The Ministry of Railways has scrapped the Long Term Traffic Contract (LTTC) policy that was introduced in 2017, extending freight rate stability, certainty and assured supply of wagons to customers during the period for which the agreement is signed.

“Based on the experience gained over these years, it has been decided to undertake a review of the existing policy. In view of this, no new LTTC contract shall be executed on zonal railways henceforth,” the Ministry said in a December 18 circular. “Any process for extension of the current LTTC contract beyond the prescribed term should also be stopped,” said the Ministry. The LTTC policy was designed to provide freight rate stability to customers and also offered rebate in freight based on incremental growth in Gross Freight Revenue (GFR) as well as for retention of traffic volumes.

Freight rebate was also available for retention of GFR in each year of the agreement period. The policy was issued in compliance with the announcement made in the Railway Budget Speech of 2016. It also sought to provide certainty in logistic operations for the Railways as well as the customers. “The customers entering into long-term contracts with Railways shall bring assured traffic to the Railways and in turn got assurance of certainty in tariff rates as well as freight rebate on fulfilment of certain conditions,” a government official said.

For the Railways, it gave long-term freight revenue commitments from the customers as well as generation of additional traffic volumes and revenues. The policy could be availed for a minimum period of three years and a maximum of five years.

Existing customers offering traffic of at least one million tonnes per annum and new customers committing to provide volume of more than three million tonnes per annum over the period of agreement with at least one million tonnes during the first year itself, were eligible for the scheme.

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