How Center’s focus on Clean Energy impacts Railways’ coal freight loading

coal freight operations

Indian Railways is reworking its strategy on freight loading as the transportation of coal, which comprises half of its freight, is on a decline because of the Centre’s thrust for clean energy. The share of coal in railway freight is expected to come down to 40 per cent in the FY21.

Finance Minister Nirmala Sitharaman, in her budget announcement on February 1, 2020, made a push for solar energy and clean air by allocating INR 220 billion for the power and renewable sector.

Clean energy, defined as the energy derived from renewable, zero-emission sources (renewables), as well as energy saved through energy efficiency measures is the need of the hour considering the drastic climate change and environmental damage. India which is home to 15 of the 20 most polluted cities in the world, with domestic and global pressure in its 2020-21 budget, has stepped on the right path with the policy level push.

Indian Railways and coal are highly interdependent. “Freight loading by the Railways in 2019-20 (FY20) is 1,223 million tonnes (mt), of which 50% is coal and the rest other commodities,” Vinod Kumar Yadav, chairman of Railway Board, said during a post-Budget conference.

The share of coal in railway freight is expected to come down to 40% in the FY21, target for which is 1,265 mt. Railways’ reduced coal freight loading will lead to losses for the Railways’ freight business.

Apart from the reduction in thermal production that is leading to a decline in coal transportation, the overall transit cost for coal is being rationalised by the power companies. The thermal power firms reworking their fuel transportation strategy to cut costs has also led Railways to rethink their freight business.

Lalit Chandra Trivedi, General Manager at East Central Railway, while speaking to Logistics Insider on the impact of reduced transportation of coal on the freight business laid emphasis on the other major commodities transported by Railways.

According to him, the main hope of Railways rests on the following: Transportation of coal ash, which is used to manufacture bricks; Containerisation; Special purpose wagons to carry automobiles; Bulk cement; Transportation of water; Sand movement; Stone chips; Roll in-Roll out movement of trucks; Iron ore/Steel etc.

He further adds, “Incidentally, at the time of the advent of the Railways in 19th and till early 20th century, coal was not the prime commodity of movement for Railways.”

After witnessing an upward trend in the freight traffic and revenue since the past three financial years, the freight traffic handled by the Indian Railways remained static with a minor dip of 0.97% during the first seven months of the present financial year, owing to improved traffic from sectors such as minerals and ores, petroleum and container.

Apart from this, the National Transporter is also banking on business from the auto companies for transporting, mainly two-wheelers via railways.

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