Railways starts procuring cheaper power to the tune of 300 MW from Ratanagiri gas plant in Maharashtra

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The move to save Rs 600 crores annually for Central and Western Railways Zones

In a significant move to reduce Railways energy bill, Indian Railways today started procuring 300 MW power from Ratnagiri Gas Power Ltd. (A Govt. owned gas based power plant in Maharashtra) for its traction power needs in Maharashtra region. This is for the first time that Railways are drawing power under open access as Distribution licensees in any state.

This Electric Power is almost Rs. 4 per units cheaper in comparison to the present tariff being paid by Railway in Maharashtra. The procurement of power from Ratnagiri Gas Power Ltd. will give a saving of about Rs 600 crores annually for Central and Western Railways both Railway Zones with headquarter in Mumbai. Railways have been allocated 500 MW power from Ratnagiri plant. The procurement of remaining 200 MW power will also be done soon which will be utilized for traction power needs in other states. The complete procurement of 500 MW in the coming days is expected to give a saving of about Rs.1000 crores annually. In this way, the financial saving will continue to increase in the coming days. This kind of initiative of saving energy cost by procuring power through open access as distribution licensee is in line with the Railway Minister Shri Suresh Prabhu’s mission to improve the Railway’s financial Health using innovative methods.

Background brief :-

One of the prime focus areas of the Minister of Railways, Shri Suresh Prabhakar Prabhu since he assumed the charge of Minister for Railways was to improve the financial health of Railways for which he adopted multi pronged strategy. Railway Minister targeted to reduce cost of the big ticket items like the energy bill of Railways which was about Rs.30,000 cores and he took up this as his mission area. This vision has been realized in a big way today when Indian Railways started drawing about 300 MW from Ratnagiri Gas Power Ltd. (A Govt. owned gas based power plant in Maharashtra).

Indian Railway had the status of deemed licensee as per the Electricity Act, 2003 which was further clarified by Ministry of Power in May, 2014. This proviso has been effectively used by Ministry of Railways today on 26th November, 2015 when about 300 MW power started flowing in Maharashtra. This is for the first time that Railways are drawing power under open access as Distribution licensees in any state.

At present Indian Railways electric traction bill is about Rs.10,600 crores and in the Budget Speech of 2015-16 it was envisaged that in the coming years this will be brought down by about Rs.3000 crores by procuring power at economical tariff from generating companies, power exchanges and through bilateral arrangements. This current procurement move fulfils this important Budget commitment to reduce the input cost to railways.

The entire move could fructify and all challenges could be overcome successfully due to continuous support and guidance of the Railway Minister Shri Suresh Prabhu. In this case CERC after looking into all aspects including the judgement of Hon’ble Supreme Court upheld Railways right to avail power directly under open access from the generators as per Electricity Act read with Railway Act.

At present high cost of electricity tariff being charged by Distribution companies makes electric traction costly. Payment of realistic electricity cost is important to Railways as this will make electric traction viable in many areas and will reduce the total energy bill of Railways. This in the coming days will tremendously improve the financial viabilities of Railways in a great way. If one takes into account the future expansions and high speed trains the saving will be much higher. This will also be beneficial from the climate point of view.

This is the first time Railways have been able to source power as licensee using the state transmission network (STU network) and therefore it becomes a classic example of co-operation of Central and State agencies.

Railway Minister has been working on multiple fronts to improve the financial health and to speed up growth of Railways. On one side, low interest rate institutional financing is being made available through funding from institutions like LIC etc. and on the other front, the input costs are also being brought down.

In addition to these steps, Railways have laid special emphasis on improving energy efficiency and have achieved savings of about 3% in Electric traction energy and about 5% in non traction. Because of various energy efficiency measures, a saving of about Rs.400 crores in the current year will be achieved. This will have cascading benefits as these initiatives will lead to savings year after year.

Railways are committed to contribute towards improvement of the environment. In this direction Railways are focusing on energy security and going for environmental friendly means of power generation keeping in line with the Hon’ble Prime Minister’s vision. Railways have recently completed work on 26 MW wind plant in Jaisalmer, which will take Indian Railway’s installed capacity on renewable energy front to 47 MW. It is just a beginning towards installation of targeted 1150 MW renewable energy (Solar and wind) plants by Indian Railways in the coming years.

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