Financial Daily from THE HINDU group of publications
Friday, Mar 18, 2005
Industry & Economy - Steel
Revised Rly demurrage rates may affect SAIL
Kolkata , March 17
THE recent upward revision of demurrage rates and the reduction in free time for wagons by the Railways has dealt a serious blow to the public sector Steel Authority of India Ltd (SAIL).
According to one estimate, SAIL may be required to cough up more than Rs 300 crore annually to the Railways as per the revised rules as compared to Rs 20 crore so annually as at present.
The Chairman of SAIL, therefore, has urged the Chairman of Railway Board to keep in abeyance the enforcement of the revised rules till such time a mutually agreeable arrangement could be thrashed out, it is learnt.
The total production of hot metal in various steel plants under SAIL is estimated to rise to nearly 14 million tonnes (mt) in 2005-06 from the present around 12.5 mt or so.
This will mean increased volumes of raw materials will have to be moved into the plants and larger volumes of finished products out of the plants by rail, pushing up the requirement of various types of wagons.
According to one estimate, the volume of rail-borne traffic will increase by an additional seven mt or so in 2005-06.
It might be noted that 12 different types of raw materials and as many as 200 different types of finished products are required to be moved in and out of various SAIL plants by rail.
Considering the importance of rail movement in the maintenance of normal production at the steel plants, the Railways refrained from any revision of demurrage and reduction of free time for a long time.
In fact, the views of the three committees constituted for the purpose by the Railways were not shelved.
Conceding that the detention of wagons has been a matter of concern to the plant authorities, the SAIL sources would attribute it to the old systems and practices in force in the plants.
The newest plant at Bokaro was set up 30 years ago while the other plants nearly half a century ago.
The infrastructure, the systems and the railway handling facilities in these plants are so old that they cannot meet the requirement of today; hence the wagon detention. Only recently did SAIL finalise a Rs 400-crore scheme to update the infrastructure including railway facilities at Bhilai steel plant and similar such schemes are on the anvil also for other plants.
The detention of wagons, it is pointed out, is not always caused by the inefficient functioning of the steel plants; sometime the Railways itself too has to be blamed for it.
The detention is often caused by the re-tarring of the empties by the Railways, non-availability of tally clerks and train examiners to be posted by the Railways at the plant level, the shortage of empties for outbound loading and, even when available, about four to five per cent them found to be unfit for operation and delay in giving line clearance by the Railways even to the rakes carrying either empties or loaded wagons.
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