Executive Briefings

Indian Railway Freight Rates Rise Five Percent

Plans to increase coal rail freight rates by 5.7 percent across India have been outlined in the national Railway Budget 2013-14. India's Railways Minister Pawan Kumar Bansal published proposals to raise the freight rate on coal from Rs 685.10 per tonne to Rs 724.80 - a jump of 5.79 percent.

A report in the Economic Times quoted experts as saying that his proposed hike in coal freight charges will be "neutral" to coal sector but will impact the sector using coal such as power, cement and steel factories.

"The increase in freight charges would increase electricity tariff by less than one percent as freight is very small component of overall cost of electricity," said Kuljit Singh, partner, Ernst & Young.

Coal India Limited (CIL) chairman and managing director S. Narsing Rao told the Economic Times, "Coal sector, including Coal India will have no effect due to increase in coal freight charges. However, the increase will borne by power generating companies and might lead to increase in electricity chargers."

He added the freight rate increase may lead to higher landing cost for generating companies by up to three percent.

Bansal added that the newly upgraded policy of allowing tie-ups with large mines, industry and investors was designed to meet the concerns of private investors.

"This is a good step and it would help in more evacuation of coal," Singh added.

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A report in the Economic Times quoted experts as saying that his proposed hike in coal freight charges will be "neutral" to coal sector but will impact the sector using coal such as power, cement and steel factories.

"The increase in freight charges would increase electricity tariff by less than one percent as freight is very small component of overall cost of electricity," said Kuljit Singh, partner, Ernst & Young.

Coal India Limited (CIL) chairman and managing director S. Narsing Rao told the Economic Times, "Coal sector, including Coal India will have no effect due to increase in coal freight charges. However, the increase will borne by power generating companies and might lead to increase in electricity chargers."

He added the freight rate increase may lead to higher landing cost for generating companies by up to three percent.

Bansal added that the newly upgraded policy of allowing tie-ups with large mines, industry and investors was designed to meet the concerns of private investors.

"This is a good step and it would help in more evacuation of coal," Singh added.

Read Full Article