The Hindu : Business : Railways’ bold step, goes in for dedicated power

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Saturday, Nov 10, 2007
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Railways’ bold step, goes in for dedicated power

V. Jayanth

More joint ventures likely; to look at greenfield capacity at traction load centres

— FILE PHOTO

ELECTRIFICATION: Railway overhead electric traction work under progress in Chennai.

CHENNAI: In another bold step to cut operational costs and improve efficiency, the Indian Railways has signed an agreement with the National Thermal Power Corporation (NTPC) to set up a 1,000 MW captive power plant at Nabinagar in Bihar. The NTPC will have a 74 per cent stake in the Rs. 5,352 crore project, which will be taken up on a 70:30 debt equity basis.

In 2000, the Railways started drawing power from the NTPC’s Dadri and Auriya power plants under a Central scheme to provide the Railways a share from the 15 per cent unallocated power from the Central share of electricity in its undertakings. That arrangement alone resulted in an annual saving of Rs. 50 crore to the Railways, because of the cheaper cost of power.

Over the years, the Railway Board has been repeated urging State governments to supply power from the State electricity boards (SEBs) at a concessional tariff. Except a few States such as Kerala, not many came forward to do that.

Cost of production

Consequently, the Railways decided to go in for captive power plants through joint ventures.

According to the Railway Board, the Nabinagar plant can lead to a saving of Rs. 400-600 crore annually. The cost of production in the unit has been estimated at Rs. 2.13 a unit, and along with wheeling and transmission charges, it will cost the Railways somewhere between Rs. 3.38 and Rs. 3.63 a unit.

That works out much cheaper than the average cost of electricity, which is now Rs. 4.28, to the Railways. This joint venture with the NTPC, therefore, promises to be just the first of such projects by the Railways to cut down its operational costs.

The annual power bill of the Railways is estimated at Rs. 5,700 crore for the 18,000 route km of electric traction in its 63,000 route km network across the country. Railway sources say that though diesel locomotive may work out cheaper than electric transmission costs, the unprecedented rise in global crude oil prices and the cost of importing fuel, makes the power alternative a better proposition. Operationally too, electric locomotives can accelerate faster and have a better pulling power.

Special concessions

Now that special concessions have been offered for ’mega power projects,’ and Central undertakings such as the NTPC, the Nuclear Power Corporation, and the Neyveli Lignite Corporation have taken the lead in setting up joint ventures, the Railways opted to go in for captive power plants through this route.

Over the next few months and years, the Railways will look at greenfield capacity at traction load centres. Power from these units can be drawn for use in the electrified routes in that region. For instance, the Nabinagar project can feed trains in Bihar, Jharkhand, West Bengal, Chhattisgarh, Maharashtra, Gujarat and Madhya Pradesh. The NTPC, on its part, will earmark 10 per cent of the power to other users.

“Even a 1 to 2 per cent saving in the power costs can make a big difference to us in the overall cost of operations and efficiency.

The board is now looking at every aspect of our operations to reduce costs and enhance efficiency, to become more competitive,” a senior board official explains.

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