December 03, 2008

Rail transportation of iron ore has become costlier again

It is reported that rail transportation of iron ore has become costlier again. With effect from April 1st 2008, the classification has been revised upward to Class 180 from the current Class 170. This is in keeping with the Railway Minister’s favorite practice of hiking freight rate outside the Budget proposals.

More important are various other imposts such as busy season surcharge, congestion surcharge, development charge and terminal charge in addition to punitive charges, demurrage charges, rent on land used for railway sidings and for some particular section higher freight under freight rationalization scheme.

For example, from April 1st 2008, the congestion surcharge has been hiked to 100% from 60%. The cost of transporting iron ore by rail in 713 kilometer long Bimlagarh to Paradip port jumped from INR 615.40 per tonne in April 2005 to INR 1,714 per tonne in April 2008. The per tonne kilometer cost thus increased from around 86 paise to more than INR 2.4 during the period.