Bulk coal movers silent on Railway Budget

Pratim Ranjan Bose Kolkata | Updated on February 26, 2011

As a group coal producing and consuming companies - like the power sector - are the largest user of railway services, contributing nearly 25 per cent of the gross earnings and 40 per cent of the freight earnings of the Indian Railways (IR).

Yet, strikingly enough none of these sectors has much to comment on the Railway Budget and is rather pre-occupied with their routine struggle in ensuring movement of coal that meets more than half (55 per cent) of the nation's primary energy requirement!

“I do not think that this (rail) budget has looked to the power sector as such,” says a senior NTPC official. He is “not disappointed either” as needs of power sector had hardly ever been a part of this annual hullabaloo.

NTPC alone is responsible for nearly a quarter of the country's total consumption of coal (approximately 580 million tonnes) for identical contribution to India's average generation of 1.25 lakh mw of power. However, when it comes to creating transport logistics to ensure easy availability of coal, NTPC is often left to fend for itself.

The company has recently taken up an ambitious project to use inland waterways to reach the costly imported coal to its power stations in the Eastern region. The aim is to avoid the congestion on the rail tracks where movement of coal often as (if not more) time consuming as it is to ship the coal all the way from Indonesia or South Africa.

“The inland movement of coal is no less a cause of concern than the issues relating to the growth in domestic production of coal,” says Mr. P K Chand, CFO of Birla Corporation and president of Coal Consumers Association of India (CCAI). The rail budget has had little to address his concerns. In fact when it comes to his company, Birla Corp, the availability of rake is the only concern.

Mr. D Sinha, associate professor of Indian Institute of Foreign Trade (IIFT) feels that the evacuation of coal may increasingly prove to be a bigger concern than the sourcing point of coal. He is sceptical if Indian ports and railways have capacity to efficiently evacuate the projected 40 per cent growth in imports to 120 mt in 2011-12. “The time period for evacuation is likely to move up,” he cautions.

And, no one faces the problem more than Coal India Ltd, catering to 85 per cent of domestic production. Often blamed for slower growth in production than demand, the company has historically recorded lower off-take than production leading to a huge accretion of over 60 million tonne of pit head stock which is 14 per cent of its production (430 mt).

CIL is accumulating pit head stock at the rate of 4-5 mt a month during January and February 2011, largely due to lack of availability of rakes.

According to a senior CIL official, in a post budget meeting railways promised a net induction of 14,000 wagons in the system in the next fiscal. “If we get a proportionate share of wagons our annual off-take will go up by 11-12 million tonne in 2011-12 against a minimum projected increase of 17 mt production leading to further accretion to stocks.

“The entire logistics infrastructure is overstretched and congested and we do not foresee a respite in the foreseeable future,” a source adds.

Published on February 26, 2011

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