Coal consumers suffer as rake shortages delays transportation of coal

by Nudrat Alim

September 17, 2009: Industrial development can take place in totality when supported by a strong logistics platform. However, speaking specifically of coal, industry sources have revealed that the shortage of railway rakes have resulted in unwarranted delays as far as delivery is concerned.

Not only there has been shortage of rakes reported for movement of imported coke from ports to end use destination, but also for the movement of domestic coal from mines to plants.

All the major coal importers starting from Maheswari Brothers to Gupta Coal to Visa Comtrade to international suppliers like Coal and Oil Group and Knowledge Infrastructure Services Pvt Ltd, while talking to Coal Insights, have raised the issue of shortage of rakes for movement of coal in the country and are unanimous in their views that rakes availability is far from satisfactory.

Even senior officials of Coal India Ltd (CIL) acknowledge existence of this critical problem. "Most of the times, it is CIL which is blamed for delay in supply of coal to various consumers, but the actual problem lies in availability of rakes," an official of CIL said.

Despite the entire scenario of rake availability being extremely bad, Eastern Railway division of Indian Railways that is responsible for arrangement of rakes for supply of coal from mines of Eastern Coalfields Ltd, appears to have done far better compared to its peers.

Chief Public Relations Officer of Eastern Railway Sameer Goswami, while speaking with Coal Insights, said that Eastern Railways has in fact surpassed its loading target set by the Railway Board for the period April to July 2009.

A coal industry source revealed that the rake (one rake constitutes 59 wagons) requirement of CIL stands at 192 per day, while the availability is far less than this and the requirement remains unfulfilled on most occasions. While this is one of the reasons for delay in deliveries, there are few other factors as well which result in delays spanning two to three months.

Whenever there is a shortage of coal, the available volume is directed towards power plants on a priority basis. Hence, deliveries to other consumers of coal, takes a back seat. Power plants across the country usually work on a buffer stock of 7 to 15 days and this stock needs to be maintained at all times.

Despite the norm of maintaining the buffer stock, a majority of 78 major power plants in the country suffer due to low availability of coal, which in most cases is due to non-availability rakes. Coal consumers, who buy coal through e-auction route, also suffer as quite often they get delivery of material 2-3 months after the schedule, an e-auction participant said.

From the time an order is placed, till the actual delivery there are a number of steps which are involved. A buyer of coal submits a 'programme' to CIL which in turn sends its 'consent' to the Railways. It is the Railways job then to sanction the rakes to the buyer. Once the rakes are allotted, the placement, loading and weighing of the material is carried out.

The Railways then issue a rail receipt specifying the quantity, after which the delivery takes place. As per the CIL scheme, the time period within which delivery needs to take place is 60 days, but sometimes due to non-availability of coal or the non-availability of rakes, this time frame gets extended.

Even though rail movement cannot be blamed in isolation for the delays, as many as 600 rakes are still pending at the Mahanadi Coalfields Limited (MCL), according to the source.

Goswami, however, vehemently denied that there is a shortage of rakes. During the period April to July 2009 the total volume of goods loaded by the Eastern Railways stood at 17.605 million tons (mt) compared to 15.620 mt which was loaded during the corresponding period of the previous year, noted Goswami.

In fact the proposed target for the period set by the Railway Board stood at 17.190 mt and the Eastern Railways managed to surpass that by 0.415 percent.

Even in terms of revenue there has been a growth. Earning from goods traffic during the April to July period stood at Rs 1024.28 crore as compared to Rs 827.15 crore in the corresponding period of 2008, registering a growth of 23.83 percent.

Moreover, out of the total loading of 17.605 mt, the volume of coal loaded amounted to 11.585 mt, compared to 10.027 mt of coal which was loaded during the period April to July 2008, added Goswami.

Notwithstanding improved performance of the Eastern Railways, the Indian Railways in general are not at all in a position to cater to the needs of coal consumers and coal consumers are suffering in absence of any alternative.

The number of rail lines and other infrastructure facilities need to be uplifted to ensure that timely delivery of coal takes place and production losses due to delay in deliveries can be checked.

Source: Coal Insights