Railway revamps terminal policy, delinks revenue share from WPI

After a tepid response to its private freight terminal (PFT) policy, the Railways have revamped the policy to attract private investment. The Railways have simplified the revenue sharing clause by delinking it from the wholesale price index (WPI).

The PFT owner will pay railways (concerned Railways Zone) 50% of the prevailing per tonne rate of terminal charge leviable at their good shed or Rs 20 whichever is higher. Right now, the terminal handling charges for freight cargo in railway goods shed is Rs 40 a tonne. The Railways get a share in the revenue since the private terminals get connectivity to the railway network. Besides, the railways in no way regulating what the PFT owner can charge the customer for handling the cargo.

 

Under the new policy, greenfield PFTs will be sharing revenue after five years and the brownfield PFT after two years after the notification of the PFT. “For the Railways, this is an evolution phase in PPP experience and the flaws in policies come into highlight only when it is tested on ground. We are still open to address the genuine concerns of our customers,” said a railway official.

The new policy has fixed a uniform fee of Rs 2 crore for both greenfield and brownfield PFTs. The eligibility criteria for the PFT applicant has also been expanded to make the policy more broad based. Earlier, only a company registered under the Companies Act, 1956 could have applied for the PFT. This debarred many legitimate players like Central Warehousing Corporation (CWC) and other corporations from setting up PFT. Now, even a PSU or a joint venture company or a cooperative society can apply for this.

The documents required have been restricted to papers relating to eligibility criteria and projection of anticipated business volumes for brown field PFT. For green field PFT, feasibility report of the proposed PFT is also required, said an official.

Expressing concern over the finer points in the new policy, an executive of a private company said, “No doubt, the railway has sorted out many ambiguities from the customer end and made it easier even to be understood at the goods clerk level. As the revenue sharing is now 50 per cent of the terminal handling charge per tonne, it won’t pinch us provided railways’ terminal charges are kept low." Another concern is that the approval of zonal railway for the PFT should be granted within reasonable time as the PFT proposals take a long time for approvals.

The railway good sheds are in shambles and the cargo handling is getting congested and this is precisely the reason the railways is encouraging the formation of private freight terminals. The private sidings which are catering to their own traffic will continue as private sidings. Other private sidings which are handling railways’ traffic apart from their own traffic will have to necessarily change into PFT.

Country's largest container train operator Concor is planning to build its new facilities as PFT. “We cannot convert the existing facilities on the railway land into PFTs as they are required to be on private land and CONCOR's terminals are on railway leased land. The facilities that we are planning will be built with PFTs,” Anil Kumar Gupta, managing director, Concor said.

The policy seeks to supplement the in house programme of the Ministry of Railways by opening the area of terminal development with participation of logistic service providers to create world class logistic facilities.

Key changes in PFT policy:

* Revenue sharing of PFT delinked with WPI, it is now 50% of railways’ terminal charges in its goods sheds

* Eligibility criteria expanded to include PSUs, cooperative societies, JVs, consortiums apart from companies registered under the Company Act, 1956

* Applicant’s land papers no more required; just ensured that the private siding not on railways land

* Fees for both Greenfield and Brownfield applicants made uniform at Rs 2 crore