Moneycontrol
Last Updated : Dec 23, 2015 09:53 PM IST | Source: PTI

Railways partners with Coal India for 2K wagons procurement

As per the MoU signed between the two, the wagons will be procured by railways on behalf of Coal India for exclusive use in the evacuation of coal traffic from the mines of Coal India.

In a bid to ensure speedy coal loadings, the railways on Wednesday joined hands with Coal India for procurement of 2,000 high-capacity wagons.

Coal India will make a total investment of about Rs 5,000 crore for wagon procurement.

As per the MoU signed between the two, the wagons will be procured by railways on behalf of Coal India for exclusive use in the evacuation of coal traffic from the mines of Coal India.

Describing the partnership with Coal India as "path breaking", Railway Minister Suresh Prabhu said it was the first time that such a collaboration has been achieved and investment would be made by the customer. Initial investment would be Rs 500 crore which will go up to Rs 5,000 crore, he said.

These wagons will be high-capacity wagons of 25-tonne axle load with additional payload of 8 to 10 tonnes over the conventional wagons.

Prabhu said, "It is our constant effort to partner with customers. Majority of our freight comes from the coal sector. It is the mainstay of railways. That is why this is an extremely important agreement. This is an investment made by the customer. We will make sure that continuity of coal supply will not be disrupted."

Coal accounts for almost 50 percent of the railways' freight basket and 43 percent of its freight revenues. The MoU envisages creation and augmentation of infrastructure on all important routes to enable running of 25 -tonne wagons.

Prabhu said that the railways looks forward to such partnerships with other stakeholders.

Coal Minister Piyush Goyal said, "Today's MoU is a small step towards achieving the target of 1 billion tonne coal production. Coal output is up by 9 percent this year. With adequate rakes available, we will be able to supply sufficient coal to power plants. Today, every plant has sufficient coal supply."

Railway Board Member (Traffic) Mohd Jamshed said that by signing the MoU, railways and Coal India Ltd will be entering into a strategic partnership which would ensure adequate wagon availability for meeting the transportation needs of coal produced by Coal India Ltd.

He added that the railways and Coal have always had a synergetic relationship and it is difficult to imagine the existence of one without the other.

Speaking to CNBC-TV18, Pankaj Sharma, Head of Equities, Equirus Securities says that Coal India will benefit from the deal in a three to five year perspective. He expects improvement in capacity utilization and improvement in production by 4-5 percent annually adding that increased production will not impact coal prices.

(Inputs from CNBC-TV18)
First Published on Dec 23, 2015 09:22 pm
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