Private firms may set rail freight rates

RUN-UP TO RAILWAY BUDGET 2005

The private sector may soon be allowed to set cargo haulage rates on select rail routes. Private players that are in joint ventures to lay and upgrade railway lines will be allowed this facility.

The main beneficiaries will be Pipavav Rail Corporation, Kutch Railway Company and Hassan-Mangalore Rail Development Company, which are laying lines from posts to railheads.

The move, to be announced in the Railway Budget, is aimed at promoting private participation. Rail Vikas Nigam Ltd has been entrusted with the task of bringing in private equity and it intends to undertake nine projects through joint ventures.

Railway officials said safeguards would be in place to ensure that companies setting rates did not take undue advantage and that tariffs would not be allowed to fall below railway charges beyond a point.

Private investors in the joint ventures have complained against the present mechanism that allows only the railways to decide tariffs.

They are pushing for lower haulage rates to comepete with cheaper road cargo. Pipavav Rail Corporation holds a concession for building, operating and maintaining the Pipavav-Surendernagar line for 33 years. Kutch Railway Company, a joint venture with the Gujarat government, Kandla Port Trust and Gujarat Adani Port Ltd, will undertake the Gandhidham-Palanpur project.

Hassan-Mangalore Rail Development Company was created to implement the Hassan-Mangalore project.

The move is also aimed at speeding up Rail Vikas Nigam Ltd's discussions with strategic partners for connecting the Krishnapatnam, Vallarpadam, Dahej and Hazira Ports to the railway network.

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Track record

• Private players in joint ventures that are laying and upgrading railway lines will be allowed this facility
• The main beneficiaries will be Pipavav Rail Corporation, Kutch Railway Company and Hassan-Mangalore Rail Development Company, which are laying lines from posts to railheads
• Rail Vikas Nigam Ltd has been entrusted with the task of bringing in private equity and it intends to undertake nine projects through joint ventures