Connectivity between coalmines to be enhanced

Addressing the Coal Ministry’s concerns about taking up rail projects linking coalmines on a priority basis, the Railways is planning to invest about Rs. 4,000 crore for enhancing connectivity and giving a thrust to the availability of coal for the power sector.

This initiative is part of the Railways’ plan to invest up to Rs. 9,000 crore for providing connectivity to ports, coalmines and iron ore mines. While presenting the budget, Railway Minister Pawan Kumar Bansal said the recently revamped participative policy enabling partnership with ports, large mines, industry and investors addresses the specific concerns of private investors.

“The models seek to create a win-win situation by ensuring payback of investment mainly through freight apportionment. An investment of up to Rs. 9,000 crore is expected under these projects including Rs. 3,800 crore for port connectivity projects, Rs. 4,000 crore for coal mine connectivity and Rs. 800 crore for iron ore mines connectivity improvements,” he said.

Lack of rail connectivity is among the many problems that companies face while transporting fuel from the coal mines to their power projects. These logistical issues also impact overall electricity generation.

The Coal Ministry last month warned of serious implications, including severe shortage of coal for thermal power plants, for the southern States of Andhra Pradesh, Tamil Nadu and Karnataka and many northern and western States if three important railways lines connecting coal fields in Jharkhand, Odisha and Chhattisgarh were not completed in the next three years.

Private investment in railways gets Cabinet nod

Desperate to attract private investment in railways, the Cabinet on Thursday cleared the transporter’s plan to rope in the private sector for building new rail lines and plants and augment capacity, a move that was red-flagged by unions. With the policy in place, the railways will be able to get the private sector to connect ports, mines and industrial plants with the railway network by allowing them to invest in laying the tracks for last-mile connectivity. The move is expected to lower transportation cost and help move minerals, coal and finished products from production hubs. Similarly, wherever the private sector thinks putting up a third or a fourth line is feasible, the government can enter into a build-operatetransfer arrangement. The move comes as the railways, in the absence of fare increase, has failed to generate resources for funding modernization, leave alone capacity addition, despite successive railway ministers adding new trains to appease their constituency. ‘Model pacts to be finalized soon’

The railways had earlier suggested that connectivity to ports and mines would be developed by the owner or concessionaire as private railway lines by acquiring land and making investments in it which could be declared non-government railway (NGR) for public carriage of goods.

The government, however, said the model agreements for private participation — ranging from NGR to BOT, joint ventures and capacity augmentation via funding by customers — will be finalized soon.
Although the Cabinet cleared the proposal on Thursday, the government will need to get the bureaucracy on board as it has repeatedly blocked any attempt by the private sector to get a foothold. For instance, the move to allow private container operators has proved to be a nonstarter as the railways decided to give public sector player Concor priority.

Similarly, Lalu Prasad’s plans for PPP locomotive factories in Marhaura and Madhepura, both in Bihar, are yet to take off despite interest from companies such as GE.
Even this time, the unions are opposing any attempt to hand over operation and maintenance to private players, which could deter investors looking to enter the BOT space for building new lines. Citing poor finances, they are, however,not opposed to letting private players invest in infrastructure development, indicating that they are on board for an EPC-like arrangement where the private sector only builds projects, and invests in it.

“We don’t have any problem with private sector participation in infrastructure development. But we’ll oppose if the railways tries to hand over operation and maintenance to private companies,” said Shiv Gopal Misra, general secretary, All-India Railwaymen Federation.