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Railways rationalises coal tariff, calls move ‘revenue neutral’

The move has been effected after discussions with the coal ministry, Railway Board, member traffic Mohammad Jamshed told reporters.

By: Express News Service | Amitabh Sinha & Geeta Guptanew Delhi | Published: August 24, 2016 2:50 am
Railways, Indian Railways, Railways, coal transport, indian railways, freight rates, coal tariff, power production, NTPC, Essar Power, Hindustan Power, energy sector, business news Though the railways claims the move is “cost-neutral”, analysts said the move would still have a significant inflationary impact. For thermal power plants, coal transportation accounts for up to 25 per cent of power tariffs.

Facing shortfall in freight loading, primarily due to tepid core sector growth in the country, Indian Railways on Tuesday rationalised its tariffs for coal — the main commodity it transports.

As per the new tweaks, it has reduced the rate for long-distance transportation and increased it for short distance while imposing Rs 55 per tonne coal terminal surcharge at loading and unloading for distance beyond 100 km.

The move has been effected after discussions with the coal ministry, Railway Board, member traffic Mohammad Jamshed told reporters.

“The new coal loading rate effective from today (Tuesday) will be less by 4 per cent to 13 per cent for coal transportation beyond 700 km,” he said, adding that the move is “revenue neutral” and that it is meant to increase the volumes of the loads.

However, he said the rate has been hiked by 7 per cent to 13 per cent for transportation between 200 km and 700 km distance. There will be no change for transportation up to 200 km. As per the new rate, coal loading would cost Rs 712 per tonne for transportation up to 497 km now as against Rs 702. It will be Rs 2,138 per tonne for 1,807 km transportation now as against the existing rate of Rs 2,348.

Coal loading witnessed a decline in the last four months. While the coal loading target was 200 million tonnes for April-July period, Railways has carried only 177 MT during this period. The tariff hike will increase the fuel costs of power stations and cement units closer to pitheads, while units far away from coal mines could see their fuel/input costs decline. A power company official said electricity from plants less than 700 km from pitheads could become costlier by 8-10 paise/unit.

Railway officials said the tariff revisions would aid capacity utilisation. “More than 300 rakes are now lying idle,” a source said.

Most likely, the extra fuel/input costs will be passed on to the end-consumers by power and cement firms while those who see their freight costs coming down as a result of the railways’ latest decision might improve their margins. Given the tepid demand scenario, steelmakers have subdued pricing power and may not immediately transfer the extra cost to the consumers.

Though the railways claims the move is “cost-neutral”, analysts said the move would still have a significant inflationary impact. For thermal power plants, coal transportation accounts for up to 25 per cent of power tariffs. With FE

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