Freight trains loaded with coal sit on rail tracks as people climb a flight of steps to a bridge near Vadala Road railway station in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Railways Revises Some Freight Rates on Transportation of Coal

The ministry of railways on Tuesday revised the base freight rates for transporting coal. After the revision, an additional Rs 55 per tonne will be levied for transporting coal beyond 100 kilometers, according to a circular issued by the ministry.

This additional levy will be effected at both loading and unloading terminals for moving coal. All other rates will remain unchanged, the circular noted. The revised rates will be effective with immediate effect.

Industries such as power, cement, and steel, that rely on the transport of coal for fuel supply will be negatively impacted by the rationalisation of this coal tariff structure.

The intention is to encourage long distance transport of coal, said Mohammad Jamshed, Member (Traffic) of the Railway Board in an interview with BloombergQuint.

The concessions work out to 4-13 percent for different slabs above 700 kilometres. There has been an incremental increase of 7-8 percent in the cost of coal transportation between 200-700 kilometres. The aim is to improve import substitution and encourage indigenous use of coal. This lower long distance costs will make transporting domestic coal more attractive.
Mohammad Jamshed, Member (Traffic), Railway Board

On the levy of an additional Rs 110/tonne in transport costs, he said, “The Rs 55/tn surcharge on loading and offloading is not a part of the fare revision, the surcharge has been enabled due to excess rake capacity. The railways currently has 300 rakes stabled across the country, and is incurring an additional cost of Rs 30 crore per day because of unused rakes. There is a need to offset the costs due to changing coal demand.”

Jamshed explained that Coal India had sought for 253 rakes but only 203 rakes are being utilised. The railways also has 15 rakes are not being operationalised due to lower imported coal demand from NTPC’s power plants in Central India.