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Congestion fee to make imported coal costlier

Power companies will be forced to pay more for imported coal as Indian Railways has decided to levy congestion charge of 10% on base freight rates for traffic originating from ports.

The decision comes at a time when there has been a spurt in demand for imported coal, mainly due to dwindling stocks at a large number of power plants. Subhasri Chaudhuri, secretary general of Coal Consumers' Association of India, which has urged the government to revoke the surcharge, blamed the railways solely for the congestion.

"Domestic coal consumers are grappling with non-availability of rakes. The congestion at the ports is the result of non-supply of sufficient wagons by the Indian Railways," she said.

The companies which meet a portion of their coal requirement through imports include India's largest power producer NTPC, Damodar Valley
Corporation, Madhya Pradesh Power Genco, state utilities in Uttar Pradesh and private companies such as Adani PowerBSE -5.08 % and CESCBSE 2.15 %.

Coal India has also started importing coal on behalf of its customers.

This fiscal, the state-run monopoly miner is likely to import 5 lakh tonnes of coal, of which 1.7 lakh tonnes has already reached the Mundra Port.

NTPCBSE -1.88 % is currently finalising import contracts for 5 million tonnes of coal for its power plants while MP Power Generating Co is firming up shipment of 7 lakh tonnes.

"At ports there are more a few hundred indents pending and railways supplies only a few rakes every day," said Chaudhuri.

"As a result, indents are piling up and coal consumers are paying huge penalty by way of moving cargo by road, paying higher freight, paying increased rent to port authorities, slow or non-evacuation of cargos, resulting in waiting of vessels and incurring very high demurrages and reduction in generation due to non-receipt of coal on time from ports," she added.

Indian Railways is already collecting a number of surcharges including busy season charge and development charge, without changing the base freight rates, leading to a substantial rise in total freight, importers said.

Source: Economic Times