SAIL inks Long Term Tariff Contract with Indian Railways

KOLKATA: Steel Authority of India Ltd. (SAIL) and Indian Railways have entered into a strategic agreement on Long Term Tariff Contract (LTTC). The agreement will involve fifteen of the sixteen zones under Indian Railways for transportation of iron & steel and other related commodities. In terms of benchmark gross freight revenue and tonnage it poised to be the highest tariff contract of Indian Railways.

As part of the agreement, which will come into effect from September 1, 2017 and will be valid for a period of three years, SAIL is committed to generate a benchmark Gross Freight Revenue (BGFR) of Rs 3,418 crore with corresponding tonnage of 19.3 million tonne.

SAIL is one of the largest customers of Indian Railways, having a rail coefficient of over 95%. This agreement will be for loading and unloading terminals, with different commodities applicable to long term tariff contract like, iron & steel, pig iron, slag, limestone, dolomite, manganese ore etc.

The objectives notified in the Railways’ policy include long term freight revenue commitments from customers, while customers are ensured of stability and certainty of freight rates and assured supply of wagons. While it aims at generation of additional traffic volumes and revenues for railways, there is freight rebate on incremental as well as retention of traffic to customers. In any given contractual year, Railways also guarantees protection from freight escalation.

SAIL is on the verge of completion of a major modernisation program at its different steel plants that will substantially increase its production capacity. The company said it expects infrastructural improvement at loading and unloading areas will reduce the detention and thereby improve the overall turn-around time of railway wagons in the future.

The agreement was signed on Tuesday (August 29, 2017) by Kaushik Mukhopadhyay, Chief Commercial Manager, South Eastern Railway, which is headquartered at Kolkata and Debabrata Maiti, General Manager (Rail Movement) on behalf of SAIL.