Railways iron ore transport policy under scanner

Santanu Sanyal
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The rail movement of iron ore has been through many ups and downs in
the past few years. — Paul Noronha
The rail movement of iron ore has been through many ups and downs in the past few years. — Paul Noronha

The iron ore transportation policy of the Railways has come under review. The high-powered committee, constituted by the Railway Board a few months ago to examine the present policy and make necessary recommendations, is believed to have firmed up its findings

. The committee was headed by the Executive Director ( Traffic Transportation, Steel), with the Chief Operations Managers (COMs) of top three freight-loading zonal railways, South East Central, South Eastern, and East Coast, as members.

There are several reasons why the review of the present policy has become necessary. The rail movement of iron ore has been through ups and downs in past few years.

It started picking up from around 2002-03, rising significantly in 2006-07, 2007-08, 2008-09 and 2009-10, with the exports rising up to 100 million tonnes (MT)

or so. The domestic demand for iron ore also jumped, thanks to the country’s economic growth fuelling the demand for steel and, therefore, for iron ore and causing many steel producing units, not only large but also, medium and small, including sponge iron ore units, to come up.

However, the boom did not persist; it gave way to slump from around 2010-11.

Dipping demand

Between 2006-07 and 2009-10, the iron ore throughput of South Eastern Railway (SER), the largest loader and transporter of iron ore, jumped from 56.33 MT to 75.73 MT and during the period the throughput for exports increased from 8.57 MT to 18.95 MT. From 2010-11, the decline started — the throughput dropping to 68.89 MT in 2010-11 and further to 62.15 MT in 2011-12.

During the same period the throughput for exports dropped to 15.3 MT and 8.28 MT, respectively. On April 30, 2007, as many as 21,328 indents, highest ever, for iron rakes were pending with SER, and on September 17, 2011, the indent figure dropped to zero.

The Railways, thus, was facing a major challenge of coping with this kind of fluctuating demand for iron ore rakes.

There was another problem. The demand for rakes for transportation of iron ore pellets started rising significantly due to the changing dynamics of the steel making technology. But in railway parlance, the concept of iron ore pellets was totally unknown.

The committee visited most of the major iron ore producing States like Odisha, Jharkhand and Karnataka, and several mines in these States, held meetings with the officials of the respective State Governments and various steel plants, the Steel Ministry and Joint Plant Committee, among others.

No uniform system

Unlike coal, the production and distribution of which is monitored by the Central Government, iron ore is a State subject.

The present State-level system of documentation, the committee has noted, leaves much to be desired as it varies from one State to another.

The system has been rendered particularly cumbersome following crackdown by many State Governments following complaints of illegal mining. For example, earlier, the Railways used to load on the basis of the forwarding notes issued by the customers.

Not so any more. Now the forwarding note has to be vetted by the mining department officials of the State Government. This follows a decision taken at a Cabinet Secretary level meeting.

The purpose is noble but the procedure is tardy. Therefore, it is felt that there is room for rationalisation in documentation to achieve certain amount of uniformity, particularly to avoid duplication.

The categorisation of iron ore consumers in regard to allotment of rakes, too, perhaps needs a relook. Under Central Board of Transportation (CBT) there are Category C and Category D customers for allotment of rakes and within Category C there are some “high priests,” who historically are used to getting special treatment and these include old integrated steel plants, such as Tata Steel, IISCO, RINL and SAIL plants.

The case of a large number of customers under Wagon Investment Scheme (WIS), close to 100 parties for iron ore movement, too, deserves a careful consideration. They are already under certain regulations in matter of inter se priority allotment.

Finally, the Indian Railways has introduced RAS, a computerised rake allotment system for transportation of iron ore. Once the Railway Board accepts the recommendations of the committee and decides to introduce new systems and procedures, RAS too may have to be modified.

(This article was published on November 25, 2012)
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