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Railways, NTPC ink pact for captive power

BS Economy Bureau

The Railways and the National Thermal Power Corporation on Monday signed a memorandum of understanding to set up captive power plants with a total capacity of 2000 mw, for the former.

The 50:50 joint venture would invest about Rs 90 billion over the next five years to set up 300-500 mw units near the traction load centres of the Railways.

"The Railways' foray into power generation would help it save between Rs 10-15 billion annually on electricity bills," Railway Minister Nitish Kumar said at the signing of the MoU in New Delhi.

The total cost of the project has been estimated at Rs 110 billion, of which Rs 20 billion will be for the wheeling charges.

The debt-equity ratio of the project is 70:30 with the Railways and NTPC contributing Rs 16.50 billion each.

The Railways have rationalised the project on the ground that they spend Rs 45 billion annually in electric energy for traction and non-traction purposes.

It purchases major portion of the power from state electricity boards, which charge two to three times the rate at which they could purchase power from central generating agencies.

The average cost of procurement of power from the SEBs works out at Rs 4.28 per unit for about 10,000 million units of power consumption, Kumar said, adding that joint generation of power would help us save 40 per cent of the energy bill."

After the Cabinet approval to the Railways to procure direct power from the central generating agencies from 15 per cent unallocated central share of power, the Railways have been drawing power from the Auraiya plant of NTPC since November 2000 for the Ghaziabad-Kanpur sector, he said.

While, procuring 100 mw of power from the Auraiya plant had resulted in an annual saving of Rs 500 million to the Railways, the drawing of 80 mw of power from the Korba plant would result in a saving of around Rs 400 million, Kumar said.

The MoU was signed by V K Raheja, executive director (electrical), Indian Railways, and A Palit, director (technical), NTPC.

Railway board chairman R N Malhotra said 6-7 traction sites had been identified for setting up the power plants.

"A final view on the location and the capacity of the plant would be taken in a month's time by a committee, which would prepare a project report on the same."

Of the Rs 320 billion annual expenditure, the Railways spent close to Rs 80 billion on fuel needs, of which, 63 per cent was for traction electrification, he said.

"The Railways have further identified some more schemes for availing of direct power supply from NTPC, Nuclear Power Corporation and Neyveli Lignite Corporation in different parts of the country," he added.

NTPC chairman C P Jain said a special purpose vehicle would be set up for executing the joint venture power projects, which could be an expansion of the existing plants or greenfield capacity addition at the traction load centres.

The power plants, as of now, would be coal-based but possibility of gas-based power plants could not be ruled out, he said, adding the MoU envisaged the constitution of a committee to prepare a project report.

Malhotra also asked NTPC to clear the Rs 9.55 billion outstandings of coal transportation charges, at the earliest.

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