In a move likely to impact cash flows of iron ore miners and steel companies, Indian government owned and operated transporter Indian Railways (IR) is mulling the option to secure advance payment for bulk freight movement, government sources said on Monday, May 7.
The sources said that IR management has been working out details whereby bulk freight customers of the transporter would have to make an advance deposit of their annual freight estimates and in return IR would offer a guaranteed number of wagons for loading, quicker turnaround time of freight trains and a freeze on freight rates during the period which has been paid in advance.
The advance deposit payable is expected to be applicable for those offering a minimum freight of about five million mt per year, the sources said.
The government sources acknowledged that, while the advance payment would entail higher cash provisioning by bulk IR users in the steel, cement, coal and iron ore mining industries, the scheme would on the other hand enable IR to plan and acquire wagons as the transporter will have assured estimates of freight demand for the year.