From Bloomberg, May 3, 2015: Prime Minster Narendra Modi’s plans to shift India’s economy toward manufacturing and away from agriculture and services are being held up by a coal shortage. Caused by the continued inability of the railroad to move the coal market “demanded” by its customers.
To read the entire article, go to http://bloom.bg/1PgQE9W
The railway simply does not have its service marketing act together yet. Promises are made, but progress is agonizingly slow. As a result, coal may actually be imported to get around the problems of poor rail service.
Critical points from Bloomberg report include these.
Actually, there’s plenty of coal, just not enough trains to get it to the power plants. While about 200 railway convoys arrive every day at Coal India Ltd.’s depots, Technical Director Nagendra Kumar said the company needs 230 of them.
“The (railway) infrastructure bottlenecks are stopping Coal India from rising to its full potential,” Choksey said.
Coal generates about 60 percent of India’s electricity. With output climbing at Coal India — and poor rail service — the fuel is piling up at the mines.
At the same time, slumping global prices mean customers are turning to imports from the likes of Glencore Plc, BHP Billiton Ltd. and Indonesia’s PT Bumi Resources. India’s coal imports jumped 33.5 percent to 242.4 million metric tons in the year ended March 31, according to data from Mjunction Services Ltd., a Kolkata. The figure may reach 260 million tons this year.
Power plants near ports often bring in imports by truck, unable to find enough railway cars. Dependence on coal imports is unjustified, as India has “huge” reserves of the fuel, Piyush Goyal, minister for coal, power and renewable energy, said in March. But it is the government that invests or does not invest in the necessary railways. Coal India has also called for the construction of three new railway lines that will help open new mines that can produce 300 million tons of the fuel every year.
Rail Giant Indian Railways, which has been in operation for 162 years, may be big, but it is not agile at modernizing its freight services.
“The logistical difficulties are a reason to worry,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “My fear is we don’t have a quick solution to the (railway) problem.”