Higher freight rates may force a rethink on power plant location

The phased deregulation of diesel prices and its impact on railway freight rates may finally force India overhaul its policy for the power generation sector. Also anticipated is a change in how coal is consumed, which should prove to be a relief for the country’s clogged transport logistics.

On Tuesday, the Rail Minister announced a 5.5 per cent hike in coal freight (from April 1) from an average of Rs 701 a tonne in 2012-13 to about Rs 740 a tonne in 2013-14. This will mark a 20 per cent rise in average freight cost of coal from March 31, 2012 (Rs 617 a tonne).

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