The Hindu Business Line : ‘Dedicated freight corridor is answer to coal woes’

Coal has to be transported over a considerable distance and the average lead now is 600 km, down from more than 700 km a decade ago. We’ve noticed that in some cases the consumers pay more for transportation than for the price of the coal.

PARTHA S. BHATTACHARYYA, CHAIRMAN, COAL INDIA

Santanu Sanyal

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Coal India Ltd, together with its subsidiary coal companies, is the single largest producer of coal in the world, nearly 400 million tonnes annually. The projection is that the volume will rise by more than 50 per cent in the next eight to nine years. Transportation of this huge volume is a major challenge not only to Coal India but also other agencies. In an interview to Business Line, Mr Partha S Bhattacharyya, Chairman of Coal India, discusses various issues relating to coal transportation.

Excerpts from the interview:

Coal India is a major producer of coal. How do you handle the transportation of this huge quantity?

Yes. Coal India is the single largest producer of coal in the world. Last year, we produced 380 million tonnes (mt), likely to rise to 405 mt in the current fiscal. Handling this huge volume is a big challenge to us. But I will answer your question in a slightly different way.

The producers are a handful few but the consumers are spread all over the country. A few States, such as West Bengal, Jharkhand, Orissa, Chhattisgarh and Andhra Pradesh, account for the bulk of the country’s total coal production but coal is consumed throughout the country. Which means coal has to be transported over a considerable distance and the average lead now is 600 km, down from more than 700 km a decade ago.

How does Coal India handle it?

We handle the volume but we are not responsible for reaching coal to every nook and corner of the country. In fact, the coal producing companies are responsible for transporting coal from the pitheads to the nearest railheads or roadheads, i.e, points of loading either by rail or road, where the consumers take delivery of coal. Our sale price includes the cost of transportation from the pitheads to the nearest loading point either by rail or by road.

How much is the cost?

It comes to about Rs 20-25 per tonne.

What is the average distance from the pithead to a loading point?

There is no average as it varies from place to place — from two to three km to even 25-30 km. We charge extra from if the road bridging covers a distance of more than 20 km.

How much coal is loaded in railway rakes and how much in trucks for onward movement?

The ratio is 60 per cent by rail, around 32-33 per cent by road and the balance by captive facilities such as merry-go-round (MGR), conveyor system and ropeways. We’ve noticed that in some cases the consumers pay more for transportation than for the price of the coal.

But road transportation of coal has another implication. Costlier fuel is being burnt to carry a cheaper fuel. Isn’t that so?

Yes, you’re right. But then, what can be done? What we’re trying to do is to achieve some rationalisation in road movement over the distance we cover. There are problems.

What kinds of problems?

First, the condition of the roads in mining areas leaves much to be desired. Next, we have to put up with an unsatisfactory transportation system. Unsatisfactory, because the number of players is limited and since we sign annual contracts with them, these players take a short-term view and are, therefore, not interested in long-term investment to modernise their fleet. In other words, the road transport capacity available in the mining areas is far from satisfactory, both in terms of the number of vehicles and the types of vehicles that are deployed.

How then can you hope to achieve rationalisation in such a situation?

We’re planning to enter into five-year contracts with transport operators with the stipulation that they must deploy modern, higher-capacity vehicles. We’re also encouraging our consumers to opt more for MGRs, conveyor systems and ropeways as a means of evacuating coal from the pitheads. We’re planning to have washeries installed on build-operate-transfer basis at the pitheads so that we can transport washed coal by road. It will mean we will carry the same energy with much less volume.

Have you identified the locations for the proposed washeries?

As many as 18 locations have been identified and the tendering process will start soon.

What about rail transportation?

We ourselves do not dispatch any coal by rail. But a large number of our consumers take delivery of coal by rail. But we’re keen that more and more coal is transported by rail despite problems in rail transportation.

What problems?

The Railways has reached a point where the capacity cannot be augmented substantially by adopting such measures as wagon loading in excess of permissible limit or cutting down on wagon detention by slapping higher detention charges. The benefits of all these measures have already been achieved. In fact, the time has come when capacity cannot be increased significantly even by increasing the wagon availability.

Why?

First, it is not enough to increase the number of wagons unless the line capacity and other supporting facilities are also added. Next, every year, a large number of wagons are condemned or scrapped. Acquisition of new wagons, therefore, does not necessarily entail net addition to the capacity.

What then is the answer?

Perhaps a dedicated freight corridor is the answer. We sincerely would like to see the work on the project taken up in right earnest, more so in view of the projected increase in coal traffic.

What are the projections?

Coal India’s production should rise to 520 million tonnes by 2011-12 and further to 665 mt by 2016-17.

Do you think coastal movement on a large scale will provide some solutions?

Coastal movement is already in force on certain routes, particularly on the east coast from Haldia, Paradip and Visakhapatnam to Tuticorin and Ennore to meet the requirements of Tamil Nadu Electricity Board mainly but also the power utilities in Andhra Pradesh and Karnataka partly. But we’re not sure if transportation of coal from Haldia to Gujarat will be financially viable. We’ve not made any such study.

Any chance of pipeline transportation of coal in slurry form as it is being done in case of iron ore pellets in certain sectors?

Yes, there are some talks in this direction as an environment-friendly measure. But pipeline transportation presupposes certain conditions.

First, sufficient water will be needed and, more important, the pipeline has to be laid in areas of a certain gradient. All this discussion is at a very nascent stage. Frankly, I’m not very hopeful.