight for iron ore exports by 44 per cent from Rs 1.26 per tonne per km (on April 1) to Rs 1.81 per tonne per km as on date.

In a thinly veiled threaten, FIMI has pointed out that alternative modes of transport like slurry pipelines, expressways, and so on, are being planned and executed from the mining areas to ports and other vantage points. “The Railways’ short-sighted policy of increasing iron ore freight charges will only give a fillip to such projects and in the long run iron ore traffic will inexorably get diverted to such alternative modes of transport,” FIMI has said.

For the eight month period of the current fiscal, Railways witnessed a 35 per cent growth in the loading volumes of iron ore for exports, while the revenues from the commodity witnessed a much higher growth (45 per cent). Railways moved 33.71 million tonnes of iron ore to the ports during the period earning Rs 2460.95 crore.

On iron ore for exports traffic, Railways has hiked the congestion surcharge to a whopping 60 per cent per tonne with effect from December 1, 2007. Earlier, the congestion surcharge was at 35 per cent per tonne, which was effected from October 1 — an increase of 14 percentage points over the 21 per cent surcharge level prevailing till September-end. The 21-per-cent congestion surcharge was imposed on iron ore exporters from April 1, through a notification after the Budget.

Other surcharges

Apart from the congestion surcharge, iron ore exporters are also paying busy season surcharge of 7 per cent with effect from October 1, when the Railways had increased the surcharge by one percentage point. Moreover, a terminal charge of Rs 40 per tonne has been imposed on iron ore till March 31, 2008, apart from a development charge of 2 per cent. With all these surcharges, for moving one tonne of iron ore on a 500-km distance, exporters now have to pay about Rs 987 compared to the base tariff of Rs 554.70 as announced in the Budget.

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