Wagon scheme: SER may face pressure

The rush among private firms to acquire rakes under the Railways’ Wagon Investment Scheme (WIS), particularly for transportation of iron ore, is going to pose a serious challenge to South Eastern Railway (SER), the country’s major transporter of iron ore by rail.

Wagon scheme

A firm acquiring a rake under the WIS and placing it with the Railways is entitled to an allotment of eight rakes a month, including two bonus rakes.

Right now, 15 rakes under WIS scheme are in operation under SER – 10 supplied by iron ore exporters and five by those engaged in domestic transportation of the ore.

This means that SER is committed to make available to these firms 120 rakes a month, or four rakes a day on an average.

These rakes are in addition to the committed allotments for the Central Board of Traffic (CBT) customers.

More customers

There are 67 CBT customers – nine old CBT customers, comprising mostly integrated steel plants, and 58 who were allowed to join the CBT list in the past year or so. Together, they have a total demand for 46 rakes a day. Then there are non-CBT customers, known as Priority D customers, who may be exporters or domestic consumers getting their rakes through indents. On an average, 4-5 rakes are made available a day to this category of customers, though their requirement is many times more. An estimated 20,000 requisitions for rakes from this category of firms is believed to be pending with SER.

Demand for rakes

What is causing concern is that the number of WIS customers is to go up by another 40 or so shortly, bringing the total to 56, with an additional 11 applications reportedly being in the pipeline. If 40 more rakes under WIS are added to the fleet, then SER will be required to place an additional 320 rakes every month or 11 rakes every day, to these firms. In other words, the total number of rakes to be made available by SER under the WIS will go up to 15 a day.

Daily loading

Unless SER steps up its daily loading substantially, the rise in WIS customers will entail availability of fewer rakes for CBT and other customers

As it is, the satisfaction level of these customers varies from 50 per cent to 70 per cent.

In other words, as the number of WIS customers rises, the squeeze in rake allotment will be felt by CBT as well as non-CBT customers. Worse, it is feared in certain quarters that iron ore transportation by rail in areas served by SER might be cornered by a limited number of firms having access to rakes under WIS. The apprehension is strengthened by the fact that the Railways will be required to cough up penal charges in case it fails to fulfill its commitment to WIS customers, not so for CBT and Priority D customers.