Steel ministry criticises SAIL as shortage hits railway upgrade

The Indian government has criticised state-run Steel Authority of India (SAIL) for its failure to supply rails to Indian Railways, according to a letter seen by Reuters.

India's mammoth state railways, hit by a spate of accidents, is trying to modernise its ageing tracks, but steel shortages have stymied progress.

The steel ministry has asked SAIL, the only supplier of rails to Indian Railways, to make sure it meets its target of 1.14 million tonnes of supplies in 2017/18, according to a letter seen by Reuters.

"It is once again reiterated that the ongoing track renewal and capacity augmentation programme of railways is an important national project and the supply of rail by SAIL is a very critical component for the success of this project," the letter, dated Sept. 19 and addressed to SAIL Chairman P.K. Singh, said.

Stung by a string of accidents on the world's fourth-biggest rail network, Indian Prime Minister Narendra Modi recently named a new minister for the railways, which is grappling with chronic under-investment and overcrowding.

Reuters earlier reported the upgrade for the country's accident-prone network was at risk because of rail shortages from SAIL.

Between April and August, SAIL could supply only 70 percent of its monthly targets set for Indian Railways, the letter said.

For 2017/18, SAIL has committed to providing only 1.14 million tonnes, against a requirement for 1.46 million tonnes.

For the remaining 300,000 tonnes, Indian Railways is likely to float a tender in the next two to three months, said a railways official familiar with the plan.

Jindal Steel and Power Ltd, which has for years tried to bag a rail supply contract, will bid for the tender, a senior company official said.

SAIL, which has posted losses for nine straight quarters, is targeting capacity additions of 2 million tonnes a year thanks to a new mill in eastern India.

The steel ministry and Indian Railways did not comment for this article.