Faced with an erosion in share of petroleum, oil and lubricants (POL) freight business with the advent of pipelines, the railways are now offering their exclusive right of way (ROW) to downstream petroleum companies to jointly build pipelines to move these products.
"GAIL (Gas Authority of India Ltd), Indian Oil Corporation and Reliance Petro have shown interest in our offer to construct pipelines with the railways as an equity partner. We have invited these companies to carry out a survey to explore if our ROW is suitable for them," railway board member (Traffic) R K Thoopal said.
The petroleum companies have shown interest in three sections, which include Jamnagar-Kota-Ahmedabad and one section in the North-Eastern Railway, the official said.
The railways are also identifying other sections where the feasibility of constructing product pipelines would be carried out.
The railways are hawking their exclusive ROW along their 58,000 km network for generating additional revenues from non-traditional sources. As part of the effort, laying of an optical fibre backbone along the tracks has already started with Railtel Corporation of India Ltd planning to become a large broadband player.
POL movement is the most lucrative part of the Railways' business. The commodity has been placed at 300, which is the highest in the railways classification of different goods in terms of the freight rates charged. The railways have been worried about losing POL business with several large pipeline projects coming up in different parts of the country.
In a bid to retain some of their customers, the railways have decided to offer 20-25 per cent discount to bulk customers in the POL and steel sectors and simultaneously started working on narrowing the range of their classification system to reduce the tariffs for high-value commodities in a phased manner.
"We have asked the industry to give us commitments of higher volumes and we would reciprocate with special concessions for specific high-value customers. Depending on the volumes committed, we are willing to give up to 25 per cent concession to our POL customers, while for the steel sector, the discount could be anywhere around 20 per cent," Thoopal said.
Having realised that they had nearly out-priced themselves on carrying these goods, the railways are also drawing up an action plan to modify their classification system and bring down the difference between the tariffs charged for different commodities, Thoopal said, adding that would mean a gradual reduction in tariffs for major commodities in the next few years.
The Railways have been demanding that the government should bear at least part of the subsidy burden as their traditional monopoly status is getting eroded by increased competition from roads and pipelines.
Railways are also looking at POL and steel in containerised form to attract less than train-load cargo from these sectors. "We have some barrel and open top containers for petro goods and steel respectively, and are willing to invest more in such special wagons to pick up larger volumes of less-than-trainload cargo," he said.
