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Gaurav Raghuvanshi

New Delhi , Oct. 20

PIPAVAV Rail Corporation Ltd, the special purpose vehicle (SPV) that owns the 270-km rail link between Surendranagar and Pipavav port in Gujarat, has sought permission from the Railways to operate container trains on the line.

The company claims that it had an "in-principle" approval from the Railways to run container trains, but Rail Bhawan says that the policy, which had been announced in 1994, has now been withdrawn and the Container Corporation of India Ltd (Concor) continues to have a monopoly over container cargo on the Railways.

"We are merely asking for permission to run container trains on our line. That does not make too much of a difference to Concor, but if we are denied permission, our business plans will go completely off-track," the Pipavav Rail Managing Director, Mr R.C. Dubey, told Business Line.

Asked about the Railways' decision to withdraw the policy, Mr Dubey said that he was not aware of any such move. "As directed by the Railways, we have already submitted our detailed plan and are awaiting a green signal from them," he said.

As per the agreement between Concor and Rail Bhawan, the Railways get Rs 6.70 per TEU (twenty-foot equivalent unit) per km for using their network. In simple terms, the Railways earn Rs 6.70 for each kilometre a TEU is moved on its network. Concor, which was created by hiving off the container business of the Railways in 1988, charges Rs 10.50 per TEU per km from its users

"We are willing to pay the same amount to the Railways and we had also agreed to pay a royalty of Rs 200 per TEU to Concor. We feel that there is enough business available and we will not make any dent in Concor's traffic," Mr Dubey said.

He pointed out that container traffic in the country has grown at a compounded average growth rate of 14 per cent in the last decade and is expected to touch five million TEUs by 2006 as compared to 3.3 million TEUs in 2002-03. Concor handled one million TEUs last year, which is just 31 per cent of the total export-import container traffic. In addition, Concor handled 0.35 million TEUs in the domestic sector.

"The overall potential for container traffic on the Railways, as per our estimates, is over 10 million TEUs and Railways only stand to gain if there are more players in the sector. While the Railways' revenues would certainly go up, increased competition may translate into lower cost for the users," Mr Dubey said.

Pipavav Rail is a joint venture between the Railways and Gujarat Pipavav Port Ltd. The company was created with the Railways and Pipavav Port contributing Rs 100 crore each and Rs 173 crore coming in as debt.

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