the growing power crisis caused mainly due to the prevailing coal crisis for
which the Indian Railways in continuously blamed for not being able to
streamline the coal transportation and logistics, Jayashree Maji of
InfralineEnergy spoke to Rinkesh Roy, the Director-TTG of Ministry of Railways.
Roy not only gave his arguments countering the criticism against the Railways
but also shared the Ministry's plan of implementing DFC, new technology systems,
etc. to cater to better coal and other freight handling.
How do you view the perception that coal crisis in India is due to inefficient Railways system?
The Railways does not produce coal and is dependent on Coal India Limited. Coal loading on Indian Railways was growing at a rate of approx 11 per cent upto end of July 2011. However, in August and September coal loading became negative by 0.12 per cent and 2.32 per cent respectively. This was primarily due to a sharp drop in loading by CIL companies which were having production and dispatch problems in most of the mines on account of incessant rains and law & order problems. The Railways have provided adequate rakes during this period, but non-availability of coal at the Railway siding has led to such a situation.
While you say that there was no coal available to dispatch, there are allegations that coal stock piles at Railway sidings. How is Railways handling this problem?
Coal stock piles were at pitheads and not at the Railway sidings. The pithead stock of CIL as on April 2011 was 69.17 MT and these have reduced to 45.2 MT by end of October that is a reduction of approx. 24 MT. The stock at the railway sidings are even less than one day transportation.
"The coal crisis started because there was a huge drop in what Coal India was producing and dispatching from September and October. These two months were very badly affected. And on top of that there was a strike in Singareni. These two factors lead to the coal crisis. The rake availability was never an issue."
Unless pithhead stocks are transported to railway sidings, further reductions will not be possible. Railways can provide only adequate rakes which they are already doing; transporting coal from pithead to railway sidings is a function of CIL and this is the key issue.
When the coal crisis occurred, then NTPC had asked the coal ministry to increase the number of wagons to its power plants to 175-180 from the existing value. Has this plan been implemented?
The coal crisis started because there was a huge drop in what Coal India was producing and dispatching from September and October. These two months were very badly affected. And on top of that there was a strike in Singareni. These two factors lead to the coal crisis. The rake availability was never an issue. It is basically production and dispatch issue linked to mines primarily. We never decided on any particular number. We decided that we can give any number the company wants provided they can transport the coal. Now, they are doing better. They have come to 175 in the month of November. From April to November, the issue was never of the Railways. The issue was of the coal companies to load the rakes and increase the loading. There is no issue now.
Coal would account for almost half of Railway's earnings by 2016-17. How are you preparing to handle such huge amount of coal transport?
I think the current differential between the earnings and the physical carriage is 8 to 10 per cent. Roughly, if you carry 46 per cent you get 36-38 per cent revenues. The current differential is 8 per cent so the expectations are that the physical carriage of coal would go up to the level of 49-50 per cent by 2016-17. The earnings therefore in my opinion are expected to be in the range of 40-41 per cent.
Basically, our flagship infrastructure project is the DFC which is going to cater to coal being carried to North Karanpura, primarily to North India. That is not slated to come up by end of the 12th five year plan but sometime by end of 2016-17. The key issue is that the period of the 12th Five-Year Plan before DFC comes up or before the third line project comes up, how are we going to carry the huge intrinsic traffic? How are we going to meet this demand? Some projects are prioritised as high priority project and those projects will be pushed for completion till the time the infrastructure is in place.
In other projects what we are looking at is operational strategy called long haul with distributed path system. Basically, what is my capacity constraint? Why am I building new lane? It is because, I don't have the path to carry that many number of trains. The capacities are limited. So, to maximize capacity in the short term, we are looking at an operational strategy to combine two trains, move it in one path. In the same path instead of carrying one train, we would be carrying two trains. There is something called distributed power system which basically will marry the locos of the two trains together. So, without having a driver in the rear train, the command of driver of the first train would be relayed to the engine of the second train. So, once you have this system that is our operational strategy for five years of the 12th plan before my flagship project before the major third lines, connectivity to the captive mining block come up. This is the model we are looking at apart from increasing the axel load on other route also.
Basic idea is that each path has to be maximised by using longer train, heavier trains and if possible faster trains. The investment being done, the work being done will all tune to match this kind of an operational traffic.
Are you planning to extend the real time train tracking service or Satellite Imaging for Rail Navigation to the freight services? How do you think will the new system streamline the freight transport of the Indian Railways?
This is already underway. Basically, what we are looking at now is the RFID systems, which is more advanced. Each wagon is going to have a tag. There will be readers at many places so we will be able to track even the wagon. Forget about a rake. Already, there is a pilot project for close to 20,000 wagons. We have a fleet of over two lakhs. So, 10 per cent of that is covered in the pilot project and each wagon will be given a tag that will be monitored. Apart from monitoring the health of the wagon, these parameters will also be getting monitored here. So, that is the idea of that pilot project.
"The idea behind the Dedicated Freight Corridor (DFC) is that with the use of freight rolling stock is maximised. So, the investment on the rolling stock should be lesser and the returns should be higher."
This pilot project is implemented across Indian Railways for particular kind of rolling stock. We want to dissipate it into all type of rolling stock. We are targeting the special type of rolling stock, which we have in limited numbers so that the monitoring becomes easier. Especially the wagons that carry specific commodities such as oil or coal or iron ore.
Railway Board on October 12, 2011 raised the freight prices of all commodities by 10 per cent. How do you explain this at the time when the country is already reeling under inflationary pressures? The railway ministry had earlier this year imposed a 7 per cent increase on all commodities for the period October 2011 to March 2012. But the rates have again been revised: this time to 10 per cent.
There was already a surcharge. Those numbers are changed. So, this 10 per cent number is basically overall what the existing surcharges have gone up. The existing development charges have gone. In actual practice, the effect is somewhere around 3 to 5 per cent approximately 4 per cent of net increase keeping in view your fuel hikes, inflationary pressure that is not great numbers that we are really looking.
How do you think that freight cost and the charges will change as the Dedicated Freight Corridor comes into place?
The freight cost should come down. The idea behind the Dedicated Freight Corridor (DFC) is that with the use of freight rolling stock is maximised. So, the investment on the rolling stock should be lesser and the returns should be higher. The unit cost should be coming down. How much the charges of freight will changes is very debatable point. The DFC project is of huge cost. We are investing Rs 30,000 crore, Rs 40,000 crore as a loan component and aid component.
"This is in common knowledge that our sixth pay commission salaries and pension has been the major cause of dwindling cash reserves. Indian Railways has got huge manpower and the salaries the department is currently paying pertains to the Sixth Pay Commission. That is the main reason why the cash reserves have come down."
Keeping all this in mind, how much the charges will change- the idea is to get the unit cost down, increase the profitability and return the money of the project. At the same time, you met the demand in the economy. Either there is burgeoning demand in the country. How do you meet that demand because roads cannot meet this bulk move? That is way we are looking at it. How much the freight charges will change is very debatable? External factors such as inflation, fuel hikes, the electricity cost, are some of the factors which would determine the freight cost. It is not only dependant on the Indian Railways.
The Railway ministry has taken a lot of flak from the finance ministry and the planning commission over its dwindling reserves from Rs13,000 crore in 2008, to a paltry Rs 75 lakh. How has this happened? And apart from revising freight charges, how do you intend to increase your fund reserve?
This is in common knowledge that our sixth pay commission salaries and pension has been the major cause of dwindling cash reserves. Indian Railways has got huge manpower and the salaries the department is currently paying pertains to the Sixth Pay Commission. That is the main reason why the cash reserves have come down. This took place somewhere around 2009-2010, the arrears and then there was also a increase in DA increase. So, the factors are primarily salary based. Salaries account for almost 40 to 50 per cent of Railway's expenditures..
I am not the right person to comment on how would we increase our fund reserve? Basic idea is to maximise loading. Freight would continue to be the earning source for the Railways. There is a lot of cross subsidisation. The idea is to meet more and more freight loading target. As long as we are able to do that part of the job, then we would be able to generate reserves. But, this time what we are planning in the budget is that a lot of PPP modes of investment which would cut down on Railway's physical expenditures. Making other people partner in Railway's growth, that is one way of trying to generate surplus.
(InfralineEnergy thanks Rinkesh Roy, Director-TTG, Ministry of Railways for sharing his valuable insights with our
readers. The column 'In-Conversation', is a platform to engage
experts from various sectors to share their views on the different
transformations happening in the Indian energy sector.)