Coal news and updates

Rail Budget hikes coal freight rates by 6.3%

February 26: Cement, coal, steel and urea prices are likely to go up with Railway Minister Suresh Prabhu proposing a hike in freight rates up to 10% for various commodities.

While there was no hike in passenger fares or announcement of any new trains, the railway minister, while placing the Narendra Modi-led government’s maiden Rail Budget for 2015-16, laid out a few strategies for transforming the nation’s lifeline.

He also made adjustments in freight rates that would hike rates on carriage of cement, coal and coke, iron or steel and petroleum products. The proposed hike for cement is 2.7%, coal 6.3% and iron and steel 0.8% respectively.

However, for limestone, dolomite and manganese and speed diesel oil, the rates have been reduced by 0.3% and 1% respectively. The railway minister has also raised the base freight rates by up to 10%.

Outlining the Budget Estimates for the coming year, he proposed a plan outlay of Rs 1,00,011 crore, an increase of 52% over the revised estimate of 2014-15. Passenger earnings growth has been pegged at 16.7% and earnings target budgeted at Rs 50,175 crore.

Goods earnings accordingly have been proposed at Rs 1,21,423 crore, which includes rationalisation of rates, commodity classification and distance slabs.

Other coaching and sundries are projected at Rs 4,612 crore and Rs 7,318 crore. Gross traffic receipts are estimated at Rs 1,83,578 crore, a growth of 15.3%.

Stressing that railway facilities had not improved substantially for the past few decades, which is a result of under-investment that affects capacity, leading to poor morale, Prabhu said investments in the overloaded railway network would be increased to Rs 8.5 lakh crore over the next five years that would see translated into modernised tracks and introduction of faster trains, amongst other developments.

In the proposed investment plan for 2015-19, an amount of Rs 199,320 crore has been allocated towards network decongestion; Rs 193,000 crore towards network expansion; Rs 39,000 crore in national projects (north-eastern and Kashmir connectivity projects); Rs 127,000 towards safety; Rs 5,000 crore in IT and research; Rs 102,000 crore in rolling stock (locomotives, wagons and coaches – production and maintenance); Rs 12,500 crore towards passenger amenities; Rs 65,000 crore in high-speed rail elevator and rail corridor; Rs 100,000 crore in station redevelopment and logistics parks and Rs 13,200 crore in others.

Since such investments would require setting up key partnerships, Prabhu indicated that to gain access to long-term funding and technology from overseas, key partnerships are to be formed between states, PSUs with multi-lateral and bilateral organisations to improve last-mile connectivity, expand fleet of rolling stock and modernise station infrastructure.

Continuing with the means to raising funds for the Rs 8.5-lakh crore investment over the next 5 years, he also announced the launch of a financing cell in the Railway Board to raise funds from pension, insurance and multilateral agencies and the setting up of an infra fund and a holding company to raise long-term debt.

Prabhu pledged to increase track capacity by 14% to 138,000 km and construction of road overbridges for unmanned level crossings and an expenditure of Rs 6,581 crore towards level crossing safety.

He proposed an operating ratio of 88.5% for FY16 versus 91.8% in FY15 and spoke of revamping management practices, systems, processes, and re-tooling of human resources and aimed to set standards for governance and transparency.

The minister also welcomed bids from interested parties for revamping stations and said Indian Railways will spend Rs 96,182 crore on capacity expansion in FY16.

Other Rail Budget highlights:

* FY16 gross traffic receipts pegged at Rs 1.84 lakh crore.
* Market borrowing of Rs 17,655 crore proposed for FY16.
* Cash flows to fund Rs 17,739 crore in FY16 spending.
* Estimated 16.7% growth in FY16 passenger earnings.
* FY16 gross budgetary support from government pegged at Rs 40,000 crore.
* Prabhu announced mobile charging stations for general class coaches
* Proposal to increase the number of advanced booking days to 120 days.
* WiFi services in all category of A & B stations.

While India Inc did not seem exactly enthused by the Rail Budget, some said it smacked of populism, it having kept passenger fares untouched. 

A K Sarkar, President, Bengal National Chamber of Commerce and Industry, felt creation of satellite railway terminals in ten cities and mobilisation of funds for better service from corporates and MP-Lad, elimination of unmanned level crossings are steps in the right direction. Completion of the eastern and western freight corridor and increase in allocation of plan size to Rs 1,11,000 crore this year as against Rs 65,000 crore last year are good moves, said Sarkar.