NTPC moots Railways’ plan for captive power projects

July 31, 2009 11:00 am

NTPC moots Railways’ plan for captive power projects
 
The Indian Railways has approached NTPC Ltd to jointly set up power projects on 700 acres of surplus land it owns and use the electricity produced to run trains, etc. An official from NTPC confirmed, “Yes, the Railways has approached us to set up captive power projects on its surplus land. Talks are at a preliminary stage.”
 
The state-owned NTPC is in a 74:26 joint venture with the Railways to construct 1,OOO mw project at Nabinagar in Bihar.
 
However, railway officials declined to comment, citing the ongoing budget preparations. The railway budget will be presented in Parliament on July 3. Buying from state electricity boards is costlier as commercial subscribers such as the Railways pay more to make up for power supplied at subsidized rates or for free such as for use at farms.
 
The Railways pays an average of Rs 4.29 per unit to run locomotives and Rs 4.37 per unit for other purposes. The average cost of generation at NTPC was Rs 2.11 per unit in the fiscal year ended on March 31. The proposed arrangement could provide the public sector enterprise with a large captive consumer. The Railways currently uses some 12 billion units of electricity a year and its consumption is growing at an average 5 per cent every year.
 
The Planning Commission, the apex planning body, has recommended that the Railways purchase power from independent producers or get the private sector to build power plants, rather than rely on state electricity boards.
 
Gokul Chaudhri, partner at consultancy firm BMR Advisors, said, “It makes sense for NTPC to evaluate this opportunity as the Railways is the largest commercial organization in the country. If NTPC enters into this relation-ship, they will build an asset base for supplies to a relatively secure customer.”
 
NTPC has a power generation capacity of 30,144 mw which it plans to raise up to 50,000 mw 2012. It made a net profit of Rs 7,827.40 crore on revenue of Rs 42,182.40 crore in 2008-09.