M A I N   N E W S

Rail freight on coal, iron ore hiked
Tribune News Service

New Delhi, November 25
The Railways have decided to increase the freight rates for coal, iron ore and some other items from November 27 to mop up Rs 400 crore for the current year in a bid to partially offset the additional burden on account of hike in the prices of diesel and steel.

An official spokesman said the decision about the hike was taken at mid-term revision of rail freight classification.

He said there has not been an across-the-board increase in freight rates for the past three years and all the expense on this account head was being fully absorbed by the Railways on its working expenses.

“Freight rates for coal, iron ore, limestone, dolomite, gypsum, bauxite, manganese ore, cement and clinker have been increased from November 27,” the spokesman said.

The freight rates for coal, iron ore, manganese ore and clinker would be higher by 7.7 per cent, while those for cement would be higher by 3.7 per cent.

These adjustments in freight rates were estimated to yield an additional revenue of the order of Rs 400 crore for the remaining period of 2004-05 to offset partially the additional burden of the fuel bill and steel prices.

The spokesman said Railways are one of the largest consumers of High Speed Diesel and steel, consuming over 2,000 million litres of diesel and nearly 1.4 million tonnes (MTs) of steel every year and impact of the three recent hikes in the diesel price on the fuel bill of the Railways has been around Rs 540 crore during the current year.

“Impact for the next year is estimated to be around Rs 940 crore, provided there is no further increase in diesel prices”, he said.

The spokesman said steel industry had also hiked prices repeatedly and Railways expenditure on purchase of steel and wagons had increased significantly.

There has been an unprecedented demand for transportation of iron ore for export and the classification of finished iron and steel was reduced from class 190 to class 180 in 2003/04 thereby reducing the freight by 5.3 per cent, the spokesman said.

He said the increase in the freight of one tonne of iron ore at an average lead of around 386 kilometres would be only Rs 48.60 per tonne. The effect of increase in the iron ore freight would be only around 0.30 per cent on the price of one tonne of finished steel.

The spokesman said there has been no increase in freight rates of coal for the last three years. During the past seven years coal freight has increased merely by 1 per cent per annum on an average. The effect of the current increase in coal freight at an average lead of 600 km is only 3.59 paise per kg of coal. As 0.7 kg of coal is consumed for producing one unit of electricity, the effect of freight increase will be only about 2.5 paise per unit (kwh) of electricity, the spokesman said.

He said a single uniform Class-140 has now been assigned to the minerals transported by Railways namely coal, iron ore, limestone, dolomite, gypsum, bauxite and Manganese Ore. The freight rates for the entire group of `Raw Materials for Steel Plants’ has been rationalised uniformly at a single Class-140 at par with coal. The classification of Bauxite, which is the main raw material for manufacturing Aluminium, has also been brought at par with iron ore.

The classification of cement, which was reduced from 140 to 135, in 2003-04, has been restored to its original class. 

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