Report: Steel shortage delays crucial Indian Railways' safety modernization
The Indian Railways' planned multi-billion dollar safety modernization plan is facing delays as the state-owned Steel Authority of India Ltd (SAIL) is unable to meet the demand for new rails. According to Indian government documents accessed by Reuters, SAIL will only be able to meet 78% of demand up until March 2018. This dents the government's timely attempt at upgrading the accident-prone railways.
The Indian Railways is undergoing a five-year $130 billion plan to modernize its network which is also the world's fourth-largest. In February, the government sanctioned an additional $15 billion to counter a 25% increase in train accidents over the past two years due to defective tracks.
SAIL supplied 620,000 tonnes of rails during the 2016-17 financial year, falling substantially short of the demand of 1 million tonnes. For 2017-18, SAIL has committed to provide 1.14 million tonnes of rails against a demand of 1.46 million tonnes, Reuters has reported. This prompted the railways to escalate the issue to the Prime Minister's Office. Rail supplies are expected to increase next year.
In a letter to steel secretary Aruna Sharma dated May 19, Railways board chairman AK Mital wrote that the entire railway modernization programme "hinges on the supply of rail." "Unless SAIL steps up supply, the whole programme will be at risk," he added. Mittal suggested SAIL's would also struggle to meet its reduced target for 2017-18 based on initial supply rates.
SAIL currently has a monopoly in supplying rail, which the Indian Railways has considered ending. However, the Modi government has made the use of locally produced steel for major infra projects mandatory. Indian steel giant Jindal Steel has for years been vying for rail supply contact, but Indian policymakers still prefer state owned companies. SAIL said it's working towards increasing its supply.