The Union Railway Ministry on Tuesday revised freight rates for coal, a commodity from which it earns at least 45% of its revenue. According to the new rates, freight charges on movement of coal between 200 km and 700 km will be increased by 8-14%, while that for distances more than 700 km will be cut by 4-13%. Rates for distance within 200 km, however, will remain unchanged, reported The Financial Express.
It has also imposed a charge of Rs 55 per tonne on both loading and unloading of coal for distances beyond 100 km. Senior railways officials told the Economic Times that the step will help balance the revenue shortage triggered by a decline in coal loading. The railways saw a 7.74% drop in freight earnings in July on a year-on-year basis while freight traffic came down by 1.88% to 89.34 million tonnes.
Railway Board member Mohammed Jamshed said it was more of a balancing act and revenue-neutral for the railways. He said that while there has been a hike for some distances, it also being balanced by slashing the tariff on long routes. "Owing to the reduction in freight rates on coal movement to destinations that are more than 700 km away, the net loading will increase and the railways will get more traffic.”
Private power producers, however, said the revised rates will raise power generation costs for several plants, reported Livemint. Executive Vice Chairperson of Essar Power Sushil Maroo said around 60% of power plants will have to shell out an extra 6-7 paise per unit of power because most of these plants transport coal further than 200 km. NTPC officials said they have not yet calculated the impact of these revised rates.
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