Tuesday, January 22, 2013

Railway regulator is coming for sure, says Board head

Vinay Mittal, Chairman, Railway Board
Vinay Mittal, Chairman, Railway Board
I don’t think, in the current backdrop, we can compare air travel with AC rail travel. At the most, AC first class, to some extent, can be compared. But definitely not AC three-tier, or AC two-tier. Air fares are too dynamic.
During his tenure as Railway Board Chairman since July 2011, Vinay Mittal has seen many a trough and some crests. He became Chairman of the cash-strapped Indian Railways and saw the system go monetarily negative. He also oversaw the hurried salvage act, in the form of across-the-board freight hike in 2012. Perceived as frank though media shy, Mittal prefers to work behind the scenes.
Soon after the Railway Budget in 2012, a political commotion broke out on the across-the-board passenger fare hikes. When asked what, he feared, could derail the proposals, Mittal simply said he was keeping his fingers crossed. Hopefully, he would have uncrossed them now, since the passenger fare hike came through two weeks ago.
How has the slowdown hit the Railways?
We were about 13 million tonne short of target in freight till December. We are trying to make good in the remaining three months of this fiscal. The coal offer is good. Coal India, Coal Ministry and Railways have worked in close co-ordination to ensure availability at rail heads. Till December, we had 9.3 per cent growth a year in coal loading, which is high, given the large base.
Will wagon procurement get hit?
Wagon procurement is a dynamic process. We plan procurement on yearly basis.
In 2011-12, we procured 18,000 wagons. In 2012-13, our procurement fell to 16,300 wagons. Now, if buoyancy returns to the economy, we will increase wagon procurement. By and large, we are able to procure as per target. Also, we don’t want stocks to be idle and divert valuable monetary resources. But, in case there are wagons that stand idle in lean season, it should not be construed as excess procurement. We use the same idle wagons during peak season. For instance, there is a sudden demand for coal and food-grain movement, and fertiliser imports have started coming in. We are able to meet such sudden spurt in demand by using wagons that were idle in the lean season.
What are the segments in which you expect large private investments?
Primarily, terminal handling and building last mile rail links to connect ports and major factories, such as steel plants and industrial areas.
Could the usual delays due to environment and forest clearances affect rail link investments?
We have not faced problems except in deep forest belts and areas with wildlife presence. Now, a core group has been formed with Coal India’s Chairman Managing Director, Railways (Member-Engineering), and Railways’ infrastructure directorate, for quarterly review of major coal connectivity projects. Environment Ministry representatives are also part of the group.
There are three major coalfields that hold potential for production — North Karanpura in Jharkhand, Mand Raigarh in Chattisgarh and Ib Valley in Odisha. We have identified specific rail connectivity proposals with these fields.
Those projects had been identified earlier, too. But, didn’t they run into problems?
They did face environment problems. But, now we have sharp focus on these projects. Moreover, we are also looking at existing projects, such as sidings, where there are no environmental issues.
What is the status of the proposed regulator?
The proposal is being discussed. The regulator is coming for sure, that itself is significant. But its administrative powers, composition, authorisation, form, are under discussion.
After passenger fare hike, is there a chance that freight charges, traditionally perceived as high, will come down?
I don’t expect so, because input costs are continuously going up. Manpower and fuel costs are rising. There may be some minor, sector-specific rationalisation, at the most. Over a period of time, the perceived excess freight hike will get evened out. That is already happening. After the diesel hike in September 2012, we did not increase freight charges. I can already see some movement back to rail in cement, as the road segment has increased fares.
The Government has indicated that diesel prices may rise further. Do you think the fuel adjustment component as a surcharge should come in now? (After the interview, on December 17 night, diesel prices rose by Rs 10/ litre for bulk consumers like Railways.)
I feel the tariff authority will have to decide on issues such as the extent of the fuel component and how it should be spread over the services. We will have to wait for the tariff authority to come in. At present, we have gone for a modest fare hike on the passenger side.
The Railways had proposed building quite a few rolling stock factories on public-private partnership basis. When can we expect some concrete action on these?
These are complex projects, being attempted for the first time in India. They require work to be done. We are hopeful that given some time, if we take up at least one or two projects, they could pave the way for remaining projects.
As demand for AC travel goes up, has the share of AC 3-tier coaches increased?
Yes. We are augmenting all AC coaches by 20 per cent. In 2009-10, 15.55 per cent coaches were AC coaches. In 2011-12, the AC coaches account for 17.1 per cent share. The number of AC coaches has gone up to 7,631 from 6,402 during the period. The number of non-AC coaches, too, has gone up to 37,000 from 35,000. We are also introducing unreserved trains for the economically-weaker sections.
How much of a dent will low-cost airlines make to your AC traffic?
I don’t think, in the current backdrop, we can compare air travel with AC rail travel. At the most, AC first class, to some extent, can be compared. But definitely not AC three-tier, or AC two-tier, to a large extent. Air fares are too dynamic. Sometime ago, I had checked the return airfare between Delhi-Thiruvanathapuram was Rs 20,000 if you book six months in advance, and became Rs 42,000 a week in advance. We are not that dynamic.
In the freight segment, in which commodities do you expect an increase in share of transportation?
Coal and cement could see some increase. But, not for petroleum products, though we would like to see an increase. Domestic containerised traffic is another segment, where we like to increase the share of rail.
When can we expect significant monetary benefits to Railways from commercial land utilisation?
For over a year, we could not take up any land-related commercial proposals due to a Cabinet decision. Investors had also lost interest. Now, with a clear Cabinet decision, we are approaching investors. But, locations have to be chosen carefully. There are some sites that do not have many takers. After all, on a yearly revenue base of about Rs 1,30,000 crore for the Railways, there is a limit to the extent of difference such projects can make.


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