Government may reduce rail freight for coastal transportation of coal


The Center is considering reducing railway freight rates for thermal coal shipped through coastal transportation by changing the price calculation under the rail-sea-rail (RSR) method. BLiTZ has received this information. With the demand for coal expected to increase significantly in the coming months, the Center aims to increase coal dispatches while reducing pressure on the railway network and keeping the cost of sea-borne coal under control.

This also comes after Finance Minister Nirmala Sitharaman in her Union Budget speech for 2023-24 made clear her intention to promote coastal shipping. Following this, the Ministry of Railways and Ports, Shipping and Waterways will soon hold a meeting with high-level stakeholders to chalk out a roadmap for bringing in ‘telescopic freight’ rates for coastal transportation of coal.

Still a work in progress though. Sources said the government is pushing for the new policy to be implemented before the upcoming strong consumption season as it wants to avoid a repeat of last year’s coal demand-supply crisis.

Telescopic freight i.e. journey from coal mine to port and then from destination port to power house will be treated as one consignment thereby reducing the final freight cost. At present, freight for rail transport from mine to port and from destination port to power houses is charged separately, making it very expensive.

The policy is facing some resistance from the Ministry of Railways, which will face revenue shortfall if telescopic rates are levied for rail transport in coastal shipping. BLiTZ had reported that last year the NITI Aayog had asked the Railways to consider reducing the freight for transporting coal.

Sources said the Railways is not keen on any proposal to reduce the basic freight load, as coal transportation is the main earner of the Railways in terms of revenue. Coal accounts for more than half of the approximately 1.65 lakh crore (estimated for FY2023) freight revenue for the Railways.


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