Date:26/11/2004 URL: http://www.thehindubusinessline.com/2004/11/26/stories/2004112602830100.htm

Back Railways hikes freight rates for coal, iron ore, other items

Our Bureau

New Delhi , Nov. 25

THE Railways today announced a hike in freight rates for select items including coal and iron ore, a move aimed at countering the dual impact of the repeated hikes in prices of diesel and steel.

The hike, to come into effect from November 27, is expected to generate additional revenue of around Rs 400 crore during the current fiscal.

While the freight rate for coal, iron ore, bauxite, manganese ore and clinker has been hiked by 7.7 per cent, the rate for cement has been raised by 3.7 per cent.

These adjustments have been done "to offset partially the additional burden of the fuel bill and steel prices", the Ministry of Railways said in a release.

The Railways has said that the impact of the three hikes in the diesel price on the fuel bill has been to the tune of Rs 540 crore during the current year. For the full 2005-06 fiscal, the impact is estimated to be around Rs 940 crore.

"The steel industry has also hiked steel prices repeatedly and the expenditure on purchase of steel and wagons has increased significantly," the Ministry has said.

The Railways is the largest consumer of high-speed diesel and iron and steel, consuming 2,000 million litres of diesel and 1.4 million tonnes of steel every year.

"There has been no across-the-board increase in freight rates by the Railways for the past three years. The Railways has so far been absorbing fully the increase in fuel bill and other working expenses," the release said.

The Ministry has also said that increase in the freight of one tonne of iron ore at an average lead of around 386 km would be only Rs 48.60.

Thus, the effect of increase in the iron ore freight would be only around 0.30 per cent on the price of a tonne of finished steel.

The effect of the current increase in coal freight at an average lead of 600 km would be only 3.59 paise per kg of coal. Since 0.7 kg of coal is consumed in producing one unit of electricity, the effect of freight increase would be only around 2.5 paise per unit (kwh) of electricity, it added.

The freight rates for the entire group of `Raw Materials for Steel Plans' has been rationalised uniformly at a single class 140 at par with coal, including iron ore, limestone, dolomite, gypsum, bauxite and manganese ore.

"The classification of bauxite, which is the main raw material for manufacturing aluminium, has also been brought at par with iron ore," the release said.

For cement, the classification has been restored to 140 from 135 to which it was reduced in 2003-04.

The classification of clinker, which is the penultimate stage of cement, has been brought at par with cement.

The rail freight for cement and clinker at an average lead of about 560 km would be Rs 471 per tonne.