An exercise to reduce the cost of transporting coal

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- However, this scheme of the government will give a big blow to the revenue of the railway system

The central government's think-tank Niti Aayog is trying to reduce transport costs for transporting coal. Which is part of the policy to optimize the price of coal in the country, which will be prepared jointly by the Ministries of Coal and Power. However, this will have the biggest impact on Indian Railways, which accounts for the largest share of coal transportation in total freight earnings.

NITI Aayog said, "The report is currently being prepared and will be sent to the Prime Minister's Office (PMO). "Based on the recommendations, the Ministry of Coal and Ministry of Power will finalize the policy for reduction of coal freight duty and substitution of imported coal in the reports," he said.

NITI Aayog has undertaken a comparative analysis to study the cost of transportation of coal from one state to another and similarly to study the cost of power generation and transportation from coal.

Sources in the Coal Ministry said they are aware of the report being prepared by the Niti Aayog but if any action is taken based on its recommendations, input from all stakeholders, including the railways, will be required. As far as the reduction in imported coal is concerned, the Ministry of Coal and national mining company Coal India Ltd have significantly increased domestic production and it will be more than enough to meet the demand.

Between April and August this year, thermal power units in the country faced severe shortage of coal. Subsequently steps have been taken to draft the policy. This is a problem every year. The main reason for the gap in demand and supply of coal is the lack of coordination between the Centre, states and some departments of power plant operators.

But the plan to reduce coal transport costs could be detrimental to railways' revenue. Sources familiar with the matter said the railway ministry has so far been reluctant to reduce freight rates for coal, which accounts for nearly half of its revenue. In the last financial year, the Railways made Rs. 67,356 crore earned.

The government has taken an important step to rationalize freight rates and the ministry may come up with a plan to reduce transport costs. The freight structure can be changed according to the coastal shipping rate of coal.

Under the rail-sea rail route, railways charge different fares for transportation of coal from mine to port and from destination port to power stations. The trips will be classified as goods, known as telescopic freight calculation.

Coal transportation is the biggest source of revenue for railways. Coal accounts for almost half of its freight traffic. Along with this, Railways has earned 1.43 lakh crore rupees in 2021-22. The distance covered by an average coal freight rack increased to 565 km in June from 465 km a year ago.

On the other hand, the Ministry of Railways is also planning to exercise more autonomy over the coal transport scheme. This will enable railways to plan future rail routes based on profitable supply routes, end-to-end transport and upcoming coal mines and demand issues. This proposal is being worked on under PM Gati-Shakti National Master Plan.

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