Did you know that one of the many reasons why you were sweating it out without power in an intensely hot summer is because the Indian Railways (IR) had a shortage of wagons? Bizarre as it may sound, the movement of coal across the country is plagued by logistical problems because the?shortage of wagons in the IR has hit the movement of coal from the pit-heads to the centres of consumption. At a recent coal market seminar organised by IBK Media and the ministry of coal, the discussion?centred on the power crisis triggered by coal as the source of energy.
Coal forms 47% of the commodities?basket for IR and contributes nearly 45% to railways freight traffic. The 2007 concession agreement between IR and private container train operators (CTOs) opened the inter-modal movement of export/import and domestic containerised cargo to the private sector. However, coal was one of the four core commodities besides?iron ore, minerals?and?coke that were reserved for the IR.
The dependence on coal for energy requirements is not by choice, but by compulsion, because other sources of energy are still in a nascent stage. The demand for coal by the power sector is inexorably growing. The 12th?Plan envisages capacity enhancement of 76,000 MW, of which 63,000 MW is for coal-based projects. The coal production target set by Coal India for the same Plan period is 615 MT, subject to the environmental clearances coming through.
Indigenous production alone will not narrow the gap between demand and supply. Domestic production is being supplemented by imports. A 100 MT of coal is targeted to be imported. Coal would be sourced from Australia and Indonesia, which would be discharged in the east coast, and from Mozambique, which would be discharged in the west coast.
The big question is, would the IR be able to seamlessly evacuate the bituminous material from the pit-heads and ports? Should the movement of coal, a highly critical commodity for industries, particularly power, be left to a single operator? Power and GDP has a symbiotic relationship. The rate of growth of the power sector is approximately 1.4 times that of the GDP, says Karthikeyan Ranganathan, partner, Baring Private Equity India. The power sector grows in tandem with the GDP. If the power sector slows, so would GDP. The irony is that of the 14?CTOs who started operations in the?capital intensive venture of running private train operations, many are struggling because rakes remain empty as they do not have enough cargo to move. Obviously, if bulk commodities now reserved for the railways were even partially opened to them, there would be solutions to the critical problem of moving coal from pit-heads to production centres.
Why cannot the railways involve the private train operators in the movement of this vital commodity? IR plans to augment the carrying capacity of railway wagons by importing high capacity wagons from?the US, according to a representative speaking at the coal seminar. Instead of this huge expenditure by IR, would it not be better if the investment in the rolling stock for coal movement is left to the private operators?
The modernisation plan of IR, according to the expert group, involves a staggering investment of R5.6 lakh crore in the next five years and covers critical areas such as tracks, signalling, stations and terminals, PPPs, land, dedicated freight corridors, information and communication technology. Should not IR concentrate in these vital areas that are directly in its domain?
Why not let the CTOs into the fray? Why not spread the responsibility of the transportation of a commodity that is so vital to the economy of the country across several players? The risks so disseminated would not only collectively ease the burden on any single operator, but also ensure uninterrupted supply of coal to its destinations. The private operators have the capability to take on the distribution of coal. They?have deep pockets and are willing to invest in foreign technology.
Is IR willing to concede its turf, which hitherto it has so jealously guarded? IR has kept the CTOs at bay fearing competition. But competition is what would make the distribution of coal a success. Would this be a radical change in the railway policy? Possibly yes, but why not??It should not lose sight of the larger objective.
The author is a freelance maritime writer
