Steelmakers say cap on ore transport rate to cut cost by a third

Manufacturers of sponge iron, pellet and steel products said the state government's decision to put a cap on iron ore transport rates by trucks will result in bringing down transport cost at least by a third.

In 2012, the state government had issued a notification mentioning transport rates for different districts. However, it never worked out as no trucker obeyed the guidelines and eventually, the notification was withdrawn.

This time, the state government said, it would start online auction of transport rates and only registered transporters would be allowed to participate. "I think this time the steps will definitely work as there is no loophole in the process. The decision to use only registered trucks for mineral transportation will surely yield desired result and transport rates would come down in e-tendering process," said Ranjan Mishra, senior official of Visa Steel.

The e-auction process is going to start from July 1 on pilot basis. A fixed rate will be decided for transportation of iron ore by trucks from mines pithead to various locations inside and outside of the state after consultation with all stakeholders. The truck owners and transport agents will be asked to go for reverse bidding to get the transport order. According to sources, the transportation rate may be fixed at around Rs 6 per tonne per km compared Rs 9 per tonne per km charged at present. The transporting agencies would be asked to quote lower rates than ceiling prices in the e-tender. However, the chances of cartelisation by transporting agencies cannot be ruled out and they might go for nominal drop from ceiling rates in the auction process. Steel industry officials said, there might be some problem initially, but that will get sorted out later.

"Initially there would be some hiccups, but eventually everybody will fall in line. We have also asked the state government to allow truck transportation for 24 hours instead of 12 hours currently, which will get them more orders and will also bring down transport cost for us," said N D Rao, managing director of Brahmani River Pellets Ltd (BRPL). Truck transport rates in Odisha are very high as the transporters had jacked up the prices in tandem with ballooning iron ore rates in 2008-09. Though rate of the mineral has come down since then, transporters have refused to bring down their charges.