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            january 21, 2020

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Concor plans to reduce its dependence on container terminals


State-owned Container Corporation of India (Concor) intends to reduce its dependence on container terminals built on land owned by Indian Railways by up to 15 per cent by 2024, to avoid paying land licence fees.
At present, 41 of the rail hauler's 86 inland container depots (ICDs) are operating on land leased from Indian Railways for which it pays a land license fee of INR1,175 (US$16.57) per laden TEU.
In effect, Concor pays land licence fees on 40-45 per cent of its overall volumes because these cargoes are handled at facilities built on Indian Railways' land, reported the Hindu of Chennai.
"Wherever our depots are coming up, the markets are shifting. We shift our business to our own land where we don't have to pay any land license fee," said Concor managing director V Kalyana Rama.
The share of cargo containers handled at terminals built on land owned by the railways will keep going down as more and more volumes are handled at Concor's own terminals, he said.
"For instance, at Vizag, where the entire volumes are now getting handled in our own terminal. It used to be 100 per cent at the railway-based terminal, and now we have completely stopped handling cargo from that terminal," Mr Rama said.
However, Concor's terminals built on Indian Railways' land will become a thorny issue ahead of the privatisation of India's largest rail hauler. The government has decided to sell 30 per cent of its stake in the company to a strategic partner, along with transfer of management control.
"Railways land is the biggest issue facing the strategic disinvestment of Concor. The deal cannot destroy the basic rules of the game laid down by the concession agreement signed between the private operators and the Indian Railways in 2007, which provides a level playing field to all. If that land goes into private hands, then it will be a completely destructive move," said the chief executive of a private container train operating company.
Concor currently gets land from the Indian Railways at a concessional rate, compared to other inter-modal operators. If this is given on a platter to a new private operator, it will result in the economics of the business going squarely in favour of the new entrant, an industry consultant said.
"So, from a competition point of view, it's a wrong move to privatise Concor unless the land lease terms are re-worked," he warned.

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