Jindal to Adani Logistics, Private Sector Bigwigs Join Railways Wagon Scheme

The railways through its Indian Railway Finance Corporation (IRFC) arm leases out general purpose vehicles on a rental scheme

NEW DELHI: The opening up of private investment in general-purpose wagons (GPWS) by the railways has invoked interest from at least eight big companies. These are from cement, steel, iron ore and aluminium sectors.

The scheme of allowing firms to own wagons, of the fleet of Indian Railways, is likely to attract more investors.

State-run PSU – Coal India (CIL), too, is set to join, with likely orders of Rs 20 billion, for around 500 rakes. The eight companies —JSW Cement, Jindal Steel and Power, Adani Logistics, Gallantt Ispat, Adhunik Metaliks, Rashmi Cement, Orissa Metaliks, and Orissa Manganese and Minerals —have so far submitted Expression of Interests (EoIs) for around 50 rakes.

This should bring in investment of around Rs 10 billion. “CIL, Tata Steel, UltraTech Cement and Vedanta, too, are expected to submit EoIs soon. This has happened within a month since the scheme was launched,” said Mohammed Jamshed, Member (Traffic) of the Railway Board.

Currently, the railways through its Indian Railway Finance Corporation (IRFC) arm leases out general purpose vehicles on a rental scheme. The new scheme allows companies to put in funds in wagons that could move multiple commodities.

There were earlier schemes for private investment in special wagons and container train operators (Liberalised Wagon Investment Scheme, Wagon Leasing Scheme, Automobile Freight Train Operator Scheme and Special Freight Train Operator Scheme). This programme will permit companies to have their own wagons in colours designed by them. The routes will be specified.

In addition, the railways have already placed orders for 40,000 wagons, including car carriers. “This will mean Rs 160 billion investment and provide adequate capacity for the railways in the coming years,” said Jamshed.

With rising demand and competition from the road sector, the railways was struggling to serve consumers with a wagon fleet of about 250,000. The new move is to have adequate general purpose wagons, to meet the expected rise in demand following the launch of Dedicated Freight Corridors (DFCs).

A DFC will use longer wagons of 25-tonne axle load capacity, compared to the existing 22.9-tonne axle load. The former will cost around Rs 2.5 million and latter costs around Rs 2 million.

In the general purpose wagon scheme, corporates will get 10 per cent rebate on the base freight for 15 years, for carrying each commodity. However, the rebate will not be more than the lease charge IRFC now gets from the railways. The scheme was launched on April 26. With the largest freight consumer, CIL, expected to join, the scheme might see investments over Rs 100 billion.

Though the railways planned to acquire around 12,000 wagons in 2017-18, it finally added 7,120. For the current financial year, it has set a target of adding another 12,000 wagons.