Logistics venture:Coal India looks to rope in Railways

Pratim Ranjan Bose Kolkata | Updated on February 03, 2011

Having entered into a memorandum of understanding with the Shipping Corporation (SCI) to form a logistics joint venture, Coal India Ltd (CIL) is now aiming to include Indian Railways (IR) as a stakeholder in the project to ensure smooth delivery of imported coal to the power stations.

While Coal India top brass is not available for comments on the issue, company insiders suggest that a dialogue has recently been initiated in this direction with the Indian Railways. If it agrees to participate, the Railways will be the third partner along with SCI and CIL in the venture.

CIL is primarily depending on the proposed long-term contracts to initiate coal imports. The company has already received 28 expressions of interest (EoI) from miners in Indonesia, South Africa, Australia and the US for supply of a total of 250 million tonnes over 10-year period against the only tender floated so far.

To evince maximum interest among the global miners, CIL has also promised to take delivery of supplier at the port of the sourcing country. Accordingly CIL is required to set up its own logistics solution for shipping the coal to Indian ports (one each in the East and the West coast) and further transportation of the same to customer end mostly by rail.

While participation of SCI will ensure the shipping solutions; considering the strained railway infrastructure in the country involvement of railways may ensure smooth evacuation of coal from Indian ports.

Stumbling block

According to Mr D Sinha, associate professor of Indian Institute of Foreign Trade, while overall coal import in the country is set to move up sharply in the next few years, the capacity constraint at Indian ports; overdependence on rail system for movement of coal and serious capacity constraint on the part of railways may prove be costly for users of imported coal, especially the power sector, in the foreseeable future.

From a total of 49 million tonne (mt) in 2007-08, Indian coal imports is set to reach 80-85 mt in 2010-11 and is estimated to reach 200 mt as early as in 2015.

“We visualise the total coal imports in India to reach 200 mt as early as 2015,” CIL Chairman, Mr. Partha S Bhattacharyya, said at a meeting with the Coal Consumers' Association of India

Mr Sinha is expecting the movement of such coal from ports to users to be delayed with rise in imports. “The (railway) rake availability to the ports is uneven. For example, the Haldia port (West Bengal) has a higher availability compared to a Paradip port which could berth bigger ships unlike Haldia. Again compared to the Eastern coast, availability of rakes is poor in the Western coast,” he said.

While apprehending fresh challenges before the strained rail infrastructure, Mr Sinha advocated for greater use of waterways for transport of coal. In developed countries majority of the coal is transported through barges. “Its time India should follow the trend,” he opined.

Published on February 03, 2011

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