KOLKATA (miningweekly.com) - Government-owned and -operated Indian Railways (IR) has taken a hit on freight revenue following the ban on iron-ore exports from key mineral-rich provinces in the country.

According to the railway budget documents IR placed before the Indian Parliament on Tuesday, IR has projected a meager 3.8% growth in revenue from movement of iron-ore during 2013/14.

According to the budget papers, revenue from iron-ore freight for export was projected to fall sharply by over 56% to $209-million in 2012/13, down from $478-million in the previous fiscal period.

Iron-ore was IRs second-largest revenue driver, contributing about 10% of its total revenue, second only to coal, which accounted for 40% of total freight revenue.

IR had projected total freight revenue earnings of $17.29-billion during 2013/14.

For 2013/14, IR had projected a further 4.1% drop in revenue from iron-ore export freight at $201-million. Total earnings from export and domestic transportation of iron-ore had been forecast to increase by 3.8% to $1.52-billion.

IR charges dual rates for export and domestic iron-ore transportation, with the freight charges for export approximately four times that charges for domestic movement.

Also in the railway budget for 2013/14, the Indian government has proposed an investment of $740-million on projects for rail connectivity at coal mines, and boosting coal transportation capacity from mines to thermal power plants. The investments were marked down for a public-private partnership model framed by IR for capacity enhancement in linkages between mines, ports and railways.

According to a study conducted by the Association of Power Producers, the six major trunk routes that accounted for the bulk of coal movement by rail for both domestic and imported coal were highly congested, with capacity use of over 100%, and in some sections over 150%, even though the benchmark efficient capacity use level was 85%.

Meanwhile, the railway budget also proposed to hike coal freight by 5.7% during 2013/14.

According to Coal India, which accounts for over 80% of domestic demand for coal, the proposed freight hike would not impact the miner since the increase would have to be borne by thermal power generating companies.

The freight increase would result in a 3% increase for power generating companies for landed coal at the power stations, with the possibility of a 1% increase in power tariffs if the higher freight costs of coal were passed on to consumers by power companies.