The Hindu Business Line : Slower freight growth a major concern for Railways

New Delhi, Dec. 30 In 2009, the Indian Railways faces the key challenge of absorbing an extra burden of about Rs 11,000 crore as staff cost due to impact the Sixth Pay Commission, and lower than expected growth in freight earnings.

Lower than expected freight loading is a concern area as earnings from goods transportation is the major source of income for the railways. Almost 70 per cent of the total railway revenues accrue from freight loadings.

Additionally, the Railways has not yet been able to successfully bid out any of its key public private partnership projects — be it the diesel locomotive factory, electric locomotive factory or the New Delhi railway station modernisation plan.

FREIGHT LOADINGS

The October-December quarter is usually a busy season for the Railways and it levies a busy season surcharge on goods movement.

This year, however, despite levying the busy season surcharge, the Railways had to extend freight discounts of up to 40 per cent on short lead cement traffic and distance-based freight concession of up to 50 per cent on iron ore for export traffic to woo its customers during this period.

In probably a first since Mr Lalu Prasad took over as the Railway Minister in 2004, the rail freight loadings actually registered a negative growth in a month.

In October, the freight loadings registered a negative growth of 0.14 per cent over the corresponding period last year, and November saw a growth of only 1.29 per cent over November 2007.

To offset any likely negative impact on earnings, the Railways simultaneously resorted to increasing freight charges — particularly on commodities such as coal, cement, iron ore for domestic consumption, which do not have any optional mode of transport to bank on.

Additionally, levy of various surcharges such as congestion surcharge, busy season surcharge and special surcharge have protected the Railways’ goods earnings from registering a negative growth.

Container train operators have been hit by the slowdown with several operators resorting to stabling of rakes during October and November.

In the backdrop of these uncertain times, operators have approached the wagon manufacturers asking them to delay deliveries of wagons.

The operators have been pleading with Railways for lowering the haulage charges. Haulage charge is the money paid by container train operators for using rail infrastructure such as track and signalling system.

DELAYED PROJECTS

Mega projects of the Indian Railways – setting up of greenfield electric locomotive unit and diesel locomotive unit, the modernisation of New Delhi railway station — have not yet taken off on the ground.

The Railways has still not been able to invite financial bids for setting up the diesel and electric locomotive units in partnership with international manufacturers.

At the technical qualification level, GE and EMD have been short-listed for the diesel loco unit at Marhowra; and Alstom, Bombardier and Siemens have been short-listed for the electric loco unit at Madhepura.

“The Finance Ministry had said the Railways could invite the financial bids and then move to the Cabinet Committee of Economic Affairs (CCEA) for a final approval.

“However, the Planning Commission wanted the Railways to first get a CCEA approval and then invite financial bids,” said an official source in the know.

The New Delhi station modernisation project is also getting delayed due to several reasons that include getting approval for certain changes in bidding documents, and objections from the Delhi Development Authority.

Japan loan

On the dedicated rail freight corridor (DFC) front, the Indian Railways has finally been able to secure a 450 billion Yen soft loan from the Japanese for a section of the western corridor, but only after giving in to Japan’s demand for building the western corridor on electric traction.

The Railways had envisaged building the western corridor on diesel traction as it would primarily serve the export-import container traffic between the northern hinterland and western ports.

Globally, international standard sized double-stack containers are moved only on diesel traction as of now. China moves a mix of higher and lower height containers under electric wire at places. However, Japan said it could consider funding only if the Western corridor was electrified.

Thus, in July, the Railways conducted the world’s first trial for moving international standard sized double-stack containers in Daitari-Tomka section (Orissa) by placing the overhead electrical contact wire at a higher (than usual) height of 7.45 metres.

Moreover, the Japanese loan has been extended only for Rewari-Vadodara section of the Western corridor. The Vadodara-Mumbai section comprises several bridges and accounts for 20-25 per cent of the total cost.

The Railways was also able to launch the first train service in the Kashmir valley in October, about 10 years after the project launch. The diesel multiple unit train service covers 66 km with nine stations — Budgam, Srinagar, Pampore, Kakapora, Awantipora, Panjgam, Bijbehara, Rajwansher and Anantnag.